McDonald's Name Change in China.

McDonald’s, a company that has been running since the 1940's, is going to be changing its name in China due to the consumer wishes’, as well as a strategy to increase sales. Previously, the corporation was called Maidanglao, a mandarin rendition of the company's name, into the now Jingongmen, or Golden Arches (Shane, 2017). Although the company stated that the branding will remain the same through a spokeswoman, and that it is just the registered business name that will be changes, there are still questions to be answered as to how will this change affect the stakeholders of the company as well as the corporation itself.  

McDonald's in China (source: eater.com)

This is not the first time that a major company has changed their name, and it has lead to either catastrophy or success. In 2011, the Coca Cola company changed their name to Ke kou ke le, which translated to “tasty and fun”. Additionally, Google also officially changed their company name to Gu ge, or “harvesting song” (Shane, 2017). So this is not a new idea, and has been implemented by big corporations, so it is seen where the motivation came from to change McDonald’s name. Furthermore, Coca Cola’s financial statements showed that even though they only owned 15% of the market, the amount of cases sold grew exponentially after the name change (Bailey, 2014). Although there are many examples that show promise for McDonald’s, there were the odd times where a company’s name change ended up being its downfall. In China, the online rental platform Airbnb attempted the change its name in order to compete with competitors. It changed to a translation that meant “welcome each other with love” (or Aibiying) . Yet with only 80 thousand listings, the company could not compete with their competitor Tujia, with 400 thousand listings online. According to locals, the new name was also harder to produce and therefore, made it less attractive to the target market of 35 year old adults in China (Thomas, 2017).

Coca Cola after their name change (source: slideshare.net)

So how will this affect McDonald’s stakeholders? According to an article by the Panmore Institute, McDonald’s identifies its employees as its top stakeholder group, followed by its customers, and investors (Smithson, 2017). What the company was trying to do was to make sure the interest of every single stakeholder was of priority during the transition. With the name change, as mentioned previously, the amount of sales coming in might decrease, depending on if the consumers find the name to be appealing or not. If the sales stay the same, the stakeholders will not be affected but if they do, it is important to identify what will change within the stakeholders. The employees of any company, in this case of McDonald’s, want to develop or advance their career while having a good salary. As it is only the name, and not the branding that is changing, it is not predicted that a change in sales will occur, which means that the employees at McDonald’s will still be able to keep their regular schedule. The customers of McDonald’s want a variety of food options that are cheap, healthy and can be made quickly. In addition to the name change, the company wants to open 2000 new restaurants in China, Korea and Hong Kong within the next five years (Ping, 2017). This way, the consumers will be happy with the amount of options being offered to them. Predicting the outcome of the investors in McDonald’s will be the hardest to do as with the name change in China, the investors might not feel as confident in the company as they are going through a transition period, which can be a rough patch at times for the company’s stock.

A McDonald's employee (source: Glassdoor.ca)

Currently, McDonald’s main competitor is KFC, and their goal is that with the name change, they might be able to edge out their competitor. Currently, McDonald’s has around 4,500 locations across the country whereas KFC has more than 5000 (Ping, 2017). As McDonald’s are in a transition period, they might be overtaken by the fried chicken company. This is the risk that has to be taken along with any other transition in the restaurant’s history. KFC have had the 12 year advantage of arriving in China at 1987 (whereas McDonald’s came in 1999). Being the smaller company, it is dangerous to take these risks, but if it pays off, McDonald’s might end up being the strongest fast food chain in China.

KFC vs McDonald's (source: eater.ca)

This change was an attempt at a new strategy that would fix the culture, ethics, and globalization of the brand. Now, McDonald’s will look like a more customer-friendly restaurant as they changed specifically in order to please their consumers. McDonald’s has already emerged as an international brand, they are constantly mastering the business concepts, and are still emerging as a strong global restaurant chain today.




Sources:

Reuters, A. (2017, October 30). McDonald's changing company name in China - Article. Retrieved from http://www.bnn.ca/mcdonald-s-changing-company-name-in-china-1.900062

Wang, S., & Shane, D. (n.d.). McDonald's puzzles Chinese customers with name change. Retrieved from http://money.cnn.com/2017/10/26/news/companies/mcdonalds-china-name-change/index.html

Fuhrmeister, C. (2016, March 31). McDonald's Hopes to Open Another 1,500 Restaurants in Asia by 2021. Retrieved from https://www.eater.com/2016/3/31/11340116/mcdonalds-asia-expansion

Thomas, L. (2017, March 22). Airbnb is trying to do what Uber couldn't: win China. Retrieved from https://www.cnbc.com/2017/03/21/airbnb-china-rebrands-as-aibiying.html

Bailey, R. (2014, May 08). The Coca-Cola Company - Financial Analysis and Projections. Retrieved October 31, 2017, from https://www.slideshare.net/RaeannBailey/the-cocacola-company-financial-analysis-and-projections

Smithson, N. (2017, February 05). McDonald's Stakeholders: A CSR Analysis. Retrieved from http://panmore.com/mcdonalds-stakeholders-csr-analysis

Ping, X. (2017, January 04). Competitors and Companions: KFC and McDonald's in China. Retrieved from http://gnp.advancedmanagement.net/article/2017/01/competitors-and-companions-kfc-and-mcdonald%E2%80%99s-china