Mr. chen

Fast Food in Chinese Market
----Story and analysis of the fast food industry
In the Chinese market--------

Taiyi Chen
April 3 2013
Student Nr.000389768
ICV1B

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Table of content
Content

Page number

Introduction

P3

Reports and findings

P4

-

P4

-

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The history and current situation of fast food industry in China

The competitions in the “Chinese fast food” industry
1.
The competition between Chinese and western fast food
2.
The competition between KFC and McDonald‟s
3.
The breakfast battle.

P5

P9

The social influence

Conclusion and Recommendation

P10

Reference and future readings

P11

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Introduction
For modern Chinese society, “Fast food” is not a fresh concept. In 1980s, however, when the western fast food merchants opened the door of the Chinese mainland market, fast food shops were the symbol of fashion and romance to the younger generations.
The purpose of this report is to elaborate the situation and stories of fast food industry in
China, which will be divided into 2 aspects. First of all, the history and status quo of fast food industry in China will be introduced. Next the competitions in the “Chinese fast food” industry will be exposed partly.
Finally, a conclusion and recommendations will be at the last part of this report.
As for the limited time and expertise, the mistakes will be hard to avoid in this report.

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Reports and findings
- The history and current situation of fast food industry in China
The concept of the “fast food” appeared 1,000 years ago in China (Hays, 2008). But if we talk about the flourish of the whole fast food industry in China, the story should come back to the
30 years ago.
In mainland China, the first fast food shop had appeared since the April of 1984 in Beijing, which named “Yi.li fast food Restaurant” (Keyton & Xu, 2009). At that time, customers were not only to enjoy coffee, sandwich and hamburgers, which they have never seen before, but also try to learn the spirit of the new age.
In 12th of November 1987, the first Kentucky Fried Chicken (KFC) has been opened in
Beijing (Keyton & Xu, 2009), which has been regarded as a milestone of the fast-food industry in
China. And 3 years later only, in 1990, the first McDonald‟s has been opened in Shenzhen (Liu,
2008). At the same year, a great number of fast food companies have came into the Chinese market. From then on, the competition of fast food industry in China has moved into a new level.

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- The competitions in the “Chinese fast food” industry
There are three aspects of the fast food competition in China will be revealed in this part of my report.

1. The competition between Chinese and western fast food
For most of customers in china, fast food means convenient and hygienic. And this idea has been already rooted in their mind for a long time. But to be more specific, the fast food should be divided into two major categories namely Chinese and western fast food.
The “Chinese fast food” has various forms, which evolves from the western-style fast food.
After the western fast food like KFC and McDonald‟s shocked the whole Chinese food market in the 1980s, the indigenous businessmen tried to learn and survive. Therefore, a brand new style of fast food had been generated, which is the Chinese fast food.
In fact, the Chinese fast food was born with the competition. As we all know, the traditional
Chinese food have to take long time to prepare, which means it cannot suit the needs of business people and offers of the modern society. However, the Chinese fast food solve this problem, it can better satisfied those business people who pursue their meals have both of the flavor and speedy.
Besides, the speedy can increase the number of customers per day which increases the profits as well. Furthermore, the western fast foods basically are full of the fat. However, the Chinese fast food much focuses on nutrition. Therefore, it is more close to the traditional Chinese food culture.
In 2011, the turnover of whole fast food market in china is 600 to 700 billion. And the
Chinese fast food got 80% market share of it, which much more than the western fast food part
(only 20%) (2012.). But, on the other hand, the market share of Chinese fast food is too low to against the west fast food brand in China. Even the cock of Chinese fast food brand---“ZhenGongfu” can have no more than 1% market share only (2012.).
An article select from the “Chinese consumers‟ newspaper” points out the standardization may be the main obstacle which stands in the way of Chinese fast food industry development
(Zhao, 2008). The standardization can bring three benefits: cost reduction, quality guarantees and services improvement (Zhao, 2008), which can absolutely increase the competition with the western fast food.

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2. The competition between KFC and McDonald‟s
Kentucky Fried Chicken
Kentucky colonel may be the most popular old man in China. His heritage, Kentucky Fried
Chicken is one of the earliest fast food bands in China which is still the most popular one. “As of
2010, there were 2.100 Kentucky Fried Chicken restaurants in 459 cities. This is up from 1,759 outlets in 2005. (Hays, 2008)”

McDonald‟s
McDonald‟s says that “China has been its fastest-growing market in terms of the number of new restaurant openings. (Hays, 2008)”
In the article written by Jeffrey,
About 200 to 300 McDonald‟s open up in China every year. As of 2012 McDonald's had more than 1,400 restaurants in China. As of early 2010 it had 1,100 restaurants in over 110 Chinese cities, and 60,000 employees.
Obviously, both of these two companies have strong brand influence in the fast food industry of China. It is very easy to connect them with the whole fast food industry in the opinion of most
Chinese customers.
In terms of these two fast food brand, KFC entered into the Chinese market much earlier than
McDonald‟s, which takes a big advantage. However, because the McDonald‟s has huge reputation in the whole world, therefore, it is not very hard for McDonald‟s to earn customer numbers.
Moreover, we can talk about the successful “location” strategy of the McDonald‟s at China in the past 30 years. But meanwhile, we cannot ignore the innovation of KFC which push out different products every month that definitely can attract more young customers.
Overall, their competition is fierce and all-around.

 Advertisement campaign
Like many international brands, the KFC and McDonald‟s are trying to advertise their products. During the Olympics 2008, McDonald‟s was running a “Cheer for China” television advertisement (Wang, 2008). And KFC was running a series creative advertising campaign in
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2011. “It markets Ireland and Bailey‟s fried chicken flavor to China-wide TV / social media audiences and customers in 3,800 outlets throughout China.” (2011.)

 Menu localization
Like what Eoin M commented: “KFC is the most popular fast food here by a country mile and one of the ways they achieved this is by localizing the menus not just for China but also regionally within China.” (2011)
More than 30 years, KFC have focused on the way of menu localization. For example,
“Earlier in 2001, KFC launched a fresh vegetable soup, which was followed by „fragrant beef‟ and
„Uygur roast pork‟, two Chinese-style dips for French fries. (Tony, 2009)”. Furthermore,
“Today, KFC customers can purchase a bowl of congee, a rice porridge that can feature pork, pickles, mushrooms and preserved egg, as well as buy a bucket of its famous fried chicken.
(Mellor, 2011).”
Zhang ye has came up with one hypothesis in her article “Chinese-style Western Fast Food”
(2011) that,
Nevertheless, it is a reverse situation in China: KFC is the king of western fast food instead of the McDonald's. If we ignore the fact that KFC was introduced earlier than McDonald's and the differences of operation between the two, the left important reason would be that compared with the beef hamburger of McDonald‟s the fried chicken made by KFC is more suitable to the Chinese stomach.
She points out that “The Chinese are more accustomed to chicken than to beef, because in history the ox has always been used as a draught animal but not for meat, while the chicken is not so lucky.” (Zhang, 2011)
Therefore, she concludes “It is interesting to note that McDonald‟s is also undergoing the same process of self-adjusting. It has stopped to highlight its specialty of beef hamburgers and you can observe a gradual increase of chicken burgers in its menu.” (Zhang, 2011)
Anyway, even the competition between two international brands in the world biggest marketing sounds terrible; it is really nice to customers. They can enjoy the high-quality services and products as the competition of the fast food business.
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Nowadays, even these two companies have competed for three decades; they find another area which has huge potential value recently.

3. The breakfast battle.
According to a research from the Paul French of Mintel firm, “Only 21% of Chinese eat fast food in the morning, compared to over 75% at lunch time (D.W, 2012).” In other words, breakfast is a really big “cake” for the fast food industry in China, both of the western and Chinese fast food.
Therefore, both of McDonald‟s and KFC start their move. They offer special menu in the breakfast time. Like there is a special menu in McDonald‟s note that only sells before 10 am for every working day.
In terms of breakfast services, the KFC looks more localization. They offer food like
Conjee and deep-fried dough sticks with coffee and hamburgers at the same time in the morning meal period.

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- The social influence
The development of fast food industry in China influences the whole Chinese food business and the society.
For business aspects, the process of fast food development is a process of cultural fusion.
Localization makes those western fast food brands to adapt better with the local food culture. KFC is the best example, which has better ranking of companies in China than its homeland market. On the other hand, the Chinese food industry leant a lot from those western fast food brands. The way to standardization is an example in this case, which offers a chance that the Chinese food industry enters into the world market.
At the society aspect, like what Patti Waldmeir said, “In urban China, high property prices, long commutes, grueling working hours, a later marriage age and smaller families all add up to more fast food. (Waldmeir, 2011)”, the Chinese society itself did a favor to develop the fast food.
On the contrary, the fast food development influences the Chinese society. Family dinner is no long means 10 or 12 people sit together in a big room and wait for long time to eat. Nowadays, during the development of fast food, most of family chooses to eat together in the fast food shops.
KFC, McDonald‟s, Pizza hut and many other western fast food shops have became the perfect place for family dinar.
Of course, there are many controversies for the fast food in China. The most common topic is obesity. Like what happened in other western countries, people eat too much fast food, which leads to several health consequences.

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Conclusion and Recommendation
The fast food industry is the whiteness of the China development in the last 30 years. In this process, our food distribution industry and cooking culture has been changed a lot, which is very hard to judge good or wrong. But as we all know, the stop means dead for a business and culture.
The suggestion of mine is to insist the way of fusion. Chinese cooking culture is more than
5000 years, which is meaningful in any aspects. Therefore, the fast food industry does not attempt to change but develop it.
Besides, it is worthy to wait the future of Chinese fast food. When face the pressure of competition of western fast food, innovation is the best and only choice.

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Reference and future readings
Keyton, D & Man, X. (2009). Citing computer references. Editor: Chen Minjie, Last updated Oct
19 2009 09:37:38 Beijing Time. Retrieved March 30, 2013, from http://www.lifeofguangzhou.com/node_10/node_228/node_232/2009/10/19/1255937858706 31.shtml
D.

W (2012). Citing computer references. Retrieved March 31, http://www.economist.com/blogs/schumpeter/2012/10/chinese-fast-food Tony,

2013,

from

G. (2009). Citing computer references. Retrieved March 30, 2013, from http://resources.alibaba.com/topic/531563/KFC_s_localization_strategy_in_China_.htm In 3,800 outlets throughout China & but also regionally within China. (2011.). Citing or referencing electronic sources of information. Retrieved March 30, 2013, from http://nialljoreilly.wordpress.com/2011/05/01/new-kfc-china-advertising-campaign-promote s-ireland-to-huge-domestic-audience/
Hays, J. (2008). Citing computer references. Last updated January 2013. Retrieved March 30,
2013, from http://factsanddetails.com/china.php?itemid=1032#
Liu, J. (2008, September 8).McDonald's growing in China. China, Retrieved March 30, 2013, from http://www.chinadaily.com.cn/business/2008-09/08/content_7007412.htm
Mellor, W. (2011). Citing computer references. Retrieved March 30, 2013, from http://www.bloomberg.com/news/2011-01-26/mcdonald-s-no-match-for-kfc-in-china-where -colonel-sanders-rules-fast-food.html
Only 20% & 1% market share only. Citing or referencing electronic sources of information. (Taiyi
Chen Tran) Retrieved March 30, 2013, from http://www.6eat.com/Info/201203/380514.htm
Waldmeir, P. (2011). Citing computer references. Retrieved March 31, 2013, from http://www.ft.com/intl/cms/s/0/7a28d7c0-2e28-11e0-8733-00144feabdc0.html#axzz2P3RJu 8PP
Wang, X. (2008). Citing computer references. Retrieved http://blog.sina.com.cn/s/blog_53a7ac5101009rys.html March

31,

2013,

from

Zhao, J. (2008, January 9). 市场份额越来越大 中式快餐离标准化有多远. China, Retrieved
March 30, 2013, from http://shipin.people.com.cn/GB/86125/6752744.html

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