STORY: McDonald's confident in Chinese market: CEO of McDonald's China
SHOOTING TIME: Jan. 18, 2024
DATELINE: Feb. 2, 2024
LENGTH: 00:05:02
LOCATION: SHANGHAI, China
CATEGORY: ECONOMY

SHOTLIST:
1. STANDUP (English): ZHANG MENGJIE, Xinhua correspondent
2. SOUNDBITE (English): PHYLLIS CHEUNG, CEO of McDonald's China
3. various of McDonald's flagship store and products

STORYLINE:

STANDUP (English): ZHANG MENGJIE, Xinhua correspondent
"China is now McDonald's second-largest market with almost 6,000 restaurants like this. Recently, McDonald's announced a decision to increase its holding to 48 percent in its Chinese business. What's the reason for this move and its next plan? Let's find it out."

SOUNDBITE (English): PHYLLIS CHEUNG, CEO of McDonald's China
"I think there are external reasons and internal reasons behind the growth. Externally, we benefit from the fast urbanization of China. We have added millions and millions of urbanized population in the city. So that's why I think that is really the key reason driving growth.
Internally, there is one change that we made back in 2017. It is that we set up a company called Jingongmen (Golden Arches). So it is really mixed ownership of a global share, but also has local owners like CITIC Limited, CITIC Capital and also the Carlyle Asia Investment Group. So we have an "in China for China" strategy since 2017. So within those seven years, we opened close to 3,000 restaurants. So I think we operate 6,000 restaurants nowadays, but half of them have actually opened in the past six to seven years.
Last year in 2023, McDonald's Corporation made a decision to increase their stake from 20 percent to 48 percent for McDonald's in China. And I think that is a very encouraging news for all of us. The key reason for that is that first of all, China is the second-largest economy in the world, so as a global brand, you would definitely not miss such a big market. The second reason was that they can actually see the visible and exponential growth for us in the last six to seven years. We basically have doubled our restaurant counts, and also we almost doubled our sales volume as well. If you look at the 1,900 restaurants that McDonald's Corporation opened globally in 2023, more than half of that is contributed by China. So they can really see the potential of this market.
They also see there is a lot of innovation capability from this market. We actually learned a lot from the global market. But at the same time, they were also quite inspired by some of the digital initiatives and some of the national-level operation innovations that we have done here. So definitely with this increase of stake, that will actually increase the mutual learning from China to the global system.
So welcome to our McDonald's flagship restaurant in Shanghai. This restaurant is very special because the design theme is called "Cube." So as you can see, the design motif is actually a lot of cubes and combining them together they can actually form a burger graphic. Even the sitting area here is full of cubes, and the lightings are cubes. And one more thing is that this is a pure Chinese designer doing this flagship design. And this design is so famous right now that we've exported it to the rest of the global system.
So these are some of the locally relevant products we've made just for customers in China. The proudest product we've made here is called McSpicy Chicken Filet Burger. You know, the Chinese like thigh meat, and we don't like breast meat as much. But thigh meat is juicier, that's why we made it a fried patty. And we also like spice. The spicier, the better. We are proud of the fact right now that McSpicy has been exported to the rest of the world. So we are very happy about that.
Our supply chain is basically very self-sufficient. We leverage the agriculture system that we have here in China, sourcing of chicken to potatoes, to lettuce, to tomatoes. So basically, 99 percent of our produce here is made in China. So I think those two are the biggest achievements of us.
And of course, China's opening-up policy continues, and then the operating environment is very favorable to MNCs (multinational corporations) today. For example, we actually invest in 1,000 new restaurants a year, and the local government actually gave us quite a lot of support.
I think sustainable growth is a very important part of our company DNA so that's why we made the decision that for every new restaurant we build, we try as much as we can to be green-certified by the LEED (Leadership in Energy and Environmental Design) organization. So today, we have close to 2,600 restaurants that have been certified as green, sustainable restaurants. We are able to reduce 80,000 tonnes of carbon emissions a year. So by 2028, we will be reaching 10,000 restaurants. So that is our next five-year vision."

Xinhua News Agency correspondents reporting from Shanghai, China.
(XHTV)