As China's market opening, Chinese fast-food industry is concerned increasingly by foreign businesses. Subway is one of the earlier merchants use franchising way to enter into the Chinese market. Although the Chinese market is huge and full of potential, it also needs to face many threats. Intellectual property issues pose a big threat to the franchising of Subway. China's IPR legal system is not complete. So that Subway should cooperate with the Government, and then have more self-enhance protection of intellectual property. Subway franchising has its own advantage and disadvantage, but I still think it is most suitable business way for Subway in China. Its advantage is better to save money and save time, and it is helpful to conduct business quickly. Meanwhile, the cultural challenge also is a problem for Subway to operate in China. But I believe that through the way of franchising, Subway will be able to cross many obstacles in China, increase market share and become one of Chinese fast-food industry giants.
Subway is an American restaurant franchise that primarily sells submarine sandwiches, salads, and personal pizzas. Up till now, Subway is one of the fastest growing franchises in the world with approximately 33,556 restaurants in 92 countries/territories and $10 billion an annual revenues. Subway expands its outlets worldwide since the first international restaurant was opened in Bahrain. In China, Subway has only 150 stores that accounting for only a small fraction of their total sales, it far falls behind the fast food giant as McDonald's and KFC. But according to Subway president- Fred DeLuca said in a recent visit to Shanghai, “After a decade to enter into China, Subway will accelerate the pace of market development in China, the recent target is 5 years will increase the number of stores in China in 500.” And he even to said, “The potential of the Chinese market is tremendous, Subway hope that it can succeed in the highly competitive fast food market by the advantages of fresh materials, follow the people’ s inclinations and health first, and we want to launch a strong challenge to the McDonald and KFC.” (Reuters, 2010) Thus, this report describes Subway and the challenges of franchising in China. It divides into 3 parts. One is one is subway intellectual property problem; the other one is the advantages and disadvantages of franchising in china, and the last one is subway faces cultural challenges in china.
• The threats to Subway’s intellectual property in China Intellectual property is a term referring to a number of distinct types of creations of the mind for which property rights are recognized—and the corresponding fields of law. (Wiki, 2010) As far as I am concerned, China is a potential place to develop the franchising of fast- food industry because of its huge population, high profit and good economic prospects. But at the same time, it also has a lot of threats to the developing of Subway in China. Among of them, I think the intellectual property is the main threat to Subway. China is a developing country, many places still need unceasingly to improve and progress. Compare with the western countries, its legal system is imperfect and is full of loopholes and ambiguities. A lot of critical elements are not covered lead to some criminals have chances to access the loopholes in law to violate the intellectual property of business. Meanwhile in China, most of the people are fuzzy to the concept of the intellectual property, they generally do not understand the meaning of it, especially for the business man. It cause to they are easy to make misunderstanding about intellectual property that making illegal things. The local imitators can quickly dilute or damage a trademark a focal firm has built up through much expense and effort. For the franchising...
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