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Food chains and business success in a Chinese market

On Behalf of | Mar 20, 2018 | Uncategorized

Without question, the food industry has taken great interest in opening up franchises in China. Many American-based restaurants are growing faster in China than in the United States.

Part of this comes down to rebranding. Fast-food restaurants such as Pizza Hut have expanded their menus. They also do not necessarily target to the same market when doing business in China as in the U.S. While struggling to attract customers in the U.S., the pizza chain has become a hot spot for couples meeting for a date.

Location, adaption and creation of trust for an expanding food market

Fast-food industry revenues in 2017 were at $150.9 billion. This was a 9.6 percent increase from the previous year. In fact, over the past five years revenue generated has been at an 11.2 percent increase annually. Companies such as McDonalds, Starbucks, Pizza Hut and Kentucky Fried Chicken continually open new restaurants in China.

Obviously, the huge market is an attraction to American companies. Such companies have also been able to secure needed real estate in major Chinese cities in efforts to expand business there. In fact, obtaining real estate at the right location has been at the center of many company’s plans.

Another key factor in success has been the ability to adapt to a Chinese market that may be very different from an American one. For example, KFC has had more success overall than McDonald’s because it sells chicken rather than hamburgers. McDonald’s is now attempting to adjust its menu to choices more popular with a Chinese population.

Importantly, it’s important for American companies to create trust with the local population. This means establishing quality. Also, American companies must market a product to local customers that would make them curious to try something new.

Putting together the right business plan

Adapting to doing business in another country can prove challenging. Yet a company can overcome obstacles they face in establishing a foothold in a new market such as China by extensive business planning. Attorneys with a broad understanding of Chinese laws and customs can be extremely beneficial.

Understanding the local rules is always necessary. Establishing a new network of contacts and having someone on your side to protect your interests is even more important.