After eight years in the Chinese capital, Beijing McDonald’s has at last experienced the trading scale necessary to achieve solid profitability from its 60 fastfood outlets, expecting to post a record target profit of 10m Yuan on a turnover of 700m Yuan. This is a significant increase after years of outlay for expansion costs cutting into returns and producing modest losses or, at best, only minimal profits.
The company is a result of a 1997 joint venture between the US food giant McDonald’s Corp and Beijing Enterprises, a holdings company listed on the Hong Kong bourse. Director of the latter, Bai Jinrong, commented that the restaurant chain was only now delineating a strong market share after years of long-term investments. Its main rival is another US owned chain, Kentucky Fried Chicken, but other fastfood operators are too small to offer much threat.
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Beijing McDonald’s has battled more than just changing consumer tastes, however, also providing a landmark for political trends. In 1992, the flagship store heralded a nationwide Chinese investment in Western culture, and last May its outlets were boycotted, perceived as an actual realisation for the anti-US sentiment caused by the Nato-led bombing of the Chinese embassy in Belgrade. Bai explained: “Mainland people vented their anger against US businesses, but they forgot Beijing McDonald’s was also owned by a mainland firm.”
Elsewhere, in Hong Kong this week a McDonald’s outlet has been the unwitting venue of a protest by a man dressed as a clown, who was demonstrating against the chain’s policy of hiring cheap labour and using GM food ingredients.
Despite all this, Bai is confident in the future of Beijing McDonald’s: “It is everywhere. It is so convenient.” And over the next few years plans have been made to open another 100 outlets, the company having gained the rights to open restaurants in the provinces of Shanxi and Hebei.
In addition to this, growth is expected to accelerate when China joins the World Trade Organisation within the next few months and the country is currently experiencing economic growth that experts estimate might lie between 7.5-8%.
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