KFC in China: Secret Recipe for Success

There have been many books that claim they will help western discover the “secret recipe” for success in China.

But the success of fast-food giant Yum! Brands in China has less to do with a secret recipe — fried chicken is fried chicken, whatever KFC may say — and much more to do with a deliberate decision to position KFC in China as an aspirational western brand.

This decision was taken at the beginning of KFC's entry into China in 1987. So when KFC opened its first restaurant by Tienanmen Square in Beijing in 1987 it became an instant success.

Warren Liu, VP of Yum! Brands China, attributes this to KFC's “unique brand proposition” as perceived by Chinese consumers back in the late 1980s.

But as every marketeer knows, brand success is so often a happy coincidence of circumstances and context, and not something that sustained indefinitely. So, over the years, KFC China's branding strategy has been modified through product localisation and differentiated marketing practices.

While McDonald's entered China in 1990 and has remained a distinctively American brand to this day, KFC's success can be attributed greatly to the fact that it has re-positioned itself as a foreign brand with local characteristics.

From an advertising perspective, this divergence is quite detectable. McDonald's continues to focus on the youth market, using young sports people and pop stars as brand spokespersons, KFC expanded its target market focus to include family and friends of all age brackets, reflecting its business volume growth and brand maturity in the process.

KFC China has nearly 2,600 restaurants in over 550 cities, and Liu admits that without the past decade's improvements in China's infrastructure, it would not have been able to expand so rapidly.

At the beginning of the century, China had less than 20,000km of highway but today that figure is around 60,000km.

That expansion has also had to go to hand-in-hand with the growth of the third-party logistics (3PL) service providers that offer storage, transport and delivery services across all provinces. Even today there are very few firms with this capability, Liu laments.

More in this SeekingAlpha interview with Warren Liu who has just written a book KFC in China: Recipe for Success