Recently, McDonald's announced globally that it will increase its capital in the Chinese market, which has attracted widespread market attention. What is the significance of McDonald's global capital increase in the Chinese market?
On November 20th, McDonald's Global and Carlyle Investment Group announced that McDonald's Global had agreed to acquire a minority stake in Carlyle's strategic partnerships in mainland China, Hong Kong, and Macau. After the transaction is completed, McDonald's global shareholding in McDonald's China will increase from 20% to 48%, while the CITIC consortium will continue to maintain a controlling position with 52% of the shares.
McDonald's Global did not disclose the amount of this transaction. It is reported that the above transaction is subject to approval from relevant regulatory authorities and is expected to be completed in the first quarter of 2024.
Speaking of this equity acquisition, Chris Kampchinsky, Global President and CEO of McDonald's, said, "We believe that this is the best time to simplify the equity structure. The growing consumer demand in China has brought us enormous opportunities. China is McDonald's fastest-growing market globally, and its long-term development potential will continue to benefit us
The phrase 'fastest growing' is not polite. The reporter learned that China has become the second largest market for McDonald's globally, with over 5500 restaurants, doubling from 2017.
McDonald's recently released results show that in the third quarter of this year, McDonald's operating revenue and net profit increased by 14% and 17% year-on-year, respectively. McDonald's global same store sales increased by 8.8%, while the same store sales in international franchise markets, including China, maintained a double-digit growth of 10.5%.
Behind McDonald's vigorous development in China is the long-term improvement of the Chinese economy and the unwavering promotion of high-level opening-up.
Back in January 2017, the CITIC consortium formed by CITIC Group's two subsidiaries, CITIC Corporation and CITIC Capital, together with Carlyle Investment Group in the United States, reached a strategic partnership with McDonald's and established a new company to acquire McDonald's business in mainland China and Hong Kong for a total consideration of up to 2.08 billion US dollars. After the transaction is completed, CITIC consortium holds a total of 52% of the controlling stake, while Carlyle and McDonald's hold 28% and 20% of the equity, respectively.
From then on, McDonald's China vigorously promoted the process of localization. In the past few years, McDonald's stores in China have been continuously increasing, and the speed of opening new restaurants has gradually increased from about 250 per year in 2017 to about 500 per year in 2022. 50% of its stores are located in third and fourth tier cities. Since September 2019, McDonald's China has achieved over 30% growth in system sales.
In addition to continuously increasing storefronts, McDonald's China also established its first IT strategic research and development center in Nanjing in 2020 and announced additional investment in 2023 to provide McDonald's China with more localized information system comprehensive solutions. Through close cooperation among all parties, McDonald's China business has developed rapidly, and its capabilities in digital marketing and digital operations are constantly innovating.
McDonald's, a globally renowned enterprise, has increased its investment in the Chinese market, reflecting foreign investment's trust in China's business environment and confidence in China's economic development.
Since the beginning of this year, the trend of foreign investment in China has not decreased, and multinational corporations still have a positive outlook for investment in China. In the first 10 months of this year, 41947 new foreign-invested enterprises were established nationwide, a year-on-year increase of 32.1%. From the perspective of source, actual investment in China by Canada, the UK, France, Switzerland, and the Netherlands increased by 110.3%, 94.6%, 90.0%, 66.1%, and 33.0%, respectively.
Recently, the National Development and Reform Commission and the Ministry of Commerce held press conferences respectively, releasing positive signals of increasing efforts to attract and utilize foreign investment. This also gives multinational companies, including McDonald's, more confidence in the Chinese market and economic prospects.
McDonald's stated that looking forward to the future, both shareholders will continue to work together to promote the "Fire Development Plan" in the Chinese market, further expand the restaurant network, and better serve and connect customers.
According to McDonald's global development plan, McDonald's will open 1900 new restaurants worldwide in 2023, of which over 900 will be located in China. McDonald's China CEO Zhang Jiayin stated that McDonald's is currently advancing the plan as scheduled.
As the controlling shareholder of McDonald's China, we are pleased to see the recognition of our long-term partnership and further investment in the Chinese market from McDonald's headquarters. "Zhang Yichen, Chairman of CITIC Capital and Chairman of McDonald's China's Board of Directors, said," McDonald's China is moving towards the goal of breaking through 10000 restaurants by 2028. We are full of confidence and will continue to do our best