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mcdonalds china


McDonald’s is selling 80% of its business in China and Hong Kong, as part of plans to franchise more of its restaurants worldwide.

China’s state-owned investment group Citic, and Ameircan private equity firm Carlyle Group, will take control of the operations in a deal valued at $2.1 billion.

The fast-food giant owns and operates about 65% of its 2,000 China outlets.

Franchising allows McDonald’s to take a slice of sales while cutting operating costs.

Image source Wikimedia

The company is trying to streamline its global operations, and changing its ownership structure to revolve more around franchises is a major part of that revamp.

In March 2016, McDonald’s said it was seeking partners to help it add more than 1,500 restaurants in China, Hong Kong and Korea over the next five years.

Under the agreement signed on January 9, the McDonald’s will keep a 20% stake in its China business. Citic will hold a 52% share in the partnership while Caryle Group takes 28% of the new business.

Competitor Yum Brands, the owner of KFC and Pizza Hut, is also restructuring its China business.

McDonald’s and Yum Brands have been facing increasing competition from cheaper local rivals, particularly in China, where they are trying to recover from food safety scares.

McDonald’s China has sparked controversy after the opening of a outlet in the home of former Taiwanese leader Chiang Ching-kuo in Hangzhou.

Conservationists had called for the villa, a cultural heritage site, to be converted into a museum.

However, officials said the decision to lease the site to McDonald’s was made because they needed to cover maintenance costs.

Chiang Ching-kuo’s grandson and others have voiced their concern over the commercialization of the site.

McDonald’s opened the 100-seat McCafe in the lower storey of the villa, situated by Hangzhou’s West Lake tourist attraction, over the weekend.

The upper storey, also leased out by officials, houses a Starbucks outlet which opened a month earlier.

Chiang Ching-Kuo is the son of revolutionary figure and Taiwanese leader Chiang Kai-shek, who fled to the island in 1949 after the Chinese Civil War.

He later become the leader of Taiwan in 1978.

Chiang Ching-kuo and his family stayed in the villa from October to November, 1948, and it was designated a cultural heritage site by Hangzhou officials in 2003.McDonald’s China Opens Outlet in ex-Taiwan President's Residence

The move has been criticized by Chiang Ching-kuo’s grandson, Taiwanese businessman Demos Chiang, on microblogging platform Weibo.

“I don’t understand, opening a McDonald’s in the villa… how exactly does that adhere to regulations on correct usage of cultural heritage sites?” he said in a post.

In 2000, Beijing saw a similar controversy when a Starbucks outlet opened in the Forbidden City.

It shut in 2007 after officials decided to merge and cut down the number of shops in the palace, following multiple protests over the years about the commercialization of the site.

According to Beijing Youth Daily, the decision to commercially lease out the villa was met with strong resistance, with more than 90% attendees at a public consultation in January voting against it.

Conservationists suggested that the villa be turned into a historical museum promoting China-Taiwan ties.

One of them, Zhejiang University academic Zhou Fuduo, noted that the villa was a symbol of China and Taiwan’s shared history.

“We said that the villa’s sociocultural value outstrips its commercial value, but in the end our proposal was ignored,” he told the paper.

However, officials pointed out that the local government needed money to recoup the cost of maintaining the building throughout the years.

A spokesman for the Zhejiang local government, which oversees Hangzhou city, told the newspaper: “Chiang Ching-kuo stayed in this home too briefly and what is left is just the main structure, the interiors look nothing like they used to when the Chiang family was here… there is not much point in turning it into a museum.”

McDonald’s China fries supplier got Beijing’s biggest ever pollution fine, state media report.

Beijing Simplot Food Processing will have to pay 3.9 million yuan ($629,000) after its waste water was found to have levels of impurities above legal limits.

The company said it also serves other companies in East Asia.

Photo Reuters

Photo Reuters

IBeijing Simplot Food Processing said it had paid the fine and would take steps to avoid a recurrence.

McDonald’s said in a statement that it took the issue “very seriously” and would be monitoring Beijing Simplot’s compliance. It said it suppliers “must comply with all relevant local laws and regulations”.

A small amount of polluted water had entered the city’s main water pipes, but was not dangerous to the public, a local official was quoted as saying by Jinghua Daily News.

China has been facing international pressure to clean up its environment and an increasing number of local protests concerning pollution.