McDonald's Corp's MCD decision to take greater control of its China business and expand aggressively amid consumer slowdown and geopolitical tensions reportedly seems risky, but the potential pay-off is great.
MCD's move contrasts sharply with the ongoing trend of multinational corporations reeling back investments in China or even exiting altogether because of unfavorable geopolitical and economic conditions, reported Reuters.
Last month, MCD agreed to acquire global investment firm Carlyle Group Inc's CG minority ownership stake in the strategic partnership that operates and manages McDonald's business in mainland China, Hong Kong, and Macau for an undisclosed amount.
"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," the report quoted Jason Yu, Greater China managing director of market research firm Kantar Worldpanel.
According to Euromonitor, the market value of limited-service restaurants in China is on track to grow about 4% annually on average through 2025, with MCD grabbing 70% of the limited-service burger-focussed restaurants in the nation, as per report.
Price Action: MCD shares closed higher by 1.46% at $285.96 on Friday.
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