From Burgers to Fries: McDonald’s Success in China

By Gordon Chu | Tuesday, August 11, 2009

On a recent trip to China and after many meals of decadent Chinese food, I found comfort and safe haven seeing the familiar golden arches of McDonald’s amongst the lit streets of Shanghai. Along with the hundreds of patrons who frequent the same restaurant, we lined up waiting to order our guilty meal of the day. The menu was different but the same – there was the same familiar (and all-time favorite) Big Macs, Chicken McNuggets, and fries; but there were new entries I was not familiar with and were targeting a more localized taste including a delicious looking pork sandwich.

Despite the differences in menu, the same smile graced the person taking my order, the same efficient bustle behind the counter as they gather my food, the same “feel” I would get going to any McDonald’s I’ve visited the last 30 years.  McDonald’s is one of the handful of very successful companies growing in China. Having only launched their first stores in China in 1990, they now have nearly 1,000 stores across China and over 50,000 employees strong in their workforce. Secret to their success? Boils down to what all good businesses need – good leadership, a good eye on costs, and a little bit of luck.

Leadership

There’s no big surprise when I say leadership is an important factor in any company’s success; however, McDonald’s example should be a testament to why it is one of the biggest conglomerates globally.

Since 1955, McDonald’s core value has always revolved around employee development. Yes, you do start off clearing tables and taking out trash, but with a little bit of patience and a natural knack to succeed, McDonald’s has a strong reputation to groom talent for long-term success internally. McDonald’s has seven “Hamburger Universities” around the world that train future management level employees the fundamentals of finance, marketing, supply chain management, etc. Training is for more than just immediate operational needs, but select employees are molded for long-term growth.

With international expansion, employee development was more than the basics of “Hamburger University,” training / education lacked the necessary sensibility of knowing and understanding the local environment. And with that, training emphasized more on to homegrown talent. Operating McDonald’s in Nebraska is entirely different than operating one in the heart of Guangzhou or Shenzen. So, McDonald’s saw their role upon entering China as a catalyst to get the business started, then developing local talent to take over the long-term leadership roles. In fact, 42 percent of the company’s worldwide top management team started their careers flashing their pearly whites serving customers. Current head of McDonald’s China Kenneth Chan has been with the company since 1993. And before Chan, Jeffrey Schwartz (former head of McDonald’s China) started his career as a restaurant worker at the age of 15.