Kfc’s Success in China

Need to Know: the Secrets of KFC’s Success in China

Cp28

Abstract

Over the last two decades, KFC has succeeded in building its commercial empire of fast food chain with highly popularity and superior profitability in China. To those companies hoping to earn a place in the future chain industry within this globalization ear, it is no doubt that KFC’s great progress in China is one of the best case study for exploring the secret of chain success. This literature review investigates and analyzes KFC’s successful approach to its overseas expansion from the development environment, including inside and outside environment. Through this process, three main secrets to illustrate KFC’s remarkable success in China have been founded: preparation for launching, balance between globalization and localization and usage of franchising. These secrets of KFC’s success are treasures which the current and future enterprises in chain industry need to know.

Need to Know: the Secrets of KFC’s Success in China

A Review of the Literature

Introduction

        Although Kentucky Fried Chicken (KFC) has not attained high yield in its homeland of the United States, it has achieved great success in the global market, especially in China. The 2012 Annual Report released from Yum! Brands Incorporated (Yum!), KFC’s parent company, indicated that China has more than 4,000 KFC outlets, which account for almost one quarter of the global market. This large scale has ensured Yum! Successfully occupy the first place of the Top 100 Catering Enterprises in China since 2007. It is noteworthy that 93% of the listed companies adopted a chain operation model. This chaining operation can not only improve the efficiency of the enterprises, but also help enterprises break through the bottleneck in the development of management. For those enterprises hoping to earn a place in the future chain industry within a global market, KFC’s successful overseas-expansion experience is worth studying. Through investigation and analysis, KFC’s great success in China can be attributed to three secrets – sufficient preparations for launching, appropriate balance between globalization and localization and effective usage of franchising.

Sufficient Preparations for Launching

KFC’s full preparation for launching in the Chinese market established a stable basis for its future development. The first discussion about exploring the enormous Chinese market happened in early January 1985, three years before KFC launched its first store in China (Deamish & Morrison, 2000, p. 48). Within these three years, full preparations were well made. These preparations included sufficiently weighting the decision, successfully predicting the risks and correctly selecting the management team.