KFC in China Yum! Brands,

KFC in China

Yum! Brands, the operating holding company for KFC, Pizza Hut, and Taco Bell continued its success in the China market with another strong showing in Quarter One of 2012. "Yum Brands is seen by investors as a bet on Chinese domestic demand. The company opened 168 new restaurants in China (out of a total 297 around the world) and now counts with 4,649 stores there, including franchises" (Fontevecchia, a. April 18, 2012. PP. 1). The company's sterling record in China, particularly KFC demonstrates the company's strong commitment to localization and targeting to the Chinese consumer; a strategy which has left the organization in a competitive position to outpace its fast food rivals.

How has KFC China positioned itself Differently from McDonald's China?

Yum! Brand's KFC has performed spectacularly in China because of their commitment to the Chinese culture and consumer tastes. While McDonald's has lagged KFC because of a reliance on beef offerings, KFC has worked to provide their "core product chicken, second only in popularity in China to Pork" (Case 7-2) to their customers. Additionally, KFC "works tirelessly to ensure that it continues to come up with and launch new products that are a better fit for the Chinese consumer" (Case 7-2). These offerings include a "highly localized menu: Chinese-style porridge, Beijing Chicken Roll, Spicy Diced Chicken, and Chinese Dough Fritters" (Case 7-2). This menu is in sharp contrast to McDonald's which "in China mostly sell the same U.S.-style burgers" (Mellor, W. January 26, 2011. PP. 1).

In addition to product choices offering local flavors, Yum! Brands also utilized a China-centric strategy of "carefully selecting local partners with strong government connections" (Case 7-2), a necessity in navigating the bureaucracy of commerce which works to block foreign entities seeking operating license in China. Further, "in the 24 years it has been operating in China, Yum has hired Chinese managers to build partnerships with local companies…and even more important to entrust management of the China business to ethnic Chinese from Taiwan" (Mellor, W. January 26, 2011. PP. 1). Together these operational moves: management and menu provide the local touch requisite for KFC to excel.

KFC Local but High End?

The answer begins and ends with the acceptance of Chinese culture as priority one for KFC. While other fast food chains such as McDonald's "remain a recognizable American brand" (Case 7-2), KFC is seen as an "American brand with Chinese characteristics" (Case 7-2). From menu options catering to the Chinese consumer, to a "new brand called East Dawnings, "a fusion of the KFC business model with Chinese Food" (Case 7-2); KFC seeks to innovate but with an eye toward "its target markets to include all ages, family, and friends" (Case 7-2). The local flavor of management also provides continuity to the KFC- China linkage. Even the decor and layout of KFC and East Dawnings provide a connection to the typical Chinese life; "layouts are designed to resemble Chinese homes" (Case 7-2). Yum! provides visitors with a unique experience which is not dominated by American "young and hip" (Case 7-2), but pays respect to the home country. "A plaque at the entrance of one KFC describes it as "an exchange channel between KFC fast-food culture and Chinese folk culture" (Mellor, W. January 26, 2011. PP. 1). These operational strategies place KFC as the superior brand for fast food dining; "KFC is certainly doing better than McDonald's at becoming more Chinese" (Mellor, W. January 26, 2011. PP. 1).

What Successful Companies have in Common

Without question the success of companies in China depends on adaptation to local Chinese ways of doing business and the intricacies of culture. While not to indicate that Chinese consumers do not want the West, rather they embrace the chance to experience Western culture; Chinese consumers do appreciate and respect those companies which seek to provide connectivity to the Chinese culture and the local flavor to which they are accustomed. Adaptation is the key strategy, how best to continue offering products or services which provide a fusion between Western brands and Chinese culture. A story from KFC illustrates this concept:

Yum's cultural flexibility doesn't end with the localized menu. While fast-food restaurants in the West often host kids' birthday parties, KFCs in Urumqi, capital of the Xinjiang autonomous region that's home to the Muslim Uyghur people, advertise parties for the families of boys who have just undergone the religious ritual of circumcision. (Mellor, W. January 26, 2011. PP. 1).