In its home market, the U.S., KFC is struggling, an also ran to McDonald’s Corp., the
world’s biggest restaurant company. In China, KFC has achieved such dominance over
McDonald’s and local rivals that colonel Harland Sander’s image is a far more common
sight in many China cities than that of Mao. That accomplishment is striking in a country
where foreign companies often stumbled and ran into roadblocks in the past.
KFC, owned by Kentucky-based Yum! Brands, started out as the quintessential
American fast food company, originally being named Kentucky Fried Chicken. What
could be more patriotic than deep-fried chicken wings with special roots in the U.S.
South?
In 1973, the company opened 11 restaurants in the British colony of Hong Kong but
closed them within two years because it couldn’t win over local consumers. Decades
later, KFC returned, opening up stores in Beijing and slowly adapting its model to the
Chinese system.
Since the first piece of fried chicken (available in dark meat only, to the disappointment
of many an American tourist ) was served at a Beijing KFC in 1987, the number of
KFCs in China has grown to over 3,000 in 650 cities, with one new restaurant opened a
day.
What happened in China with Yum! Brands, and with KFC in particular, had a lot to do
with China division chairman and CEO Sam Su. “He really flexed the model,” says
Shelman. This was in part due to KFC being owned by PepsiCo when it first came to
China. PepsiCo was not a fast-food company, so Su was given more managerial
freedom.
Along with being lucky, Su is smart, driven, and visionary-a classic entrepreneur. But
he’s also humble. “There’s no room for ego,” Su explained in the case. “China doesn’t
have the same culture of individualism that is present in the United States.”
Su’s strategy was that KFC “would not be seen as a foreign presence but as part of the
local community…our opportunity was to take the best ideas from the U.S. fast-food
model and adapt them to serve the needs of the Chinese consumer.”
Initially this involved hiring the right people. For Su this meant Chinese managers who
read and spoke the language, who understood the restaurant business and the Chinese
consumer but who also had experience in the Western way of doing business. “It was a
foot in both worlds,’ Shelman says. “They knew first-hand the Western model but they
also understood the challenges of operating in this Chinese, very traditional, very
evolving market.”
KFC’s Chinese manager staff is young and hip. College-aged employees are
encouraged to socialize over company-provided video games on their breaks. The goal
is to create lifelong Yum! Brand customers. These practices helped to make the
individual restaurant feel localized, even family oriented.
Besides serving some American fare like dark-meat chicken and corn on the cob, KFC
sells more Chinese-styled fast food to appeal to local tastes. Offerings include Dragon
Twister, a chicken wrap in Peking duck-type sauce, spicy tofu chicken rice based on the
cuisine of Sichuan province, home of China’s hottest dishes, as well as fried dough
sticks, egg tarts, shrimp burgers and soymilk drinks.
KFC also actively advertises to appeal to Chinese culture. For example, in Urumqi,
capital of Xinjiang province, a Muslim region of China, KFC advertises parties for family
boys who have just undergone the religious ritual of circumcision, instead of just
birthday parties like they do in the United States.
Some claim that every day KFC in China moves further away from its U.S. roots. They
believe that the Chinese customers eating in a KFC establishment really want the U.S.
experience – with the Colonel watching over them. Others think that adapting to the
local preferences means KFC needs to drop forks for chopsticks. KFC-China, with a
focus on a consistence appreciation for the culture and unique needs of its consumers,
might even become the birthplace of a new cuisine all together.
Sources from: https://hbswk.hbs.edu/item/6704.html; Mellor, W. McDonald’s No Match
for KFC in China as Colonel Rules Fast Food [Online].

End of case study

1. What is a product adaptation?
(8 marks)
2. Using appropriate examples in the case study, analyse KFC’s product adaptations to
accommodate customer preference in the Chinese market.
(8 marks)
3. Evaluate the appropriateness of KFC’s adaptation in its promotional message in the
Chinese market to enhance customer engagement.
(24 marks)
4. “Some claim that every day KFC in china moves away from its U.S. roots”.
Argue and discuss the implication of this statement with regards to customer
behavior.
(30 marks)
5. Assuming that you are facing many competitor in fast food industry like KFC.
Suggest sales promotion objectives that are suitable for this situation. How do you
plan carry out your objectives?