Tesco has indicated that a significant expansion of its Japanese operations is on the cards.

Admitting to The Grocer that Japan was still only "mildly profitable", international and IT director Philip Clarke hinted Tesco was poised to extend its reach in Japan beyond Tokyo to a second city, possibly in 2009. "It's not like Tesco to have such a long-term R&D programme," said Clarke.

"We've been there for four years now. The team has completely changed - it includes both expatriates and locals. We've been trying to find a winning format," he said. "It's a massively complex market."

Experts speculated that Kobe was the most likely city for expansion.

Speaking at IGD's Global Retailing conference on Wednesday, Clarke also reaffirmed Tesco's interest in India but ruled out Russia as a target market in the short term.

"We've publicly said we'd like to have a business in India," he said. "It would be irresponsible not to have a business in the second biggest nation."

However, there were a number of obstacles to be overcome first. "What's stopping us? Finding the right partner and current legislation on foreign direct investment."

Clarke claimed Russia was "not on our radar screen", surprising those who had speculated that entry was imminent.

"Spreading yourself too thinly is a big mistake," he said, adding that Tesco's biggest focus was its Fresh & Easy venture in the US, promising future changes would be limited to "fine tuning and tweaking - no more than that."

Clarke gave short shrift to accusations by the United Food and Commercial Workers' Union that Tesco had refused to recognise shopworker unions in the US. "It's for our staff to choose, not for us to impose upon them conditions of employment," he said. "We've got a relationship in the UK with Usdaw. That's not the case in the US. It's as simple as that."