Industry sources say, KFC entered China 17 years ago, to "sit at the top of the fast food industry in China", to a large extent due to its localization strategy. As the global catering industry leader of McDonald's, naturally can not stand KFC in China a mountain to do big, in 2004, McDonald's also began to vigorously promote their own localization process.
Who is more Chinese may be an important reflection of the core competitiveness of the two in the Chinese market in the future.
In 2004, KFC's comprehensive product innovation and localization strategy broke the boundaries between foreign fast food and Chinese fast food, thus prying a new consumer market. For McDonald's, it was a global perspective to carry out marketing activities in the Chinese market, and KFC's excellent performance in China has forced it to follow up the localization strategy.
Who is more Chinese will probably be an important reflection of the core competitiveness of both in the Chinese market in the future.
Menu Chineseization
Hibiscus fresh vegetable soup, cold rice mushroom rice, Beijing-style chicken rolls, Sichuan spicy chicken, Western-style cumin steak wings, and goji berry pumpkin breakfast porridge, since 2000, KFC has begun the continuous speculation on the taste of the Chinese people. 2004 summer, in the scope of Guangdong Province, the old Guangzhou herbal tea Wanglaoji formally boarded the counter of KFC, which is the first time that KFC from the modified products directly transition to the Chinese market. It was the first time that KFC made a direct transition from improving a product to introducing a fully localized product.
Compared with KFC, McDonald's has had a lackluster history of product innovation, and for a long time McDonald's claimed that "McDonald's won't be changing our menu in China, and we'll always be selling burgers with our own specialties, just like our commercials say -- I like it. -I just love it". That's considered strong style for Uncle McDonald's.
And two years ago, Yum Group, which owns KFC, set up a health advisory board. Breakfast porridge and products favored by local consumers, such as the Old Beijing Chicken Wrap, which was launched with lessons from Quanjude, are said to be among the think tank's ideas. Currently, at least half of the more than 30 new products launched by KFC in China have Chinese characteristics, and it even made a big splash by borrowing China's "eight major cuisines". In addition to the deepening of its localization strategy in China, KFC's pace of localization is also very tight, and almost every month, KFC will launch either long-term or short-term localized products.
Beginning October 20, 2004, McDonald's officially launched a new breakfast line of products in Beijing, Shanghai and Guangzhou. Chinese elements like scrambled eggs and pancake breakfast appeared on McDonald's new breakfast ordering board. A month later, McDonald's "Jumbo Triangle" pancakes with Chinese flavors went on sale across the country, the first time McDonald's has launched a localized product that is only sold in the Chinese region.
Allegedly, McDonald's changed its stubbornness from its menu changes in the U.S. In May 2004, as U.S. consumers increasingly resisted obesity, McDonald's launched a new "Happy Meal" in the U.S. market, which was based on greens, and restored the loss of many customers. The change gave McDonald's a taste of its own medicine, and made it determined to spread the innovative experience of the U.S. market to the world, which naturally includes the huge market of China.
And just as McDonald's began to study the tastes of the Chinese mass consumer in an effort to localize its menus, KFC took another half-step faster and began to study the preferences of consumers in the Chinese region and continued to introduce innovative products.
Operating in China
KFC not only localized its product content, but also localized its raw material purchases. According to KFC's public information: KFC's local raw material procurement ratio in China has reached 95%, of which bread, chicken and vegetables are all from China. In McDonald's, KFC menu Chinese competition behind, is the management of the Chinese competition.
KFC's market share in China has greatly surpassed that of McDonald's. In addition to the "first-mover advantage" of entering China five years earlier than McDonald's, but also with KFC's China market strategy.
KFC will be headquartered in Shanghai, Asia, as opposed to McDonald's will be headquartered in Hong Kong, because of its geographic location and proximity to consumer research, the speed of response to be a little more responsive.
Today, the geographic advantage of KFC's headquarters is being overtaken by McDonald's. At the end of 2004, McDonald's Corp. announced that its regional headquarters in China would officially move from Hong Kong to Shanghai in early 2005. Foo Kwok Shing, Managing Director of McDonald's China Regional Headquarters, said, "The relocation of the China regional headquarters is of strategic significance to McDonald's rapidly growing China market." He said, "Moving from Hong Kong to Shanghai will enable us to be closer to the mainland Chinese market."
Franchising is a winning weapon for McDonald's and KFC's rapid growth and expansion. 1993, KFC first introduced the business model into China and improved it by starting a franchise chain in Xi'an, where KFC's expansion began to pick up speed, with the total number of stores reaching 1,200 in October 2004, almost double that of McDonald's, which was only 1,000 at the beginning of 2004, but was still only 1,000 at the beginning of the year. At the beginning of 2004, the number was only 1,000, while McDonald's had only 620 stores.
It's been 50 years since McDonald's godfather Ray Kroc began franchising McDonald's in 1955. However, it was not until October 19, 2004 at the 2004 China and Foreign Franchise Summit Forum held in Shanghai, McDonald's Vice President of Global Franchising James Kulmar said: McDonald's will be in 2005 to introduce the franchise model into the Chinese market. This will set off a new round of McDonald's and KFC store opening contest boom.