Reputation Rebuilding is a huge task
Horsemeat Scandal has swept out the entire Europe recently. This scandal affects so many brands. Ikea became the latest company involved in the horsemeat scandal as it confirmed a batch of its meatball contained trances of the meat. The UK, Czech Republic and France are among over 20 European countries where Ikea products are affected.
Video From The Guardian: Ikea Meatballs Found to contain Horsemeat
This scandal reminds me of KFC China. In February, Yum was off to a rocky start in trading as the company reported surprise weakness in China, where its business is expected to shrink this year. It is possibly worst case for Yum in China.
Video From The Guardian: Ikea Meatballs Found to contain Horsemeat
This scandal reminds me of KFC China. In February, Yum was off to a rocky start in trading as the company reported surprise weakness in China, where its business is expected to shrink this year. It is possibly worst case for Yum in China.
Many of the reasons for KFC China's recent troubles are macroeconomic. However, there was the recent "45-day chicken" food safety scare – an episode that laid bare the fragility of brand reputation. In late November 2012, Chinese media accused one of the chain's Shanxi province-based suppliers of pumping its chickens full of noxious chemicals to ensure they were fully grown within 45 days. Reports from Xinhua, the country's official newswire, claimed that the feedstuff Suhai prepared was so toxic it could even kill flies. KFC immediately denied the allegations about Suhai.
But it was enough for social media users to take a hatchet to KFC's reputation. There is a massive social response against fast-growing chicken. One called the chain Kentucky Toxic Chicken. "American people don't eat it, so they take their poisonous garbage and bring it to China?! Resolutely do not eat it!" wrote one user on Sina Weibo, China's most popular microblog, which has 400 million users. 85% of respondents to a Sina Weibo poll said that they believed KFC and McDonald's chicken products were unsafe. Three quarters said that they would stop eating them.
But it was enough for social media users to take a hatchet to KFC's reputation. There is a massive social response against fast-growing chicken. One called the chain Kentucky Toxic Chicken. "American people don't eat it, so they take their poisonous garbage and bring it to China?! Resolutely do not eat it!" wrote one user on Sina Weibo, China's most popular microblog, which has 400 million users. 85% of respondents to a Sina Weibo poll said that they believed KFC and McDonald's chicken products were unsafe. Three quarters said that they would stop eating them.
YUM! makes half its profits in China and the pace at which it is opening new outlets is still ferocious – it plans another 700 outlets there next year. They want to restore trust, they want to come back with a very strong recovery. Noting that the company is planning a public relations campaign after the Chinese New Year. They believe that they need time to rebuild trust, Not cash.
KFC Launches "Operation Thunder" To Fix Image in China
This page is form the KFC China official website. The main idea of this page is to ensure the supplies of safe chicken.
Yum! Brands pledged to ramp up safety and tighten requirements for suppliers in China to win back consumers after a probe into chicken providers dragged down local sales. The company will work with suppliers to phase out smaller chicken operators that aren’t sufficiently modernized, the company said in a statement today. The supplier review process will put a “more stringent emphasis on food safety,” it said. KFC is trying to revive revive results in the Asian nation after a former chicken supplier was found to have supplied meat with too much antibiotics.
However, the rebuilding is a really huge task to accomplish. First, food safety is a really sensitive topic in China. It is very hard to regain trust under this kind of circumstance. Second, most difficulties are from Competition. McDonald's has promised that by 2015 it will be opening a new restaurant in China every day. Burger King has announced plans to open 1,000 outlets by the end of the decade, presenting itself as a fresher, classier alternative to McDonald's. Chargrilled burger chain Carl's Jr has started popping up in Shanghai, and Californian chain Fatburger in Beijing. It is not just western style chains. Dicos, a Taiwanese chain which sells cumin-flavoured chicken fries and pineapple-chicken-mayonnaise sandwiches, has more than a thousand outlets in China, most of them in small cities. At the same time a number of domestic fast-food restaurants have emulated the type of brightly lit, sanitized, plastic environment that was once the exclusive province of western brands.
Resources:
http://www.kfc.com.cn/kfccda/index.aspx
http://www.guardian.co.uk/
http://www.cnbc.com/id/100434722/039Worst_Case039_Possible_for_Yum_in_China_Analyst
http://blogs.ft.com/beyond-brics/2012/12/07/kfc-in-china-its-not-just-the-economy/#axzz2MD54yH5P
http://www.brandchannel.com/home/post/2013/02/25/KFC-Tries-to-Rebuild-Brand-in-China.aspx
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