"Tesco has today announced its decision to market its business in Japan, " the group said within an official statement to the London Stock Exchange carrying out a major review of its Asian activities.
The organization, the world's third-biggest retailer by sales, added how the under-performing Japanese division was the smallest of Tesco's worldwide businesses.
"We have reviewed our portfolio in Asia and also the performance of our business in Japan, " Tesco leader Philip Clarke said in the statement.
"Having created considerable efforts in Japan, we have concluded that people cannot build a sufficiently scalable business. "
He or she added: "We have decided to sell our operations there and focus on our larger businesses in the area, in line with our priority of driving development and improving returns. "
However, the company added that over fifty percent of the 129 small stores in the greater Tokyo area that operate underneath the Tsurakame, Tesco and Tesco Express names, actually earn profits.
Clarke meanwhile rejected suggestions that the decision could imply that Tesco could dispose of its loss-making US company Fresh & Easy.
"Any comparison with Fresh & Easy will be inappropriate. We are going to get ourselves in order to profit, we are going to drive the growth and then we will get the return on capital that the investors want. I stick by it until things show otherwise, " he said.
Tesco is the planet's third-largest retail group after US-based Wal-Mart and France's Carrefour.
Analyzer Kate Calvert, at London-based stockbrokers Seymour Pierce, said that Tesco's departure from Japan will be welcomed by investors.
"While immaterial in group conditions, the strategic decision by Philip Clark to finally get rid of its Japanese business will be welcomed by the marketplace for Tesco has never made an acceptable return in the business, " Calvert wrote in a research be aware.
"It follows Carrefour, which swapped its Japanese property for Tesco's Taiwanese asset in 2005, out from the country.
"Japan will remain a notoriously difficult country to create money out of, as Wal-Mart is also discovering, having had a presence in Japan since 2002 via Seiyu (now a wholly-owned subsidiary). "
In a reaction to the news, Tesco's share price rallied 2. 25 % to 373 pence in late morning deals upon London's FTSE 100 index of top companies, that was one percent higher at 5, 321. 80 factors.
Global retail giant Tesco employs 500, 000 staff worldwide has a lot more than 5, 400 shops in 14 countries around the planet.
That includes over 1, 400 branches in Asian countries, where it has stores in China, Japan, Korea, Malaysia as well as Thailand.
Tesco had entered the Japanese market in 2003 using the purchase of the C2 Network, which ran stores underneath the Tsurakame brand.