McDonald's and Yum! Brands Battle for China

Major franchises McDonald's and Yum! set their sights on China through expansion and acquisitions including Mongolia's Little Sheep
 Little Sheep, McDonald's, and Yum! Brands
With a population of over 1.3 billion, succeeding in China is every major brand’s ideal. McDonald’s and Yum! Brands are both chasing the Chinese market with renewed vigor, each using massive brand expansion and acquisitions in an attempt to outpace the competition.

At the moment, McDonald’s is trailing Yum! Brands in the Chinese market, with 1,300 McDonald’s locations compared to nearly 4,000 Yum! Brands locations spread across its major brand names like KFC and Pizza Hut. But things are about to get interesting. McDonald’s has just unveiled an intimidating new business strategy, which focuses on the opening of 700 new locations throughout China by 2013. McDonald’s plans also include hiring 50,000 new employees to help realize this endeavor, with 1,000 college graduates to train for management positions. According to Investor Guide, this is the most aggressive move McDonald’s has made in China in two decades.

Not to be outdone, Yum! Brands is aggressively expanding within China as well. On April 26, Yum! Brands made a preliminary offer to acquire China’s Little Sheep Group, a popular Mongolian hot pot franchise with hundreds of locations throughout China, Japan, Canada and the United States. While Little Sheep has only begun to expand outside of Inner Mongolia relatively recently, it has already seen impressive sales. An acquisition by a powerhouse like Yum! Brands could be mutually beneficial, helping Yum! Brands achieve its growth goals while helping Little Sheep reach a bigger audience than ever before.

Compared to other companies, McDonald’s and Yum! Brands have both been extremely successful throughout Asia by the power of their willingness to adapt their menus to foreign tastes and cuisines. No matter what happens in China over the next couple of years, the competition between these two titans should be interesting to watch.

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