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Zhang Yichen, chairman and chief executive officer at CITIC Capital. /CGTN Photo
CITIC Capital plans to increase its shareholding in McDonald's China Co., visioning its growth potential in the Chinese market, said the company CEO.
According to Zhang Yichen, chairman and chief executive officer at CITIC Capital, the company's intention to increase shareholding in McDonald's by buying stakes from CITIC Ltd. fundamentally stems from its business strategy for the long run.
"We see a very long way for the business to grow in China. When we took over about two and half years ago, we had roughly about 2,500 stores. We have ramped it up to 3,300 now. While compared with our competitor KFC, it has over 6,000 stores. So I think there's still ample room to grow in China."
In 2017, CITIC Ltd., the listed arm of Chinese state-owned conglomerate CITIC Group, and CITIC Capital, the group's alternative investment arm, Carlyle Group and McDonald's Corporation announced the formation of a partnership and company that acted as the master franchisee responsible for McDonald's businesses in China.
CITIC Ltd. and CITIC Capital together gained a controlling stake of 52 percent of McDonald's China in the deal.
Earlier this month, McDonald's China said in a statement that CITIC Ltd. is looking for buyers to sell their 22 percent stake.
CITIC Capital showed interest in buying the stake. The company's spokesperson said they are confident with the future growth and prospects of the business so they're actively participating in the bidding process.
Talking about the timetable going forward, Zhang said McDonald's China opened up roughly by 400 to 500 stores a year. "We just finished the year 2019, in which we opened a record number of 433 stores. I think the number is like every 17 or 18 hours we're opening up a new store. That pace will pick up further as the existing base gets larger," Zhang added.
"We see the momentum not slowing down at all," he said, projecting more potential in the future.
Unique growth strategy for China: Delivery and marketing
Zhang attributed the fast growth of McDonald's China to technology and delivery. "I think the unique growth strategy for China, differentiating it from the other markets, is the digital and the delivery," he said.
He told CGTN that McDonald's overall delivery business in China grew by 43 percent last year, accounting for 22 percent of the total business.
According to the CEO, McDonald's China cooperated with Tencent Group over two years ago, using their mini-program and later developed their own app. Having 112 million members on the app as of 2019, the company now enjoys a unique angle in terms of marketing.
Zhang said, "In the past, the traditional way of marketing is through bombarding TV channels and all other media, but with 112 million and growing [members], you can offer a lot different and more targeted marketing to your customers, and we are seeing amazing results."
