McDonald's Bucks Derisking, Raises China Bet

The decision by McDonald's to take greater control of its China business and expand aggressively in the face of a consumer slowdown and geopolitical tensions seems risky - but the potential payoff is great, analysts say, as reported by Casey Hall and Kane Wu for Reuters.

Last month, the US-based burger maker cut a deal to repurchase the 28% stake in its China business that Carlyle Group took in 2017.

Last month, the US-based burger maker cut a deal to repurchase the 28% stake in its China business that Carlyle Group took in 2017, giving it a 48% share in $6 billion worth of operations that include Hong Kong and Macau.

The move contrasts sharply with the prevailing trend of multinational corporations reeling back investments in China or even exiting altogether because of geopolitical and economic challenges.

One advantage for McDonald’s is its majority partner in the China business, CITIC, provides top-level political cover, said Jason Yu, Greater China Managing Director of market research firm Kantar Worldpanel.

"Having a very powerful Chinese state-owned conglomerate as a partner means they are not going to be at the forefront of the geopolitical situation; that is quite important," Yu said.

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