McDonald's name change signifies shift in strategy

Ethnic Yi girls in traditional outfits take photographs at a McDonald's mobile dining carriage during a tourism expo in Beijing on Friday.(Feng Yongbin/China Daily)

New franchisee to help US fast food chain gain bigger market presence

McDonald's Corp's iconic logo has gone viral on the Chinese internet after the fast food chain restaurant changed its name to the Mandarin translation of the Golden Arches: Jin Gong Men.

According to a company statement, McDonald's China's name changed to Jin Gong Men China Ltd on Oct 12, 2017. The change will remain on the license level and will not affect daily operations. Restaurants' names, food safety standards and operational procedures will remain unchanged.

What is behind the simple name change, however, is a power shift within McDonald's China business.

In August, McDonald's announced the completion of a strategic partnership with CITIC Ltd, CITIC Capital Partners and The Carlyle Group.

The new company will become McDonald's largest franchisee outside the United States. CITIC and CITIC Capital will hold a majority 52 percent stake in the new company, while Carlyle Capital will hold 28 percent and McDonald's 20 percent.

The sale includes McDonald's existing businesses on the Chinese mainland－about 2,500 restaurants, and about 240 restaurants in Hong Kong.

CITIC's strengths and resources in China will help leverage the businesses on the Chinese mainland, particularly those in lower-tier cities, even at county-level markets, said Jason Yu, general manager of Kantar Worldpanel China.

He said McDonald's has been lagging behind rival KFC. The major Chinese shareholder will facilitate the brand's local expansion and encourage more innovation tailored to Chinese consumers, he said.

Zhang Yichen, chairman of the board of directors at Jin Gong Men China, said in August, "We believe this is a winning formula that fuses McDonald's global quality standards and branding with CITIC and Carlyle's extensive resources and market expertise in real estate, finance, supply chains, consumer and retail, and technology."

CITIC group has 1,400 banks nationwide. With its banking network expanding to lower-tier cities, they will provide better information and resources, particularly on how to choose store locations in tier-three or four cities, Zhang said.

He said CITIC's business partners, including Vanke and Evergrande Group, will collaborate substantially with McDonald's. China Overseas Property said they have worked with McDonald's at its properties in more than 60 major cities across the country.

Boosted by the new partnership, Jin Gong Men China announced a series of development initiatives termed Vision 2022, aiming to drive double-digit sales growth in each of the next five years.

The pace of new McDonald's restaurants opening in the Chinese mainland is expected to ramp up from about 250 per year in 2017 to 500 per year in 2022.