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International Fast Food Needs a Humble Approach to Grow in China

In comparison to the complexity of the wild growth of domestic brands, the shortcomings of the international Quick Service Restaurants (QSR) are more obvious and evidential. By far, Yum, McDonald and Starbucks are the outright winners in China, largely thanks to China’s government over-spending of near 10 trillion RMB to counter the global financial crisis in 2008.  Some of other well-known internationals also try to bandwagon with this hyper growth, but soon landed on the hard reality. Right now, the ambition of these three dominant brands is also curbed due to the staggering economy and the constant and long-overdue food scandals rocking China’s food supply chain.

In 2010, one of American top-five hamburg chains expanded into China and looked for people to run the operation, requiring an experience working at international chain and managing more than 50 stores. As a bureaucratic hiring procedure, it is a safe and uncomplicated bet. After three years and 7 stores opened, the brand seems not going to go anywhere. Its profitability and expansion rate lag far behind many domestic foreign fast food brands. 

MyCafe as sub-branch of McDonald is modeled a similar style as Starbucks in China, trying to take a piece of pie from burgeoning growth of Starbucks. In most of the cases, McDonald fast food and MyCafe share the same store with two separate counters. When the fast food counter sells coffee at 8RMB, MyCafe’s lowest price tag is at 12 RMB. MyCafe also sells cakes and other desserts, which doesn’t match with the overall atmosphere of a typical McDonald store. The plan is to open 1000 MyCafe in such a model of a store in a store. In addition, MyCafe also has a take-out water-bar model, which sells nearly completely different products than MyCafe's store in a store. Two concepts in the same names can simply be confusing.  Against all wisdoms for a brand positioning, its destiny is sealed from the very beginning.

Burger King has come to China for 9 years. Unlike the big three, its early strategy is to franchise, and its franchisees are no amateur in food business and have ample capitals. However, based on the current model (similar model as most of the international QSRs in China), it only opened 72 stores after 8 years, and its franchisees are losing money. Currently, BK’s joint venture tries to revamp BK’s business in China. However, it is likely to be another challenging endeavor in a very rudimentary and entrepreneurial China. Its timing cannot be worse when China’s fast food business is tumbling due to economy distress and supply chain woes, and there is no sign in the coming decade that the economy could back on its previous level.

There are many more similar stories to tell, and their shortcomings are all so similar and obvious. During the same time, China’s domestic brands mimicked after KFC and McDonald are flourishing and some brands open more than couple thousands of stores.

Despite of the success of Yum, McDonald and Starbucks so far, their models are more exceptional than exemplary. It is not about if chicken can sell better than beef or the positioning to appeal younger generation in image or not, it is about the following rudimentary elements: price to sub-conscious mind of the targeted clients, product assortment, geographic location, differentiation in a defined environment and expansion model. It has to be a package of substantial and visible values to a clientele who has evolved to be much more sophisticated than 10 years ago and to a market which is a lot of more complicated than America half century ago.

The American brands have already lost its exotic appeal and its first-mover advantage in China. The strength of the international company has always embedded in its depth of knowledge, resources and management. When a comparable value is evidential to its targeted client no matter what the product it is, the market is always there even in adverse condition. The simple duplication of a American model or a over-bureaucratic structure, which cannot translate the strength into the market identity, would alienate the market and seal the fate of a valid business from its start.

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    您认为星巴克在中国的marketing approach为何如此成功?这是和公司的glocalisation (not a typo here)相关?

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