Observer Business columnist Richard Watchman has questioned the overseas expansion policy of Tesco.

Writing in Sunday's issue, he said: "Tesco's overseas expansion is potentially risky, especially when it makes a play for a market such as Japan, always a hard one to crack. In fact, British retailers often come unstuck when they move overseas, as about 50 per cent of Tesco's floor space is based abroad, one wonders whether this risk has been factored into the share price of around 250p."

Watchman added that Tesco is "wiping the floor with the competition, but there are a few clouds on the horizon.

"Shareholders argue that the rationale for putting their money into Tesco is watertight," Watchman wrote. "As growth in the UK slows, [Tesco supremo Terry] Leahy's investment in places such as Poland and the Czech republic should pay off, boosting the top line. And when Eastern Europe comes off the boil, tesco's businesses in the Far East, including China will begin to make a contribution."

His conclusion suggested that he had either changed his mind while writing his weekly column or was looking in vain for a chink in the supermarket chain's apparently impenetrable armour. "Tesco is a great company, but occasionally doesn't it just all sound too easy?" Watchman wrote.

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