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SCMP Reporter

Mention the word honggaoliang (red sorghum), and the first thing to come to mind may be the movie of the same name by mainland director Zhang Yimou.

 However, the word could soon take on a new image with the fast expansion of the Honggaoliang fast-food chain.

 Founder and director of the Zhengzhou-based firm, Qiao Ying, chose the name Honggaoliang to capitalise on the success of the movie while his noodle chain builds up its image.

 Mr Qiao has set very ambitious targets - to build an empire of 1,000 Honggaoliang outlets by 2000 and be the first global Chinese fast-food chain, as successful as McDonald's.

 In fact, Honggaoliang outlets bear a strong resemblance to those of the United States-based hamburger giant McDonald's.

 The design of the H-shaped logo and its red and yellow colours - which also are the colours for the design and furnishings of the outlets and the staff uniforms - are similar to McDonald's.

 The menus are quite different, however. While McDonald's traditional attraction is hamburgers and fries, Honggaoliang's is soup noodles with beef or mutton.

 Mr Qiao's courage and determination to pick McDonald's as its target rival has intrigued foreign media, and his belief that Chinese food culture should have a bigger place in the growing global fast-food market has attracted many followers.

 Mr Qiao said businessmen from places such as Australia, Canada, Germany, Guam, Indonesia, and the US had inquired about taking Honggaoliang to their home countries.

 'Some even hope to take over the chain,' Mr Qiao said. 'Regardless of the outcome of the talks, Honggaoliang has to penetrate into the global market this year.'  This year, the company plans to open at least one outlet each in Canada, Germany, Indonesia and the US.

 The company has registered its name in those countries to prevent its idea being copied.

 Started just over two years ago, the chain has 50 outlets across the mainland, spanning its home base in Henan, plus Hebei, Beijing, Tianjin, Hainan and Shanxi.

  The company has almost doubled in size in a year, and while he is still a long way from his 1,000 outlets, Mr Qiao is confident the target can be met.

 'You have got to lay down a good foundation before you can grow fast,' he said. 'I am optimistic about the present development.'  To facilitate expansion, the company has set its sights on Shenzhen.

 It will soon set up an investment vehicle with an unidentified large financial institution. This venture will not only invest in Honggaoliang outlets, but also expand the chain through mergers and acquisitions of other, supporting food companies.

 'If this proves to be an effective means to assist our growth, we will do the same in other areas as well,' he said.

 Shenzhen residents will have a chance to see for themselves how Honggaoliang compares with McDonald's now that its first store has opened, and two more will follow later this year.

 Another 10 are planned for next year, all located next to McDonald's.

 Apart from testing its strength against the world fast-food leader, McDonald's, this close proximity also will allow Honggaoliang to learn how its rival has become a huge success.

 To fulfil his dream of 1,000 stores, Mr Qiao would need at least 1.5 billion yuan (about HK$1.38 billion), given that each store needs investments of between 1.5 million and two million yuan.

 However, the actual investments for the parent company will be less as it plans to franchise out most outlets. Still there will be a need for capital which will be huge for the privately run firm.

 Mr Qiao has hoped the company could issue shares to foreigners this year to raise US$100 million to fund expansion under a central government initiative.

 However, eight months have passed and there is no news about the share sale plan.

 'Issuing shares is not an easy matter,' Mr Qiao conceded. 'It needs several years of preparations.'  Despite his claim of having made much headway, Mr Qiao said he could only hope the company could overcome practical restrictions and be floated by 2000.

 The private entrepreneur is not troubled by the lack of capital as his firm has been able to secure support from financial institutions, with some stores being invested in by those institutions.

 Mr Qiao would not reveal exact details of his business plan or sales figures in what is a highly competitive business.

 He would only reveal that sales in the first half of 1997 doubled from a year ago, but he would not say how much it was behind his target of generating sales of five billion yuan a year by 2000.

 Mr Qiao, who always speaks about Honggaoliang in an optimistic tone, said: 'Other similar attempts - like Ronghua Ji [Glorious China Chicken] as against Kentucky Fried Chicken - to build a fast-food chain with Chinese characteristics have failed because they merely tried to imitate the Western counterparts without really highlighting their pros and hiding their cons.

 'We have been successful so far because we learnt the essence of management skills from Western fast-food companies but, have kept the uniqueness of the Chinese food culture,' he said.

 The difference does not only mean taste that suits Chinese palates, but also its nutritional value.



Noodle chain seeks success, Big Mac style