McDonald's plans to open 100 new outlets in China

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Last updated at: (Beijing Time) Thursday, January 15, 2004

McDonald's plans to open 100 new outlets in China

McDonald's, the world's top fast food operator, is to open nearly 100 new outlets around China this year and promote McKIDS, a series of children-related products, to the Chinese market from April.

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McDonald's, the world's top fast food operator, is to open nearly 100 new outlets around China this year and promote McKIDS, a series of children-related products, to the Chinese market from April.

In addition, Tim Lai, North China Managing Director of McDonald's China Development Company, said that, due to the success of the first McDonald's franchise restaurant in China, launched last August in Tianjin, the franchise operation model will be expanded around the nation this year.

So far, the fast food giant have over 560 outlets in China's four municipalities of Beijing, Shanghai, Tianjin and Chongqing, and more than 70 provincial cities.

"Though, our business during the first half of last year was influenced by SARS, it has recovered in the latest two quarters, hence we have achieved our 2003 target," said Lai.

Lai denies disclosing the exact figures, he just says he is satisfied with the situation last year and feels optimistic about this year.

In 2002, McDonald's Corp closed 175 outlets in 10 nations and regions outside China.

During the third and fourth quarters of last year, the global sales volume of McDonald's got rebound from the slowdown in the first half of last year.

According to local report, a McDonald's restaurant in Shanghai's Huaihai Zhonglu will be closed this month, Lai did not confirm the news and just emphasized that management changes are normal for any company and decisions on one outlet may have no direct connections with McDonald's overall performance in China.

"Number of the new outlets is not the most important issue, the key principle for McDonald's is ensuring top-quality food and services in each restaurant," says Lai.

"From April, McDonald's will launch McKIDS products, including children-related garments, toys, game DVD (digital video disk) and books, in its outlets in China," says Lai.

The market promotion is to be carried out also in the United States, Canada, Japan and South Korea simultaneously.

Insiders say the move reflects McDonald's decision to diversify its businesses and make full play of its advantages in the children market.

McDonald's launched its franchise operation strategy in China last year. Individuals who have US$300,000 to invest and over three years's operation experience in the catering sector, may apply for open a franchise restaurant after specific training.

"The business operation of McDonald's first franchise restaurant in China, which is in Tianjin, is excellent, which encourages us to further spread the franchise model in China," says Lai.

Such a model will not only reduce the business expansion costs of McDonald's but also create more jobs for local people, experts pointed out.

McDonald's is going head-to-head with KFC, who has 1,000 outlets in China to-date, in the fast-food industry for customers.

KFC has put forward a range of new Chinese-style fast food, involving chicken rolls and soup, in the recent years to adapt to the tastes of local consumers.

Lai does not comment on the issue and just tells pointed out that the image of McDonald's in Chinese consumers' eyes is a globally well-know brand engaged in western fast food.

"Consumers do not go to McDonald's for Chinese-style food. Our task is how to guarantee the quality and safety of food and develop new products to meet their consumer demand," Lai says.

Last year, McDonald's purchased 6 billion yuan (US$722 million) of raw materials, including beef, potatoes, milk and vegetables, from China, which were provided for local outlets as well as exported globally.

After entering China in 1990, McDonald's has invested over US$200 million to set up 52 farms and plants nationwide.

"Furthermore, McDonald's pays great efforts to conduct public welfare activities," says Lai.

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