China Daily Global Edition (USA)
McDonald’s sells 80% stake Growing Chinese market target for UK toymakers
Big Mac chain to franchise 2,600 stores for 20 years
Fast-food chain McDonald’s Corp announced on Monday the sale of 80 percent of its Chinese China’s mainland growing and middle Hong class Kong and operations changes to in a the consortiumfamily policy including mean CITICthe countryLtd and is Carlylea rapidly Group growingLP. market being The targetedmove by will UK toymakers,help it expand accordingamid growingto UK-based competition,toy expert Johnbut Baulch. analysts warned challenges Speaking remain.to China Daily from The Asia’s $2.08-billionlargest Toys deal and will Gamesgive CITIC Fair andat the CITIC Hong Capital Kong a Conventioncontrolling stake and of Exhibition52 percent Center,in the newentity,he said: “UK withUStoy companies buyout firm are Carlyle trying to holdingopen up 28 the percent Asian and market, McDonald’s particularly 20 China, percent, because making it it is thea rapidly largest growing franchisee market.” outside the United States.The focus at this year’s fair will Withbe on high-techthis transaction,products, which McDonald’stoy expertsis franchisingsay are all growingof itsmorethanin popularity,2,600 stores besides in classicthe Chineseand traditional mainland toys. and Hong “Not Kong many toysfor are20 made years, in a major step toward turning around its fortunes in Asia and cutting costs globally, according to Phyllis Cheung, McDonald’s chief executive officer in China.
“Financial strength is very important to accelerate openings in China. Besides, CITIC’s real estate networks and strategic alliances with developers including China Vanke Co Ltd and China Resources (Holdings) Co Ltd may potentially open up more opportunities,” Cheung told China Daily in Shanghai.
The company will rely on the Britain partners’ anymore. “unmatchedThe reality understandingis that competing of with the China local markets”in terms of to raw add materialsanother 1,500and storeslabor costs acrossis alwaysthe regiona veryin difficult five years, thing mostly to do,in third-but we anddo fourth-tierhave some cities,very goodsaid Cheung.brands making “Expansion headway takes in thea lot Chinese of resources, market.” including finding suitable Christmas locations, and negotiatingthe giftgiving rents and season findingmay havethe rightonly typejust goneof landlord,”by, but analystssaid Zhangand Chenyi, manufacturersCEO of CITICare already Capital, who looking will for chair the the next newcompany.best-seller for Christmas“CITIC Bank’s 2017. 1,400 branches Products across such Chinaas STEM would toys be able— that to strengthenbetter share the resourceslearning of science, technology, engineering and mathematics — are predicted to be a hot item. So, some exhibitors are showing off their latest virtual reality and augmented reality products.
Peter Jenkinson, a selfdescribed “toyologist” from UK company Playtime PR, told China Daily: “Usually one country will start off a trend and and help others the would expansion.” follow but with CompetitionVR, markets is in fierce China, in thea countryUS and UK whereall jumpedthe noveltyon theof burgers, phenomenonfries at and once.” shakes has long Jenkinsonsince added:faded, “VR said gamingQi Xiaozhai, indeed head madeof thean impactShanghai on the Society video of games Commercial market Economy.and augmented reality started to With establishthe partnership,itself in the McDonald’s toy market.is betterI am lookingpoised to forwardleverage to toya stronger companies talent developingpool to grow their VR into capabilitiesnew marketsto createa lot fasterthanonitsown,a new dimension in the Qi ‘toys noted. to
“But consumer tastes have evolved in the past two decades to favor more upscale restaurants, indicating more headwinds to overcome amid growing competition,” he said.
Shaun Rein, managing director of China Market Research Group, regarded the movelife’ category.”as a retreat rather than a step However, forward. Baulch warned that “It’s UK not consumersa great sale.will haveThe problemto dig deeper with in their McDonald’s pockets isn’t this year. really about management, “2017 but will that be itsa verycore interestingproducts aren’t and something challenging Chinese year consumersbecause, as enjoya result the most,”of Brexit,he said.the pound is very weak against the It’s US questionabledollar,” Baulchto what said. extent “Most a toys 20-yearare produced franchise inis going China to and unlockthe currencythe potential there is peggedof McDonald’sto the US and dollar, let soit reacttoys coming quickly intoto issuesthe UK such this as year food will scandalscost a lot and more changing than last because consumerof the preferences, fluctuation he in noted. currency.”
Its He added archrival that Yumthe toy Brands industry Inc, is the looking companyat how behindto mitigateKFC and Pizza those Hut, circumstances.has spun off its China According business to throughthe Hong an Konginitial Trade public Development offering, Council,with investmentit is estimated from that Primaveraabout 80 Capital percent andof toys Ant worldwideFinancial Services are made Group.in China.
proportion of toys worldwide that are made in China
Weber noted that the property market correction and the depreciation of the renminbi are two major risks facing the Chinese economy, and the challenge for Chinese policymakers is to strike the right balance between sustaining growth and curbing financial bubbles.
Weber said UBS has not experienced difficulties in expatriating profits from the Chinese market.
Weber anticipated that outbound mergers and acquisitions by Chinese companies in 2017 will maintain the growth level of the past year and the Swiss bank’s M&A business in China will remain intact, despite tighter government scrutiny of the latest buying spree by Chinese corporates in international markets.