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Food and Drinks

The KFC China story: how Taiwanese businessman Tony Wang Tatung introduced a nation to fast food, and why there are no Chinese franchises overseas

  • When KFC opened in Beijing in 1987, it was the first US fast food outlet in any communist country
  • Tony Wang, who led the project, introduced new concepts, including hygiene and the art of queuing
PUBLISHED : Tuesday, 18 December, 2018, 8:17pm
UPDATED : Wednesday, 19 December, 2018, 8:55pm

It was a chilly November day in 1987 when an animated crowd gathered outside a new shopping centre a stone’s throw from Beijing’s Tiananmen Square.

Members of the international press corps and curious locals braved the blistering cold to witness a historic moment that would have had Chairman Mao Zedong spinning in his nearby mausoleum – the opening of a three-storey Kentucky Fried Chicken restaurant.

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That was three years before McDonald’s entered the country. It was four years before the fall of the Berlin Wall and the dissolution of the Soviet Union, and the American fast-food joint – with its white-haired Colonel Sanders sign and racks of golden fried chicken – was a first not only for China but for the whole communist bloc.

“On the opening day, 20 to 30 reporters followed me around wherever I went,” says Tony Wang Tatung, who led the venture.

The restaurant sent ripples through the country’s catering industry, says Wang, who bears an uncanny resemblance to the colonel when he smiles.

“The Beijing Evening News ran an article saying the toilet … was cleaner than the pond in a Chinese restaurant,” he says from his home in the Taiwanese city of Taichung.

“The opening of that first KFC in China affected food safety and hygiene in the country’s catering operations, and introduced more civilised concepts such as queuing for food.”

The restaurant was an immediate hit, with a two kilometre queue outside in the days after it opened, Wang says.

“They came to KFC not so much for the chicken, but to experience a bit of Americana. People were curious about the American lifestyle. The shop did brisk business and KFC recouped its investment within a year of opening.”

The appeal has been enduring: today, KFC is the most popular American fast-food operation in China, with more than 5,000 outlets. Since 2016 the licensee of KFC in China has been Yum China, a listed company in which Ant Financial Services, an affiliate of Alibaba, owner of the South China Morning Post, is a minority investor.

Born in China’s Sichuan province, Wang’s family relocated to Taiwan in 1949, when he was five years old, following the Chinese civil war. He graduated from Taiwan Chung Yuan Christian University in 1968 with a civil engineering degree, and completed a master’s degree in management science at Stevens Institute of Technology in New Jersey in 1973.

After a short stint working in pharmaceuticals marketing in New Jersey, Wang was headhunted by KFC in 1975 to work as a business analyst at its headquarters in Louisville, Kentucky.

With dreams of becoming an entrepreneur, he left KFC in 1980, and the following year met then Tianjin city mayor Li Ruihuan – who was later elevated to China’s powerful Politburo Standing Committee – when he was visiting San Francisco with a delegation.

“He asked me to teach them how to start a fast-food business in China. I went to Tianjin and saw there was good potential, [but] it was a risky decision because it was uncharted waters,” he says.

In 1982, with Singaporean and Chinese partners, Wang opened Orchid Food in the city, serving hamburgers and sandwiches.

“Me and my Singaporean partner put in US$300,000 for the venture. The decor was very basic. We opened a second Orchid at Tianjin Water Park 10 months later,” he says.

Its interest piqued by Wang’s success with Orchid, KFC came knocking on his door again in 1986, offering him the position of vice-president for Southeast Asia and China operations. Wang took the bait and sold his share in Orchid.

KFC had already established a foothold in Southeast Asia in the early 1980s, with chains in Singapore, Indonesia, Malaysia and Thailand, as well as in Hong Kong. But the company was stumped when it came to communist China.

“Richard Mayer, who was then KFC’s board chairman, was eager to enter the China market. They had a China division based in Hong Kong, and hired a South African head of China development. They worked on [expanding into China] for many years to no avail. The South African couldn’t even get a visa for China,” Wang says.

At the time, the Hong Kong and Singapore KFC chains were run by franchisees. The company bought back half of the franchise in Singapore – where residents had a better grasp of Mandarin than Hongkongers at the time – and Wang led the China drive from the Singapore office.

The first Beijing branch was a joint venture between KFC and the ministries of tourism and animal husbandry – the latter supplying the chicken.

Wang says he encountered his first problem while renovating the branch. The floors had to be tiled three times because the builders were not skilled enough to produce an even floor.

“Eventually we had to hire builders from Guangzhou, which had a more advanced construction industry due to its proximity to Hong Kong. The staff from Guangzhou came with rucksacks filled with instant noodles, because there were none in Beijing then, and southerners didn’t like northern Chinese food,” he says.

A stumbling block was KFC’s stipulation that only chilled chicken could be used.

“China didn’t have the expensive transport system needed for chilled chicken. I flew back and forth between China and the US several times to persuade KFC to let us use frozen chicken for its Beijing outlet,” Wang says.

They had a China division based in Hong Kong, and hired a South African head of China development ... The South African couldn’t even get a visa for China
Tony Wang

Salt was another stumbling block, because “KFC uses fine-grained salt, but China’s was coarse-grained. We need to apply [to the Chinese government] to import salt. Opening a franchised restaurant is very technical because you have to follow all the specifications along the whole assembly line.”

Wang then had his work cut out training the frontline staff.

“We took videos of preparations for the opening of two or three Singaporean stores, showing Chinese staff how customers came in, queued and ordered, and how staff served them at the counters. The staff even had to be taught how to count money. The training was very tedious,” he says.

By the time Wang left KFC in 1990, it had opened five outlets, in Beijing and Shanghai. “My mission was accomplished and I was bored,” he says.

It was not the end of Wang’s forays into the restaurant business, though. In 1991, he introduced US steakhouse chain Sizzlers to Taiwan, then sold the franchise in 1994. In the decade that followed, before retiring from the industry in 2003, he took a string of other Western restaurant franchises, including Jack in the Box, Kenny Rogers and Le Jazz, into countries around the world.

 

“That’s how I made my money – opening and expanding a franchise, then selling it,” says Wang, who now teaches franchise management at Tunghai University in Taichung, and Beijing Normal University’s campus in the southern Chinese city of Zhuhai.

Ninety-five per cent of Taiwanese dining franchises and 85 per cent of Chinese ones are run the wrong way. That’s why you don’t see any Chinese dining brands finding success overseas, even 40 years after China opened up to the world
Tony Wang

Although big Western franchises are household names in China today, there is still a glaring lack of home-grown Chinese brands in overseas markets.

“China has schools and exams for chefs, but not for restaurant management, because it’s the cuisine they respect,” Wang explains. “The dining-out concept in the West is experience-oriented … Chinese only care about the food and having a full stomach. That’s why China does not have a sophisticated restaurant industry which can be exported overseas.”

There is also a fundamental difference between how Chinese and Westerners regard franchise management, he says.

“In the West, franchisee and franchiser see each other as partners and develop the brand together. Chinese see franchises as a money-spinner; they don’t grow the brand.

“Ninety-five per cent of Taiwanese dining franchises and 85 per cent of Chinese ones are run the wrong way. That’s why you don’t see any Chinese dining brands finding success overseas, even 40 years after China opened up to the world.”

Famed Beijing roast duck chain Da Dong opened an outlet in New York in December 2017 to huge fanfare, but it was a lame duck. Critics from The New York Times and New York Magazine both gave it zero stars.

Another noted Beijing roast duck chain, Quanjude, opened outlets in Canada and Australia. Having approached Quanjude before for its overseas expansion, Wang thinks he knows why it was not well received.

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“Opening a successful franchise is all about standardisation. Western food is easier to standardise. Chinese cuisine is complex, and Chinese chefs have lots of discretion over the food procurement and cooking processes,” Wang says.

He says Quanjude’s management agreed to collaborate with him, but their concepts clashed and nothing came of it.

“They don’t have any marketing sense,” he says. “They wanted their overseas outlets to have the whole [Beijing] menu … I thought it only needed the trademark roast duck dish, because other dishes would have to be tailored to Western tastes.”