Execs from Subway, FOCUS Brands, and Euromonitor International offer their take on cracking the evolving market.
Fast food giants like McDonald's and KFC are amongst the pantheon of brands that have successfully grown in China for the past two decades.
But as the market continues to mature due to technology, changing consumer preferences and more spending capacity, niche players are also poised to grab a larger share, according to a panel of executives during the QSR Media Asia Conference and Awards 2019.
"Twenty years ago...we had no market. For us, this trend is good because we have an audience now that I don't think existed before," FOCUS Brands' Senior Vice President & Managing Director for Asia Pacific Ken Chen said. Last year saw the company's pretzel chain Auntie Anne's enter the country by opening its first location in Shanghai.
Subway, who has been in China for over 20 years, continues to identify as a niche offering in the country. But, the sandwich chain is looking to become more of an omni-channel player, having observed that Chinese consumers now are looking for more variety and convenience due to increasing discretionary income.
"We discovered that we needed to answer the question of whether we wanted to be a niche player or a multi-million-dollar brand - that defines your destiny," Subway APAC Regional Director Pavel Dorosevich explained, adding that brands who are able to provide multiple daypart options is required to become a "champion in the market."
Euromonitor International Research Manager Ivan Uzunov noted that there is opportunity for both niche and general offerings alike, noting that only 5% in China's restaurant industry consists of of quick-service and full-service outlets whilst the 95% are independent ones.
"Cracking the Chinese market is making space for new concepts which will attract those consumers. There's plenty of space for expansion for everyone," he said. "The problem there is that it's very hard to keep quality. International chains who want to expand there will need to look more in caring for their network."
Do brands need guanxi?
The panel also offered their take on guanxi, a Chinese term for "networks" or "connections", recognising its value but varied in terms of how essential it in expanding throughout the country.
"It's a way to access network but it's not the winning determinant," Chen said.
"It becomes critical in the retail space. Without strong connections with real estate moguls, will be running up with smaller locations and that's what makes the difference," Dorosevich added.
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