McDonald’s (MCD) last quarter results were undermined by slow same-store sales growth in the US. It only took the world’s largest fast food chain a day to start to talk about China. China is now the panacea for big corporate investor relations operations. When sales start to look weak in any region a little public relations about the world most populated market goes a long way.
McDonald’s China chief says the company will open 125 stores there this year and 150 in 2009. According to Reuters "the expansion plans this year and next come on top its network of around 800 restaurants across the nation." That all sounds will and good, but McDonald’s will face what many other big US companies have found. The central government likes to have unions in US company outlets. A branch of the Communist party often comes with that.
China could also be hit by a slow-growth economy in late 2008 if exports to the US drop. While no one wants to think same-store sales in China could flatten, a tightening in consumer spending could cause that.
Doulgas A. McIntyre
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