Thursday, December 18, 2008

KFC in China

Years ago, as part of a Masters degree course, I read the book, "The Burger King" by Jim McLamore, about the founding and development of the Burger King QSR (Quick Service Restaurant, more popularly known as Fast Food Restaurants) chain store. It was a fascinating story, by any accounts. So a few weeks ago, when I came across the brand new book, "KFC in China", I just had to pick it up to read, if only to compare the experiences of these two giants of the QSR industry. Strangely though I have never picked up the numerous similar books on MacDonalds, arguably the most successful of these QSRs. But there was another thing about this KFC book that drew my attention: China. This promised to be a fresh and potentially unusual and different account of a QSR's development, outside of its domicile. I wasn't disappointed.

"KFC in China" is written by Mr Warren K Liu, Vice President of Business Development at Tricon Greater China until the early 2000s. Tricon was a spin-off of PepsiCo and focused on the food business. KFC, Taco-Bell and Pizza Hut are the better known brands under its wings. In this book, Liu traces the start of KFC in China, in 1987, through the enterprise of the "Taiwan Gang" - seasoned veterans in KFC Taiwan. Surprisingly, they preceded MacDonalds in this venture. In quick succession, he relates the development of the KFC restaurant business in China, going over issues of staffing, business strategy, partnerships with the local Chinese and its government and touching somewhat on issues of corruption.

This book also goes into detail about how KFC in China developed its 'DNA' through the siting of its HQ in Shanghai (rather than Hong Kong, which MacDonalds did), relating its product and marketing strategies, supply chain issues as it expanded, first along the coastal regions of China and subsequently westward into more remote parts of China. As with MacDonalds, KFC also acquired real estate as it established new restaurants. Along the way, Liu makes comparisons with the way the KFC has done things and the (different) way that MacDonald's has approached its business in China. It suggests that KFC's approach is one that suited China more than MacDonalds'. The book then goes on to discuss how the operations in KFC were established, the localization and globablisation issues and headquarter support. It ends with an analysis of the model, Liu suggests, that has brought success to KFC in China - Leadership with Chinese characteristics - and the inevitable speculation of what lies ahead. Liu also suggests and provides an analysis using KFC China's experience how certain modes of operations (e.g. decentralisation, centralisation) suited different stages of development in a Business.

This book can be as dry as any Business Management book on an academic's shelf. One gets the impression that Liu wants to avoid singling out real people for mention in his book. Very often, he leaves out the identity of the person, even though that person, in his account, has contributed significantly to the business. For example, Liu mentions a person who has contributed tremendously to KFC China's development with Joint Venture partners, but declines to identify him by name. This makes the account almost impersonal and gives the feeling that one is reading either an academic theses or a textbook, or both. He did make an exception towards the end of the book when he described in greater detail the work of Sam Su, the head of Tricon Greater China, as well as Roger and Elaine - husband and wife to each other - but working in the same department to illustrate how Sam, and KFC China, dealt with issues of close relatives working together.

Yes, in spite of the general absence of personal references and 'inside' stories, I have enjoyed reading the book. This is because Liu writes in a succinct style, allowing him to cover a wide range of topics in a relatively thin 200-page paperback book. What I especially liked was his summary of the book towards the end. For someone who may have taken a 'start-stop' route while reading the book. it does bring together rather nicely, a reminder of what has been covered.

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