Secrets to KFC's Dominant Success in China

Ted Levitt, the brilliant Harvard Business School marketing professor who died in 2006, was an early thinker on what it means for companies to sell their products in other countries. His take was that the most successful firms would be those that developed low-priced, truly standardized products that didn't have to be tailored to local markets.

It turns out the answer is not so clear cut. Cars, for example, can be competitive global products with minor tinkering such as switching the steering wheel from one side to the other. Hospitality is another industry where a consistent focus on customer satisfaction pays off everywhere from Kansas City to Kuala Lumpur.

But an alternative approach to global strategy is to customize offerings for local audiences, just as fried chicken powerhouse KFC, owned by Yum! Brands, has done in China, where it opens a store a day. KFC, which served its first meal there in 1987, has been successful by ignoring traditional fast-food wisdom, where a cookie cutter approach is used for everything from the makeup of the menu to the architecture of the buildings.

Here are three things KFC did differently, as chronicled in a recent case study at Harvard Business School.

Focus on China. Where many fast food franchises in Asia try to duplicate a Western experience, KFC decided to promote itself as a local organization rather than as an outside presence. So instead of importing Western managers, KFC hires college students who understand the Chinese consumer but also have experience in the American way of doing business. All food is locally sourced.
Adapt the product to local tastes. Other than dark-meat chicken sandwiches and some "original recipe" options, American diners will find very little that is familiar on the menu, which includes such local delicacies as egg tarts, shrimp burgers and congee (rice porridge). Competitors including McDonald's and Popeyes Chicken & Biscuits offer much more Western-style menus.
Reactive to local concerns. As alarm mounts in China about what Western diets are doing to the health of the local population, KFC has reacted with a healthier menu and by sponsoring exercise and youth events.

"One of the lessons I take away from this case is that to do China, you have to do China," Mary Shelman, who co-wrote the case, tells HBS Working Knowledge. "It's a large, complex, and dynamic market that deserves single-minded attention."

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(Photo by Flickr user norsez, CC 2.0)

Sean Silverthorne

Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.

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