McDonalds Expansion in China

McDonald's Expansion in China
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McDonald's Expansion in China
Partnerships
McDonald's partnership with the largest homebuilder in China, Evergrande Group, has accelerated its localization strategy. Besides, McDonald sold its controlling stake to Citic Group, a state-owned company. This strategic cooperation with Evergrande enabled the global fast-food dealer to expand in the whole country. As part of the expansion, McDonald's food brand set up a goal to add 2,000 more restaurants countrywide in five years. Most specifically, McDonald's concentrates in third and fourth-tier towns (Jeon et al. 2016). Adding more restaurants is a bid to compete effectively with Yum Brand's Kentucky Fried Chicken that holds the largest share in the mainland cities. Evergrande also vowed to give McDonald's top priority in their site selection in property developments countrywide.
Local Management Emphasis
To gain a marketing edge, McDonald's has undertaken to hire Chinese locals as their managers. This has enabled the company to gain acceptance among the citizens. Their global slogan of acting local in international markets places it as a native corporation in the Chinese markets. This strategy also enables the fast-food brand to evade the bureaucracy involved in setting up a foreign firm in China. Besides, the company embarked on employing the locals as cashiers, cooks, and other positions. Also, as a penetrative measure, McDonald's outsourced its agricultural products from within. This gave jobs to the local farmers and, in turn, generated trust and loyalty among the people. A positive reputation is also realized through customer and environmental friendliness.
Price Strategy
McDonald's changes its pricing strategy depending on the market it is operating due to the changes in currencies worldwide. For instance, depending on the target market, the Bic Mac value varies worldwide. In Switzerland, its base price is overvalued by $.60 in the United States. In China, the price is valued lower by $.60 compared to how it is sold in the United States. The company maintains a price range depending on the city it is operating (Zhuang, K., & Jiang 2016). Thus, it works in the Chinese capital, Beijing, and Shanghai, where the target market is middle and upper-class customers. Moreover, the corporate operates in other cities, but the prices are lowered to accommodate the lower class customers. Setting ranging prices has enabled McDonald's to attract a huge market in China and continues to grow and open new restaurants. However, their products are popular among the upper-middle, middle class, and lower class customers.
Factors Affecting McDonald's in Competition
Government policies
The Chinese government sets food safety as a top priority concern among its citizens. When McDonald was accused of using a supplier who relabelled meat that had expired, it became challenging to recover peoples' trust again. The incident destroyed its reputation in the Chinese market up to date. Stores that dealt with the same type of meat continued to suffer for years as a result. The customers are still leery about the corporation and are yet to be convinced it has controlled the sup...