A cut-throat battle for business in China's rapidly expanding fast food trade has left domestic producers vulnerable to fierce international competition.
China's fast food market has been expanding at a yearly rate of more than 20 per cent over the last decade, attracting aggressive competition from some of the biggest global players, according to an investigation by the State Administration for Industry and Commerce.
The probe predicts more foreign fast food companies will enter the Chinese market in the next few years in the wake of the nation's entry into the World Trade Organization (WTO).
The total volume of fast food business in China last year was worth over 200 billion yuan (US$24.39 billion). KFC (Kentucky Fried Chicken) Corp alone enjoys a massive 2 billion yuan (US$240 million) share of the market, according to the investigation.
McDonald's Corp, the world's largest fast food chain, plans to dramatically increase its presence in China by adding at least 100 outlets across the country each year, according to Peter Tan, president of the McDonald's China Development Corp.
Peter Tan told Beijing Youth Daily that such a decision was aimed at meeting the ever-increasing demand in China, a huge market with a population of 1.3 billion, more than four times that of the United States.
In the United States, McDonald's has more than 13,000 outlets. There are only about 300 in China at present, Tan added.
McDonald's also showed its interest in China's western region by opening its first outlet in Xi'an, capital of West China's Shaanxi Province, this year.
McDonald's expects to achieve such a growth rate by introducing its franchising model in China, according to Tan.
While foreign fast food giants are accelerating their expansion in China, some Chinese fast food companies are also stepping up their development plans. Many others, however, are still hesitating to draw up well-defined strategies to cope with the challenges ahead.
"We are also trying our best to expand our business across the country," said Zhuang Zewei, vice-director of Grand Mother Dumpling Restaurant Co Ltd, when asked to comment on McDonald's expansion plans. He added: "We do not have an exact goal of setting up a certain number of outlets per year."
The chain expects to add two or more stores in Beijing this year, according to Zhuang.
Zhuang explained: "We still have the advantage of meeting the taste of Chinese, since we are offering the traditional Chinese dumpling."
As one of the largest domestic fast food companies, Grand Mother Dumpling Restaurant Co Ltd now owns more than 40 stores across the country, mainly in East China's Jiangsu Province and Anhui Province, as well as Shanghai and Beijing.
Experts of the State Administration for Industry and Commerce pointed out most Chinese fast food companies lacked management experience, financial resources and capable personnel, compared with those transnational giants like McDonald's and KFC.
(China Daily 08/31/2001)