KFC Globalisation In China: Challenges And Repercussions

Using China as an example, not only has KFC managed to successfully establish a branch in China, they have also outnumbered the world fast food leader in that country (McDonalds). To be able to achieve this KFC had to be innovative, using groundbreaking skills in order to captivate the consumers in this country. At the time of their 20th anniversary, KFC had over 2, 000 outlets throughout China, consequently outnumbering McDonalds by more than two to one. Many factors have aided KFC’s success in china. Including: “the strength and stability of KFC’s leadership team, strong organisational implementation capabilities and a number of localised strategic initiatives”. Most importantly, the quality of consumables provided consistently. Over time, the staff designed, built and modified organisations, strategies, systems, processes and procedures deemed best suitable for the Chinese market. This meant KFC started with a local team, who developed and implemented comprehensive, flexible and localised business strategies. Conducted between 1987 and 2007, they made the most of the complex and rapidly changing local market. This ultimately reflects in the varied menus, comparing USA and China, where many items would not appear on KFC menus in the USA. With the aid of the Internet and media, KFC has been able to market itself globally.

Further, in the adverts, KFC’s products have been presented to be a modern way of eating habit. Through globalisation, they have been able to invest across United States borders. This has been imposed by the growth of international markets and westernisation of many countries. “Business opportunities have been opened up in many countries resulting to rapid expansion of the company”. As a result, KFC has been able to expand globally, resulting in one of the largest and most reputable fast food restaurants in the world, with over 20, 000 outlets worldwide. Their success has been achieved by leaving the dominant logic behind its growth in the United States: where they have a restricted menu, low prices, and an emphasis on takeout. Within China, KFC swift establish a presence in 16 locations from which they could grow and develop. By 1999 they were opening many restaurants, with this trend continuing. In 2008, over 500 restaurants were opened by the major fast food brand Yum! The bulk of these restaurants being KFC. However, China showed better growth in that period compared to 103 in the US. On average it takes 4- 6 months to establish a new restaurant, which is half the time required in the US. By KFC being Yum’s flagship chain, they control around 40% of the fast-food market, whereas McDonalds has around 16%.

As a result of globalisation, it can be perceived as making the rich wealthier and the non-rich poorer. “It is wonderful for managers, owners and investors, but hell on workers and nature. ” The rapid growth in China possesses challenges: a well-established company, such as KFC, could easily become a target of consumer or government backlash with the perceived negatives of fast food. Today, this western health issue can be seen in effect in China. China's national Nutrition and Health Survey showed that 22. 8% of Chinese adults were overweight, compared to 6% in 1982. The number of overweight and obese children aged between 7 and 17 over the past decade has tripled to 8. 1%.

Generally globalisation is expected to surround free trade, eliminating or reducing some or all the barriers to trade. However, many barriers still remain. For instance, 161 countries include VATs on imports, up to 21. 6% in some European countries, compared to the US, who do not have value added tax. For developed countries, the main issue is that jobs are lost and sourced to countries with lower labour costs. According to Robert Scott of the Economic Policy institute, “the permitting of China's most favoured status drained 3. 2 million jobs”. Workers in established international locations like the US face pay-cut demands from employers who threaten to export jobs. This has created a culture of concern for many middle-class people who have little leverage in the international game. Established businesses can sometimes come under scrutiny of social injustice, unfair working conditions (slave labour, poor living and working conditions), small concern for the environment and mismanagement of natural resources.