Chinese Fast Food Companies.

3. Comparative Analysis between Chinese and Western Fast Food Companies

(i). Chinese fast food dominates main market

The survey indicates that western fast food is gradually becoming welcomed, but Chinese food has advantages in price and main consumers’ tastes and holds most market shares. (See chart1)

Chart 1

(ii) Management scale of fast food companies

The survey presents that in Chinese fast food companies, main competitors are small and medium-sized and there are no large ones that can compete with famous international fast food companies such as KFC and McDonald’s.

On average amount of investment in a single chain, the minimum amount is RMB 100,000 and the maximum of RMB 10 million. The former are mainly Chinese fast food companies, and the latter are most famous western ones.

Most companies with daily sales amounting to over RMB 10,000 are western fast food ones. The companies with daily sales amount of RMB 3,000-4,000 are Chinese fast food chains. (See chart 2)

Chart2

(iii) Market target of fast food companies

Western fast food companies focus on youngsters and families, in which the ages below 16-year-old young people usually accompanied by parents or elder relatives.

The target of Chinese fast food is the consumer aged from 25 to 44. (See chart 3)

Chart 3

1. General Discrepancies between Chinese and Western Fast Food Companies

In 1999, there were more than 800 thousand fast food companies and restaurants with a revenue of RMB75 billion, accounting for one third of the revenue in the entire catering industry, which has increased by more than 20% compared with the amount last year, about 7% higher than the increasing portion of the catering industry.

But there are also discrepancies between the development of the Chinese fast food industry with social demands, mainly lie on the slow development of types of Chinese fast food, laggard production technology, low degree of industrialization and organization, etc. Since fast food is closely related with the rapid economic growth, Chinese fast food industry will be bound to have a broad market prospect and great market potential with the rapid development of the Chinese Economy.

2. Core Competitiveness of Western Fast Food Companies

Most Chinese are attracted to foreign fast food restaurants because of:

• Good service (compared to most Chinese restaurants)
• Consistent food quality
• Heavy advertising
• Pleasant surroundings
• High-quality food
• Fast

These factors, along with advanced operational systems, strategic locations, assembly line methods, and effective management policies, mean that foreign fast food chains are poised for rapid, large-scale expansion.

Compare to the successful foreign fast food companies, Chinese local fast food restaurants stress excellence in food quality and taste and have been aggressively improving their service and atmosphere. However, they are financially strapped and have problems in food consistency.

Most Chinese fast food restaurants use cheap labor instead of more expensive machines for food preparation. As a result, recipes, ingredients, cooking methods and waiting time vary from restaurant to restaurant.

Until the Chinese catch up in consistency, hygiene, finance and management, the major foreign fast food chains will probably be setting the pace in this rapidly growing industry.

3. Case Analysis of Successful Chinese and Western Fast Food

(i) Malan Noodle serves as the backbone of Chinese fast food Noticing the ever-crowded foreign fast food restaurants; many aspiring Chinese companies are also entering the fast-food industry. The Ministry of Internal Trade has taken various special measures to support the domestic fast food industry. The result has been an enormous growth in the number of fast food restaurants. The biggest, Malan Noodle Fast Food Chain Store Co Ltd, had more than $40 million in revenue last year. In terms of Chinese food, the Malan Noodle Corporation ranked first with 361 outlets. 

The traditional Lanzhou's beef hand-pulled noodle was a kind of fast food to be recognized in the past. In order to meet the needs of modern society for fast food, Malan Noodles Fast Food Company has begun developing Malan hand-pulled noodle fast food system with a certain degree of industrialization, in accordance with a modernized fast food concept.

MaLan noodle comes from the traditional wheaten hand-pulled noodles in the north of China. Because of its rich nutrition and unique taste, it is deeply loved by Chinese.

(ii) McDonald’s in China----Case from the world famous Specialist

Macdonald’s is the largest and best-known global foodservice retailer with more than30, 000 restaurants in 121 countries. As the market leader, McDonald’s serves less than one percent of the world’s population. In 1990 McDonald’s opened its first restaurant in Shenzhen, one of the biggest cities in China, to date, 475 outlets have been set up in 74 Chinese cities. McDonald’s has 38,000 employees in China, and provides about 10,000 job opportunities around the country each year. Recently, McDonald’s declared that it plans to open 100 outlets in China per year. Although McDonald’s headquarter decided to close nearly 250 outlets in the world due to the global economic crisis, the general manager in China also has confidence about the Chinese market.

McDonald’s has already been established in the world for more than 40 years, continues to expand its market to the outside of the Unite States. The reasons why McDonald’s is so successful are:

1. Before it enters a foreign country, it will carefully prepare and make detailed plans. Usually the company will spend a long time finding out the local culture, open locations, legal, suppliers, construction, personnel and government relations.
2. Cooperates with foreign companies. Foreign partners help McDonald’s to shape outstanding marketing methods and menu to local conditions. Local products have been added although US-style food still plays a leading role on the menu. For example, the adaptation of Chinese taste also contributed to the expansion of western fast food in China, such as the red bean pie and Chinese vegetable soup at McDonald's.        
3. McDonald’s success is based on the good relationship with suppliers, tight control over store-level operating procedures, nationwide marketing might, and a franchising system that encourages entrepreneurial franchisees. 

4.Conclusion

Western style fast food has been very successful in the China markets in terms of its high speed of development and its warm acceptance by the Chinese consumers. The success of Western-style fast food restaurants will continue to serve as a catalyst for the future development and improvement of the Chinese fast food sector. What's more, the appearance of western style fast food stores has definitely changed the eating habits of Chinese people, especially in the younger generation. China’s Ministry of Internal Trade has allocated $1.2 million for a campaign to help China improve its domestic chain-store management and fast food production.

Currently China’s fast food industry is in its infancy, however, its consumption and supply market have already formed. It is estimated that by 2010 the increment of its turnover will be RMB 250 billion.

5. Bibliography

• International Business----competing in the Global Marketplace, Charles W.L.Hill; Third Edition.

• Marketing research----Measurement, Method and Application.
• Marketing Casebook----Case and concepts; Sally Dibb & Lyndon Simkin.
• Internet:      

     

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