McDonald's is facing difficulties maneuvering the Chinese market. (Photo : Getty Images)
Yum Brands, the owner of Pizza Hut and KFC sold its shares to Ant Financial and Primavera Capital for $480 million to be able to survive the fierce market in the country.
McDonald's is now looking for an appropriate business model that will make the company revive from major losses in the past two years. Experts believe that the best way to go is to form a merger with a Chinese company.
Both Yum Brands and McDonald's have been hurting in terms of sales. McDonald's was greatly affected by the meat scandal in 2014, where a supplier was selling the franchise tainted beef.
Market tastes are also changing and more Chinese customers are shifting to Chinese fast food or Starbucks.
"McDonald's is in trouble in China because it doesn't have the type of food or brand position that Chinese consumers want right now," said Shaun Rein, founder of the China Market Research Group. "There's a lot more competition from Chinese chains like Kung Fu or Japanese noodle chains like Ajisen, or from western brands like Starbucks."
A columnist for Bloomberg thinks that choosing the correct partner is crucial to change the game for McDonald's.
Nisha Gopalan stated, "The search for a partner is key. McDonald's needs one that's nimble enough to adapt not just to changing tastes but to the rise in online shopping, especially through mobile devices."
Rein also added, "In order to reinvigorate growth it needs a new business model for the country. The best way to do that is to partner with folks who might know the China market a little better.
Despite the level of difficulty for McDonald's, the burger giant shows potential in certain regions. In the second quarter of 2016, sales went up by 1.6 percent in China's high-growth markets.
