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Mark O'Neill

China's feedgrain king plans to set up 10,000 fast-food outlets across the country and challenge McDonald's and KFC Group as the top nationwide chain, according to a company official.

An official of the Eastern Hope Group, owned by Liu Yongxing, said Mr Liu had signed an agreement with South Korea's biggest fast-food chain, Genesis, to set up Shanghai BBQ Fast Food Management, which aimed to open 10,000 outlets across the mainland by 2010.

'Our prices will be 10 per cent to 15 per cent lower than those of Big Mac and KFC and we will have Asian flavours, including Chinese and Korean,' she said.

'Our marketing strategy will be different. Big Mac and KFC open big stores in busy areas and wait for customers.

'But we will open many small stores, of 80 square metres to 200 square metres, in residential areas and mainly rely on outside deliveries.'

The first store is due to open in the Pudong district of Shanghai at the end of next month or early May. It will use the brand name BBQ or, in Chinese, B-B-kou (kou means mouth).

Genesis was founded in 1995 by Yun Hong-gun, who set up the BBQ chain, making fried chicken and other western foods and challenging McDonald's and KFC. Within eight years he has surpassed those two and become the biggest fast-food chain in South Korea, with 1,500 outlets. Each month 300 shop owners apply for one of his franchises.

His slogans are 'top in health, cleanliness and taste' and 'make each franchise holder make a profit'.

Mr Liu aims to repeat Mr Yun's success in China.

But policy restrictions mean that, for two years, the new company will have to operate the stores itself and can sell franchises in 2005, the only way to expand rapidly. A franchise applicant will need to invest 300,000 yuan (about HK$282,723) for a 100 sq m shop.

By the end of this year, the two sides will invest US$3 million, with each holding 50 per cent. The deal between Hope and Genesis took six months to negotiate.

Last year Mr Liu, 54, ranked eighth in Forbes  magazine's 100 most wealthy people in China list, with personal assets of US$480 million. His younger brother Liu Yonghao, 51, was sixth with US$540 million.

The pair and two other brothers founded the Hope Group in their native Sichuan in the 1980s and built it into China's biggest feedgrain company. Yonghao fell out with the others and they divided the empire.

BIG ON BBQ

The joint venture, Shanghai BBQ Fast Food Management, aims to open 10,000 outlets by 2010

Prices will be 15 to 20 per cent cheaper and feature Asian flavours

The venture will open smaller stores, a different marketing strategy to bigger rivals



Feedgrain king to build Chinese fast-food empire