McDonald’s: Is China Lovin’ It?

Case Solution

Stephen Ko, Claudia H. L. Woo
University of Hong Kong ()

McDonald’s, the world-famous American fast food franchisor, entered mainland China in 1990, when Chinese franchise law didn’t even exist. In this once-closed country, whose market was not opened to foreign investors until 1978, McDonald’s had to adapt to an unfamiliar and rapidly changing environment. Not only did the food culture in China differ greatly from that of the West, but the food culture, lifestyle, and legal structure also changed as a result of rapid economic growth and mass urbanization. Competition also intensified as local and foreign restaurants tried to capitalize on China’s growing prosperity. As the growing middle class demanded higher standards from these companies, McDonald’s local business practices related to food health, employee welfare and other socio-environmental issues in China have come under scrutiny. While the country’s booming economy provided the right environmental conditions for the fast food culture, the environment also posed challenges for the survival of fast food operators in the country. Can McDonald’s maintain its momentum in transforming China into a developed nation?

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