Kentucky Fried Chicken in China

Paper Summary:

This paper explores the concerns a business must contend with when dealing with a country such as China, using Kentucky Fried Chicken's venture into China as an example. The paper relates that the type of government in China, the large tariffs imposed on goods, and China's political environment are examples of these concerns. The paper then describes some of the measures to take to combat such risks, e.g., performing a comparative analysis and developing agreements with industries within the country so that many of the costs associated with importation are eliminated. Additionally, the paper points out that the currency exchange as well as the financing of a business venture and the future industrialization of China are also important concerns. The paper concludes that, in spite of the issues raised, China represents a great potential for investment by companies that are willing to take a risk.

From the Paper:

"However, the Chinese have modified this government form to allow capitalism to enter into the country. This is largely due to the success of old British colonies in Hong Kong and the fact that Taiwan saw explosive growth after World War II. Furthermore, communist countries can see fit at any time to nationalize a company or bring it under total government control. This would be a huge concern for a foreign company that decided to invest in China. If the government saw fit to nationalize KFC, any investment that KFC made would effectively be worthless because all profits would go to the government and hence the people. "

Sample of Sources Used:

• Caplen, Brian. (1988). Kentucky Hatches its Chickens in Beijing. Asian Business. Hong Kong: Feb 1988. Vol. 24, Iss. 2; p. 17.
• Expanding. (2008). U.S. Fast-food Chains Expanding in China. Retrieved on December 11, 2008 from http://www.chinadaily.com.cn/en/doc/2004-01/16/content_299551.htm.
• Fast Food. (2008). Here Comes The Whopper. Retreived on December 11, 2008 from http://www.economist.com/business/displaystory.cfm?story_id=12488790&fsrc=rss.
• Turner, Brian. (2008). Consumers in China Push Fast Food Expansion. Retrieved on December 11, 2008 from http://www.financemarkets.co.uk/2005/07/27 /consumers-in-china-push-fast-food-expansion/.
• Wikipedia. (2008). Communists. Retrieved on December 12, 2008 from http://en.wikipedia.org/wiki/Communist.

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