Although only a proportionately tiny number of foreign franchisors have tackled China to date, we have enough data to begin to understand the elements prerequisite for foreign franchise success in the coming struggles for sector dominance in the world's largest franchise market.
To put these elements in context, it is helpful first to categorize foreign franchisors according to their approach to China. Broadly speaking, foreign franchisors entering China to date have fallen into one of three categories:
Chinese Take-outs. Reactive rather than proactive, these franchisors sell China Master Franchise Rights to the first likely comer, and wait (often in vain) for the royalties to flow...
Bulls in the China Shop. Excited by the 1.3 billion consumer opportunity, these franchisors rush in themselves with an aggressive territorial land grab, often critically overestimating the relevance of their home-market franchise systems...
Global Thinkers - Local Masters. These are the Taoists of foreign franchisors, taking what is strong from their own franchise systems, and adapting to local ways. Their characteristically deliberate and iterative movements give them key competitive advantage.
In keeping with a franchise spirit that engenders dissemination of know-how, Baker Tilly, via this brief article, is pleased to share the 'Eight Locals', key elements of strategy from global franchisors who have successfully mastered the local way...
I. Local Market. It is a mistake to consider China as a single market - language, culture, development and consumer taste will vary as much between, say, Shanghai and Kunming as they would between Chicago and Athens. The potential for a foreign franchised product or service in any of China's regional markets wi ...