Success in China: KFC

5 Apr

Tuesday, April 5, 2011

Today is the first installment in a series of marketing successes and failures. It’s about KFC’s success in China.

This logo is widely recognized around the world. However, it’s garnered its most notoriety in China. In fact, KFC’s profits in China have now surpassed sales in the United States, where it all began.

In the 1980s, most restaurants in China were operated by the government. Enter Kentucky Fried Chicken in 1987. “I remember going to duck restaurants here in the early ’90s when you’d walk on the floor and the bones crackled under your feet,” says James MacGregor, author of One Billion Customers: Lessons From the Front Lines of Doing Business in China. “So they came in, they had a clean restaurant, they had fast service, they adapted their menu, and they invested in the country, and they just spread across the country very fast, so they’re everywhere.”1 Amazingly, Yum! Brands – KFC’s parent company – opens a new restaurant every day in the Middle Kingdom. According to Yum! Brands’ website, “[m]ainland China is [the] number one market for new company restaurant development worldwide” with 3,400 restaurants in more than 700 cities. Today, approximately 65% of Yum! Brands profits come from their Chinese locations with expectations of that growing to 75% by 2015 2.

How and why does it continue to work? Because before entering a new market, they conducted extensive research into their new customers. They surged into a new country with a plan to reinvent the restaurant experience by offering assorted food options – including both American and Chinese recipes – fast service and a clean atmosphere that the Chinese people value and appreciate. Chairman and CEO David C. Novak says, “[W]e are absolutely determined to get this done by building a famous recognition culture where everyone counts, making our brands dynamic and vibrant everywhere, demonstrating we are truly a company with a huge heart and delivering results again and again.”3 Novak continues, “Our strategy is to leverage our undeniable strength and compete and lead in every significant category that emerges in China.” Now that sounds like a plan!

1 Marketplace report February 21, 2011
2 Yum! Brands website

More posts from this series:
Winter Classic: Save!
GAP’s Branding Blunder
Coffee, Wii Bowling, Yoga and…Banking?
Bird-Watching: It’s Not Your Grandmother’s Hobby Anymore

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One Response to “Success in China: KFC”

  1. Shannon Bretz April 5, 2011 at 9:11 pm #

    Laura, this article was very interesting. After just completeing one of my capstone courses, Corporate Strategy, we touched a little bit on International Business. This article reinforced my learnings on strategies corporations use when entering unknown markets. Thank you for sharing!

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