Major retail and property developments in Asia will deliver years of growth, says Clive Black

Few facts illustrate the transformation of Tesco from a grocer on the Edgware Road to an international retail brand selling a raft of food, non-food and services than the group's presence in north east Asia.

On our fourth visit to the Korean peninsula we have seen Tesco's local business emerge from two powerful hypermarkets in 2000 to an estate of more than 100 such stores today, with approaching 250 convenience outlets in tow.

Tesco in South Korea is on the threshold of market leadership, and plans to increase selling space by 50% in the next four years may yet seal that. Korea is Tesco's 'second engine', a valuable business because of its good returns and prospects.

The pace of development in Asia does not stop in Korea, though, exemplified by Tesco's plans for the poorer but much larger Chinese market. In our missives to the market from Shenyang, a freezing industrial city, we were woken to the 'song' of hammers, drills and creaking cranes as enormous grey concrete blocks emerged from the frozen brown land; Tesco has four hypermarkets in this town with a new multi-functional Lifespace centre to come.

An hour's drive from Shenyang is Anshan, an equally rapidly growing steel city with the fourth gleaming Lifespace centre with 3,000 apartments in tow, reflecting Tesco's dual property and retail strategy for the country; 200 hypermarkets with 50 Lifespace malls are planned for 2015, with another 30 then in construction. Three hours south of Shenyang is the more clement Shanghai, where Tesco is market leader in the embryonic modern retail market with 19 stores and Lifespace malls to come. Planners are set for Shanghai's population to grow from 21 million to 50 million and in China planning means 'doing' rather than public consultation. Such growth should provide a generation and more of expansion for Tesco, albeit delivering returns may well be harder than in South Korea.

What also struck us in Asia was how Tesco is becoming a joined-up global business one with a proprietary culture. One where learning in Korea feeds into Asia, which feeds into Europe and the UK and feeds back into Asia; very virtuous and powerful loops.

Scale benefits are increasingly emerging and with a good dose of capability and skill added, Tesco has the platform and potential for years of strong growth that may yet encourage more British suppliers to follow Tesco's path.

Dr Clive Black is head of research at Shore Capital Stockbrokers.