China May No Longer be BFF with McDonald’s “Hungry for Something New?”

August 4, 2016

McDonald's share of the market fell from 16.5% in 2013 to about 13.8% last year.

China May No Longer be BFF with McDonald’s “Hungry for Something New?”

This article is originally referred from iForex Blog

For many leading brands, China means growth potential. Apple knows it and McDonald’s certainly knows it. For several years, China’s gigantic fast-food industry has been kind to McDonald’s, which alongside with ‘Yum!’ (which you probably know as KFC or Pizza Hut) enjoyed whopping 38% share of the multi-billion dollar market in 2015.

Now though, there are signs that these companies’ complete control over the market is coming to an end as competition intensifies and Chinese consumers begin to turn to more local-style food chains as well as healthier choices.

Euromonitor International offered data suggesting investor interest in McDonald’s China operations has decreased. The more recognize Chinese restaurants don’t show particular interest in franchising. McDonald’s still has around 2,200 outlets in China, but its share of the market fell from 16.5% in 2013 to about 13.8% last year.

Local players might also not have enough experience to take on such a huge company’s franchise rights, or might want to wait until the price isn’t quite as stiff.

McDonald’s is far from breaking up with China though. In an official statement the company refused to speculate on its attempts to sell off its franchise rights and vowed to add customized, healthier choices to its China menus.

The popularity of both McDonald’s and KFC in China is quite easy to explain. In both cases, the chains brought a new American taste to local diners. As the novelty wears off though (as it tends to do), people might turn again to local restaurants that have a better understanding of their preferences. Another factor is a shift in China to a new-age Western-style dining experience, what is called “affordable premium”. If you need proof of that, just look at Starbucks, which is now opening around 500 stores in China each year.

How will a shift in people’s preferences affect McDonald’s growth potential in China and will the company overcome the new challenges and adapt successfully? China being the size that it is makes it highly influential on many leading brands.

At iFOREX you can invest in McDonald’s share price, as well as in the share price of other leading brands, some of which are also highly depended on China for their growth. Stay informed regarding the latest market developments and take advantage of opportunities as they appear.

Original Source: iForex Blog

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