Topic 4: McDonald’s and Adapting in China
McDonald’s has been successful in the Mainland China market, due in no small part to its understanding that a restaurant meal for most people in China is a big treat, particularly for children. McDonald’s came to China with the expectation of opening opening a fast food hamburger restaurant positioned similar to those in the U.S. and their successful franchises in Hong Kong. McDonald’s learned early in the strategic planning process, and from its experience with its first few restaurants, that it faced a very different environment in China. McDonal’s cannot ever be as cheap as the food stalls and other low-cost venues in China. Realizing this, McDonald’s moved aggressively to position the restaurant as a fun, mid-range priced restaurant, with high quality. To provide that quality the firm actually has limited wait staff service in some locations.
McDanald’s also decided to focus on a particular niche in the market: children. China has a one-child policy that limits an urban famlity that is not an ethnic minority to a single child. This child is typically given a great deal of attention by the parents and grandparents. As a result, in spite of China’s modest per capita income, the combination of two parents and four grandparents can produce a reasonable level of purchasing power for each child. So McDonald’s determined to focus on children by doing things like running special parties for children, and having the latest toys for children (McDonald’s is one of the major toy retailers in China).
The firm convinced Chinese consumers that a trip to MaDonald’s is a special occasion, and McDonalds has created a more upscale environment in many of its Chinese restaurants than anywhere else in the world. They have also effectively reinforced this position, keeping it different from its low-priced image in the United States and in China’s special administrative region of Hong Kong.