Customers are seen at the entrance of a CP Lotus store in Shantou, South China's Guangdong Province in January. Photo: CFP

Chinese retailer Wumart Stores Inc announced Tuesday that it will acquire 36 of Thai retailer CP Lotus' outlets in China, the latest sign that China's retail grocery market is undergoing consolidation.

Beijing-based Wumart will acquire 36 of CP Lotus stores in Beijing, Shanghai and most provinces in China, excluding South China's Guangdong Province and Central China's Hunan Province, with a total of about 310,000 square meters sales floor area for HK$2.345 billion ($302.4 million), an announcement released on Hong Kong Exchanges and Clearing (HKEx) said.

Wumart will also purchase 9.99 percent of CP Lotus' shareholdings for HK$548 million, according to the announcement.

Meanwhile, CP Lotus will buy 13.77 percent of Wumart's shareholding for HK$2.893 billion, which is equal to what Wumart should pay CP Lotus, the announcement said, noting the deal will be completed before December 14.

Wumart will have a better control of retailing channels and sale terminals in the whole country, which is essential for a supermarket operator, Liu Xiaofeng, a research fellow with China Minzu Securities, told the Global Times Tuesday.

By buying the stores of CP Lotus, Wumart, which is mainly aimed at providing low-price products, can boost its store selection and expand into the middle-class market, Liu said.

CP Lotus will also benefit from the cooperation, Wang Xianqing, a professor at Guangdong University of Business Studies told the Global Times Tuesday, noting that cooperation is inevitable when a market grows into a mature stage.

Forging alliance helps companies to face the fierce competition because it combines the merits of two sides, Wang said.

CP Lotus will be able to participate in Wumart's current operation through its purchase of Wumart's shares, the joint announcement said, noting CP Lotus expects to benefit from Wumart's operating capabilities and efficiencies.

The statement also said CP Lotus can focus on Guangdong Province and Hunan Province, which are the highest growth areas for the company.

After a loss of 78.69 million yuan in the first half of 2012, CP Lotus continued to have a loss of 46.74 million yuan in the first half of 2013, according to a half-year report released in August.

CP Lotus' poor performance in China has showed that it does not do very well in localization, Liu said, noting that intense competition in the Chinese market has brought on more pressure, especially with the emerging e-commerce trade.

CP Lotus is a retailer owned by Thailand's Chia Tai Group and it entered the Chinese market in 1997, establishing its first store in Shanghai.

On October 2, UK retailer Tesco announced it will form a joint venture with Hong Kong-based China Resources Enterprise by the first half of 2014, which will integrate Tesco's 134 outlets in China with 2,986 China Resources Vanguard supermarkets.