International giant McDonald's China awakens

● As an international fast food giant, McDonald's and KFC have no difference in standardized management. The key to the difference lies in their attitude towards the Chinese market.

● Experts agree that KFC’s success should first be attributed to the decision-makers’ understanding and importance of the particularity of the Chinese market.

● McDonald's declared that "the new organizational structure is part of McDonald's efforts to continuously capture the Chinese market."

● Xiao Ke

KFC and McDonald's, the two "brothers from the United States" are quietly interpreting their understanding of the Chinese market. The difference is that KFC wins.

Talking about the "Chinese heart" of these two brothers, Chen Shi, general manager of Beijing Kailangbosi Consulting Co., Ltd. believes that McDonald's performance in China "has caused many people to feel puzzled". Currently, McDonald's has more than 30,000 chain stores in 121 countries and regions worldwide, with total sales of US$ 40.63 billion and 680 stores in China. KFC only opened 11,000 stores in 80 countries. But in China there are 1470 (of which 170 Pizza Hut). Why did McDonald's develop so carefully in China?

How to treat the Chinese market

“As the international fast food giant, the standardization and management of the two are indisputable. The key to the difference lies in their attitude towards the Chinese market.” Niu Haipeng, a professor at the Renmin University of China Business School, believes.

McDonald's opened its first store in Shenzhen in 1990. During the 10 years from 1992 to 2002, McDonald's opened an average of 38.3 stores per year, followed by the Beijing market, and the number of stores opened ahead of KFC. However, during the key three years from 2002 to 2004, only 60-70 shops were added annually, while KFC grew at a rate of more than 300 in the same period.

Gu Wei, public relations manager of McDonald's China, believes that each company has its own plan and McDonald's China is steadily advancing according to the established plan.

Zhu Mingxia, a professor at the University of International Business and Economics, believes that this is an important reason why McDonald's is not as good as KFC. "An important feature of fast food chains is that they must expand rapidly, and slow action will lag behind."

In fact, McDonald's "slowly beats" just transplanted the experiences encountered in the global market to the Chinese market.

In 2002, McDonald's made its first quarterly loss for 37 years. When McDonald's summed up the experience, it discovered that from 1987 to 1997, McDonald's stores increased by 50%, but the total sales dropped by 2%, and the profit of individual branches also dropped rapidly. When McDonald's newly built a branch, it opened once every 3 hours. The blind opening of McDonald's stores has caused dissatisfaction among many franchisees, and believes that McDonald's has opened a number of inappropriate stores in inappropriate places.

Subsequently, McDonald's decided to close 175 chain stores outside the United States, and laid off 600 people worldwide. At the same time, it withdrew its operations in three countries in the Middle East and Latin America, and stopped the “enclosure” projects in four countries. McDonald's faced the same suspension strategy in China.

KFC, who entered China in 1987, never reduced his interest in China.

As early as 1986, KFC had a keen interest in the Chinese market, which has the largest population in the world and contains unlimited potential. Wang Dadong, who was born in China and studied in the United States, chose KFC as the deputy general manager of Southeast Asia to undertake the expansion of the Chinese market. The heavy responsibility.

After more than a year of investigation and verification, Wang Dadong expressed his understanding of the Chinese market in a letter to the headquarters: "I am totally convinced that KFC has an absolute competitive advantage over any other US fast food chain."

The same is true. In the entire process of entering and expanding the Chinese market, KFC insisted that "Chinese consumers really feel that, perhaps McDonald's is the first in other countries, but the first in China is KFC that everyone likes." Yu Jing, president of Yum! China, said at the opening ceremony of KFC's 400th restaurant in China.

In order to accelerate in China, KFC implemented the strategy of “direct chain” and “franchise chain”.

Zhu Mingxia believes that the franchise first eased the financial pressure. In 1999, KFC began the franchise operation of “joining zero”. By the end of 2004, it had developed more than 60 franchise stores. According to the joining fee of RMB 8 million per franchise store, KFC obtained at least in the Chinese market. Up to 480 million yuan (renminbi) or more rolling development funds.

The single direct chain model of McDonald's has further aggravated McDonald's dependence on its own funds. In addition, “direct operation in the site selection will be subject to multiple approval assessment, which greatly increases the operating time and the time required for the site selection of the operating costs, limiting the speed of expansion.” Zhu Mingxia said.

McDonald's prudence in franchising has greatly limited the enthusiasm of franchisees.

"For McDonald's, global standardization and localization are obviously problems that have not been completely solved so far." Niu Haipeng pointed out. In the prime time of the rapid economic development of China and the rapid development of multinational corporations, McDonald’s did not give China sufficient attention, or gave a strategy of discrepancy between China and the global market.

Can it change for China?

When KFC “changes for China” and launched the latest Chinese recipes for the new quadruple mushroom soup, McDonald's advertising and McDonald's website, in-store, highly recommended is a special plate roast chicken dumplings.

In addition to the global synchronization of the flagship product, there is a global brand new synchronization activities. On September 25, 2003, McDonald's promoted the “imlovinit” brand campaign in more than 120 countries around the world. McDonald's, which closely surrounds the family as the target customer group, set aside family culture and turned to young people aged 25-35.

Under this strategy, McDonald's quickly emerged from the global financial crisis. According to the US food industry research organization Technomic's survey of the nationwide fast food industry in 2003, McDonald's ranked 13609 restaurants with sales of over 22.1 billion U.S. dollars; KFC ranked seventh with 5,524 restaurants and sales of 4.936 billion U.S. dollars. .

But in China, the effectiveness of the new brand campaign does not appear to be so obvious. Although McDonald's advertises its position as a 25-35 year old, 27-year-old Mr. Yang tends to go to KFC. "This kind of so-called cool culture may be more suitable for children of 10 years old."

Marketing planner Hu Gang pointed out that in countries with a relatively conservative concept in China, most people accept the so-called “young people” fashion culture as “not as profound” as in Europe and the United States; in addition, 25-35-year-old “youth” consumer groups are more It tends to choose some bars, cafes and other places.

Although McDonald's fashion advertisements can attract children, the actual purchase of this market is carried out by parents. With the accusation of obesity caused by McDonald's, most parents have begun to examine the children's health problems. McDonald's does not choose to face this conflict. Only the updating of product positioning has pushed the original household consumers to KFC, which is firmly implementing the "good taste of life."

KFC earlier realized the crisis of foreign fast food.

As early as 2000, KFC invited over 40 national food nutrition experts to form the "China KFC Food Health Advisory Committee."

Since then, a series of products developed to meet the tastes of Chinese consumers have come one after another: Old Beijing chicken rolls, corn salad, tender spring salad, and wind-spindle bean salad.

These products, supplemented with traditional Chinese recipes, not only increase consumers' confidence in terms of taste but also healthy nutrition.

On January 16, 2004, KFC announced its "White Paper on China's Kentucky Fried Chicken Health Food Policy" that it took over three years to open its doors in order to gradually eliminate the bad impressions of foreigners on foreign fast food.

In addition to avoiding a single hamburger product in recipes, KFC started sports marketing. In 2004, gymnastics star Li Xiaopeng, Athens Olympic tennis champion Li Ting and Sun Tiantian became leaders of KFC’s “Sports and Sports” program, while KFC launched a nationwide 3-man basketball game, calling for KFC while participating in sports. health.

In March 2005, McDonald's also launched a series of “balanced lifestyles” activities across the country, pulling people from today’s sports world such as Guo Jingjing, Shen Xue, Zhao Hongbo, Zhang Lin, and Others to “get well and move well”. I like the healthy and balanced lifestyle.

However, the activity of a balanced lifestyle is not new compared with KFC. The most important thing is that McDonald's New products have always made a fuss about Hamburg. Although at the end of November 2004, McDonald's launched a “treasure triangle” for the Chinese home market, but more of the main product is still the hamburger – and Hamburg is precisely The so-called junk food that is most vulnerable to attack.

Awakening

McDonald's China is making new changes. The former regional markets in the north and south are being replaced by four operation centers in the southeast and northwest with Shanghai as the center.

Since the McDonald's China headquarters moved from Hong Kong to Shanghai earlier this year, McDonald's has begun to expand its management team and establish a new organizational structure.

In the same year, McDonald's had two major personnel changes. In June, Chen Bide, President of McDonald's Greater China Region and President of China Development Corporation, resigned. His position was taken over by former Chairman of the Australian McDonald's Australia, Guy Russo; in October, McDonald's (China) Food Co., Ltd. had been working for more than ten years at McDonald's. Lai Linsheng, the company’s senior vice president and managing director of North China, “took classes”; at the same time, Shi Wenzhe, who had just been appointed general manager of McDonald’s Beijing a year ago, officially left the company.

Substitution, just to explain the beginning of McDonald's new organizational structure. McDonald's also claimed that "the new organizational structure is part of McDonald's efforts to continuously capture the Chinese market."

McDonald's recognized that compared to its rival KFC, McDonald's slumbered in China for too long.

McDonald's financial report in the third quarter showed that McDonald's global operating income increased by 6%, and its performance in the Asia-Pacific, Middle East and Africa regions was mainly driven by the Australian market.

As the old rival of KFC’s old rival KFC’s third-quarter earnings report, Yum!’s earnings report showed that its revenue increased by 16%, of which the Chinese market contributed more than 1/4 of its profits.

In China, KFC is not always going smoothly. The Sudanese incident and bird flu all hit KFC's growth in China. However, KFC’s threats are more from external accidents. “External threats are often easier to solve,” said Hu Shuguang, a professor at the School of Economics at Renmin University of China.

Hu Shuguang agrees that KFC's success should first be attributed to the decision-makers' understanding and emphasis on the particularity of the Chinese market. The Chinese market has also not lived up to KFC's expectations. A US fast food industry briefing revealed that by 2004, KFC’s operating profits in China had exceeded US$200 million, which was higher than the total profit of KFC’s US restaurant chains.

Analyze McDonald's, from the big reduction that began in 2002 to the global new brand movement that began in 2003, McDonald's did not give McDonald's China more attention to localization. Even on the purchase and supply of products, McDonald's prefers domestic companies in the United States to supply goods to China regardless of higher costs.

In his recent appearance, Shi Lesheng had to explain that because “the financial situation of the Asia Pacific market has not been analyzed, there is no way to use data to illustrate the importance of the Chinese market to the global market.”

However, McDonald's has already realized the potential of China. Xerox said that McDonald's China will continue to increase investment, not only in the number of new stores, but also to cultivate local management team and use more local suppliers. Moreover, the company has launched the "McDonald's China Victory Plan," which will focus on multiple core strategies such as new products, product pricing, and brand promotion. By 2008, McDonald's will have 1,000 chain stores in China.

Of course, KFC did not stop the pace. Yum! Group has already announced that it will continue to complete its plans to open 375 new stores in China in 2005, and it will open 400 new stores in 2006, achieving a sales growth of 22%. McDonald's not only has to overcome itself in China, but also to overcome its opponents.