When Yum choose to enter into Chinese market following immediate success of Mcdonald’s in China, they executed multi-domestic strategies to adapt themselves to local market in each section of China.
YUM’s intensive investment in expanding and marketing in China came from the following reasons. Firstly, China has a large population up to 1.3 billion with growing middle class and economic prosperity. Secondly, more people are appealed by the western idea and life style as the globalization trend. Thirdly, there are fewer competitions in Chinese market. Even though there are local restaurants and venders, they are targeting at totally different market segments and consumer groups. Also, the government is offering favorable policies for foreign investments in China which means cheaper investment within shorter time. In comparison with two years cyclical period in American, there are only six months to recover the investing. At last, Chinese government has less regulation on food related industry than U.S. All those factors provide opportunities for YUM to enter Chinese market.
However, YUM could never success in putting American business model into Chinese market. In the United States, they offer exactly the same menu and taste all over the country. The situation in China is totally different. The consumers even have various spicy preferences in each province. Thus YUM did more research on relative issues. The primary ones are listed as below:
Firstly, culture differences require the company to pay much more attention to the decoration and environment inside of the restaurants. Even KFCs should be authentic restaurants for families and friends to enjoy rather than fast food for Chinese. People spend more time in the stores, therefore, bigger size stores with more comfortable decorations are launched in China.
Secondly, taste differences are always taken into considerations. According to the preference, YUM offer products with minus modification in different regions to meet or even surpass the consumers’ expectations.
To better market YUM itself, the company offers menu with various choices to the Chinese customers. The reason is that Chinese people prefer more choices on the menu. Food is part of their culture which means they spend more time on cooking, eating and tasting. It is like an art for them.
YUM also build long-term and trustful relationship with their employees to decrease employee turnovers in China even though labors are way much cheaper in China. They are implanting the company culture into the employee groups to enhance YUM’s corporative power in China.
At the end, I’d like to mention BRICs in the global market. Even though YUM is expanding rapidly, they can’t use the same business model in other countries such as India as it is in China. To do that, the company has to assume exactly the same internal and external environment in the other countries. Diversification is a important factor .