McDonald’s expands its operational map in the Chinese market and opens more outlets in the country

A corner of Hubei Smart Food Industrial Park in Xiaogan, central China’s Hubei province, July 3, 2024. Photo: Courtesy of McDonald’s China

McDonald’s China, together with its four major suppliers, announced the launch of an industrial park in the city of Xiaogan in central China’s Hubei province on Wednesday, highlighting the importance of the Chinese market in terms of the food supply chain.

With a combined investment of 1.5 billion yuan ($206 million), the park, named Hubei Smart Food Industrial Park, is a joint project with Bimbo QSR, XH Supply Chain, Tyson Foods Inc and Zidan, according to information provided to the Global Times.

The park is expected to produce 34,000 tonnes of meat products, 270 million rolls, 30 million pastries and 2 billion packaged products per year. It also includes a 25,000 m² high-level automated warehouse for frozen, chilled and dry products, reducing logistics time by 90% between manufacturing and arrival at destination.

Taking advantage of local geographical advantages, the park will become a supply center for McDonald’s in central and western China, improving the efficiency and stability of supply to its outlets in the region, the company said.

“McDonald’s has been deeply rooted in China for more than 30 years, and the park is an echo of our long-term development in China,” said Phyllis Cheung, CEO of McDonald’s China.

“Without a long-term strategy, we have no structural advantage in China,” Cheung noted.

The American food giant continues to expand its business map in China. By the end of June 2024, there were more than 6,000 restaurants and more than 200,000 employees in the market. China has become the second largest and fastest growing market for McDonald’s. In 2023, McDonald’s China unveiled its ambition to operate 10,000 restaurants by 2028.

To support this initiative, McDonald’s and its suppliers have invested more than 12 billion yuan between 2018 and 2023 to develop new production capacities and improve supply chain sustainability.

Observers said the industrial park reflects foreign companies’ confidence in doing business in China as the country takes concrete steps to promote reform and opening-up.

China’s foreign direct investment from January to May 2024 reached 412.51 billion yuan, with the number of new foreign-backed enterprises reaching 21,764, up 17.4 percent year on year, according to data from China’s Ministry of Commerce.

According to a recent survey by the American Chamber of Commerce in China, the majority of U.S. companies saw improved profitability in China in 2023, and half of survey respondents ranked China as their top choice or among their top three global investment destinations.

Olaf Korzinovski, executive vice president of Volkswagen China, responsible for production and components, also shared his understanding of supply chains in China with the Global Times.

Volkswagen has been present in China for nearly 40 years. “In order to create more value for our customers,” the Volkswagen Group is accelerating the pace of innovation in China and systematically pursuing the digitalization process, Korzinovski noted, adding that the company is strengthening local capabilities with accelerated decision-making efficiency.

The Global Times