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Colonel Sanders more profitable in China than the U.S.

Rob Schmitz Feb 21, 2011

Colonel Sanders more profitable in China than the U.S.

Rob Schmitz Feb 21, 2011


Tess Vigeland: If he were alive today, Harland Sanders — otherwise known as Colonel Sanders — might be surprised to learn that his fried chicken is now making more money in China than it is back home. KFC’s parent company Yum! Brands joins General Motors as the latest American company whose profits in China have eclipsed those in the U.S.

Marketplace China correspondent Rob Schmitz reports on what has arguably become the most successful foreign company in the Middle Kingdom.

Rob Schmitz: In the 1980s, if you wanted to eat out in China, there weren’t many options. The few places where you could have a sit-down meal were run by the government. This was China when Kentucky Fried Chicken arrived in 1987.

James McGregor: They came at a time when there were no restaurants.

James McGregor is author of “One Billion Customers: Lessons From the Front Lines of Doing Business in China.”

McGregor: I remember going to duck restaurants here in the early ’90s when you’d walk on the floor and the bones crackled under your feet. So they came in, they had a clean restaurant, they had fast service, they adapted their menu, and they invested in the country, and they just spread across the country very fast, so they’re everywhere.

KFC’s parent company Yum! Brands now opens one restaurant every 18 hours in China. The country’s 4,000 KFCs and Pizza Huts make more money for Yum! than its 20,000 restaurants in the U.S. It’s left its biggest competitor in China, McDonald’s, in the dust. McGregor says that’s because KFC has been more aggressive in localizing its product.

At one of Shanghai’s 350 KFCs, you can order rice porridge, bamboo shoots, and spicy tofu chicken rice as side dishes. A life-size statue of Colonel Sanders stands at the entrance, his face altered to seem more Asian — he looks like Confucius dressed in a white suit and a string tie. Seventy-five-year-old Ying Ruquan has just finished his meal.

Ying remembers lining up outside KFC’s first store in Shanghai when it opened. That was 22 years ago. He’s come back religiously, twice a month.

Ying Renquan: Their service is so quick. Other restaurants in Shanghai are so dirty, but KFC is very clean.

For two decades, Ying says he’s never veered off-course in what he orders: Fried chicken legs. Is he tempted by the soybean milk or the Chinese wolfberry pumpkin congee? Nope, he says. I go to Chinese restaurants for that.

In Shanghai, I’m Rob Schmitz for Marketplace.

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