KFC’s Localization Strategies in China
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Do in China as the Chinese Do: An Overview of KFC’s Localization Strategies in China Abstract
Kentucky Fried Chicken has been one of the most household international brands in urban China since it opened its first Western-style quick service restaurant in Beijing in 1987. As the present largest fried chicken restaurant company in the world, KFC aims China as the most promising market and succeeds in its localization strategies in the huge China market. The most prominent success of KFC in China is not only the outcome of KFC’s persistent tenets “quality, service and cleanliness” but also the achievements of its keen perception of cross-cultural marketing and its understanding of Chinese culture. This essay aims to investigate the process of KFC’s entry into China’s market and analyze its particular localization strategies towards China. A series of KFC commercials in China would be analyzed from the perspective of cultural values. Related issues and debates would be discussed as well.
There is no doubt that China has become the highest-growth market of Kentucky Fried Chicken. Seventeen years after opening the first KFC outlet in China, KFC has celebrated its 1000th restaurant milestone in Beijing on January 16, 2004 (business wire, 2004). As the Yum! Brands, Inc., the parent company of KFC, states in the 2003 annual customer mania report , “China continues to be our Rising Star, driving double digit sales growth for the fifth consecutive year and record operating profit up over 42% in 2003.” The number is the best annotation for the announcement–in the year of 2003 China has accounted for $157 million in KFC’s operating profit. The prominent success of KFC in China’s market can be attributed to its franchise policy and scientific managerial operations, well known as CHAMPS, which measures operational basics like Cleanliness, Hospitality, Accuracy, Maintenance, Product Quality and Speed. Moreover, the accomplishments are the reward towards KFC’s comprehensive understanding of Chinese culture and its excellent localization strategies specifically manipulated to meet the characteristic requirements of the estimated 450 million urban Chinese consumers. In the analysis of KFC’s success in China, several questions were generated. How did KFC grab the opportunity to penetrate a huge market known as the fastest growing economy in the world? How does KFC find the balance point between the quick service restaurant and the ancient Chinese culinary tradition with more than 5,000 years history? How does KFC adapt its inherent individualism-driven American culture to Chinese collective community? I would analyze the localization strategies of KFC from a cultural perspective and try to answer the above questions. 2. KFC’s Entry into China
In this section, I will present an overview of KFC’s overall process of entry into China market. External and internal environment of China would be discussed. 2.1.Open China, New Opportunities
The economic reform opened China market to the outside world and improved the standard of living of average Chinese people. In late 1978 China began implementing economic reforms to develop and modernize its economy. The reforms have gradually rebuilt a new economic system, which is referred as a socialist market economy, by lessening the government’s control of the economy, allowing some aspects of a market economy and encouraging foreign investment. As a result of the reforms, China’s economy grew at an average annual rate of 10.2% in the 1980s and by 10% annually in the period of 1990-2001. This was among the highest growth rates in the world. The boost of national wealth and the consequent increase in individual’s income has led to steady changes in Chinese consumer patterns prevalent in pre-Mao era. Put in a concrete way, the increase in disposable income (nearly tripled from 1985 to 1992) has “awakened...
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