McDonald's plans to keep spending in China

02 February 2010

BEIJING: McDonald's, the fast food giant, plans to step up its investment in China this year, despite the fact recent trading conditions in the country have proved challenging.

The company will boost its expenditure in the world's most populous nation by around a quarter in 2010, with the aim of opening up to 175 new sites in all.

It has also recently launched a rebranding campaign, called "Make Room for Happiness", to commemorate the twentieth anniversary since it entered the market in 1990.

Kenneth Chan, the corporation's domestic chief executive, said "we expect to increase our capital investment by 25% over last year."

"We continue to be extremely bullish about our business in China and will continue to invest in opening new restaurants."

The Oak Brook-based organisation reported improved comparable sales in China in December 2009, but James Skinner, its ceo, sounded a note of caution about popular sentiment in the country.

"We expect it will still be some time before consumers regain confidence and are willing to spend more," he said in a call with investors.

"In the meantime, we're making the right moves to grow our business and strengthen our connection with our Chinese consumers. We remain excited about our potential growth and expansion in this region."

Alongside multinational firms like Yum Brands, McDonald's competitors in the rapidly-growing economy include everything from street vendors to local chains, with price playing a key role.

"We are not necessarily discounting but what we are doing is getting our price right in relationship to the economic time that we find ourselves in, which is an ongoing pricing relationship as compared to a discounting of our food," Skinner said.

"I think the environment in China ... basically fell off a cliff after the 2008 Beijing Olympics. We've adjusted accordingly along the way to be relevant with our consumers and it's worked well for us."

Data sourced from Reuters/Seeking Alpha; additional content by Warc staff