The Hindu Business Line : `McDonald's growth in India hit by poor infrastructure'

MCDONALD'S, the global fast food giant has 600 stores in China and employs 1,45,000 directly and 6,000 through its supply chains. In contrast, it has just 50 outlets in India.

What are the reasons for this huge gap?

For McDonald's India presents a difficult operating environment to get a fair return on investment, consumer tastes are very diverse and the numbers of people who can afford our prices is smaller compared to China.

Most important is the shortage of infrastructure, especially highway roads linking smaller towns in India, which China has achieved.

For instance Wu Han in interior China has 25 outlets.

Identifying these as key factors for the huge disparity in the company's growth in the two countries , Mr Peter Tan, President, Greater China of McDonald's China Development Company, said "McDonald's is hopeful that in the next 5-10 years we will grow significantly in India".

He was delivering the keynote address at the International Conference on `Will the 21st Century belong to China and India', organised by the Economic Forum of the Indian School of Business (ISB).

India continues to present a big opportunity for McDonald's and it is a matter of how we can consolidate.

In the US, for example, the company has 17,000 stores and is optimistic of further growth through a strategy of providing wholesome choices to the consumers, Mr Tan later told newspersons.

In the US, Australia, European Union countries and the UK the company is aggressively pursuing its salad offering as a wholesome diet.

This strategy is moving to Asia, with McDonald's having recently launched it in South Korea and planning to hit the market in Hong Kong in a month's time, Mr Tan said.

While being non-committal on when it would reach India, he said launching of these wholesome diet options would depend on the customer preferences.

"We have been successful wherever there is a huge consumer base.

"In India as economic growth empowers larger numbers of people with greater affordability, the market for our products will increase," he said.

Comparing the strengths and economic growth of the two Asian powers, Mr Tan said while China has taken the manufacturing route with attention on attracting foreign direct investments, sustained economic reforms and conscious efforts to reduce red-tapism and corruption, India has leveraged its strengths in software and English language.

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`McDonald's growth in India hit by poor infrastructure'