McDonald´s also sells its China operation - Ben Cavender

Ben Cavender

In line with expectations, McDonald´s has sold a controlling stake of its China and Hong Kong operation to private investors, after competitor Yum did the same last year. With the new financial resources, the China operation can improve fast, says Shanghai-based retail analyst Ben Cavender to Bloomberg.

Bloomberg:

Oak Brook, Illinois-based McDonald’s and rival Yum China Holdings Inc., which owns the KFC and Pizza Hut brands in the mainland, are combating rising domestic competition as they fight to retain middle-class Chinese consumers who increasingly demand high-quality and healthier dining options. The fast-food giant is also looking at further deals in markets such as South Korea, Japan and Southeast Asia as it streamlines its sprawling global operations. 

“Citic and Carlyle’s resources will allow McDonald’s to expand rapidly and refurbish old restaurants, which is expensive to do,” said Ben Cavender, a Shanghai-based analyst at China Market Research Group. “Given that McDonald’s lags behind KFC in terms of store count in China, we can expect them to expand aggressively and invest heavily.” 

Yum China Holdings and Starbucks Corp. plan to add about double the number of stores -- as many as 3,000 in China -- over the same period. 

Under the deal, Chinese state-backed conglomerate Citic and Citic Capital Partners will jointly take a 52 percent stake, while Carlyle will hold 28 percent. 

While Citic and Carlyle are paying a “substantial price,” for 20-year franchise rights, the food and beverage chains are “cash machines,” Cavender said. In contrast, Yum China licensed the KFC and Pizza Hut brands from Yum! Brands Inc. for 50 years, with automatic renewals that could make it possibly indefinite.

More in Bloomberg.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Why Beijing should not get the Olympic Wintergames - Ian Johnson

+Ian Johnson 

Beijing has only Almaty, Kazakhstan left as a competitor for the Olympic Wintergames in 2022. But many academics and environmentalists describe an upcoming disaster for the region, writes author Ian Johnson in the New York Times.

Ian Johnson:

According to Beijing’s bid, the environmental impact of the Games would be “ecofriendly” and “sustainable.” In their three-volume filing with the I.O.C., organizers say they will use renewable energy and sustainable building materials. Forest cover lost to ski slopes or other facilities would be offset by new tree plantings elsewhere, in compliance with I.O.C.requirements.

“As there are abundant water resources near the ski resorts, and the melted snow will be recycled,” the bid says, “snow-making during the Games will not have any negative impact on the local ecosystem.”

“Abundant” is not a word often used to describe Beijing’s water supply. Although some parts of the city receive up to 23 inches of rain a year, the mountainous area where the ski resorts are being built and the Games would be held receives 15 to 16 inches, making it semiarid.

Two-thirds of that precipitation falls in the summer. In December and January, areas like Chongli, where the reservoir is, receive about a tenth of an inch of precipitation, meaning they are usually bare throughout the winter.

“It just doesn’t snow in Beijing,” said Zhang Junfeng, an independent water expert who has written and published widely on Beijing’s water troubles. “People get ideas by watching television and sports and think it’s a great pastime, but it’s not sustainable.”

More in the New York Times.

Ian Johnson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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