Fast Food Thrives Amid U.S. Exports Flooding China Price, More Than Quality, Drives Many Choices

Walk into any of the more than 30 McDonald’s in this city during lunch time and you might think they were giving away hamburgers instead of selling them.

At the McDonald’s across from Tiananmen Square, Chinese customers crowd five-deep around the counters, pushing their way toward the cash registers. Seats are so scarce that some people eat their McChicken sandwiches while standing in the aisles. Outside, children pose for photos with a life-sized statue of Ronald McDonald on a wooden bench that permanently sags from the weight of so many visitors.

Fast food is one of the most popular and most obvious American exports that are arriving on the streets of China every day as U.S. and other foreign companies try to corner a piece of this 1.2 billion-person market.

In the past 10 months, branches of Dunkin’ Donuts, Domino’s Pizza, Subway, Chili’s and Dairy Queen have opened in Beijing. Many local supermarkets carry American products, from Oreos and Head & Shoulders shampoo to Skippy peanut butter and Pabst Blue Ribbon Beer.

Economic reforms by the late Deng Xiaoping sparked this rush of foreign consumer items and restaurants. Although there is still a large gap between wages in rural and urban areas, average Chinese incomes have risen to about $60 a month - nearly double what they were 2-1/2 years ago.

Foreign companies have made huge investments here in hope of capturing the fancy of the country’s emerging middle class and those with higher incomes. Some thrifty Beijing shoppers say they think American goods are often of higher quality than their Chinese counterparts, but complain that they are still too expensive.

In the Jianhua Shop, a grocery store about two miles east of the Forbidden City, Procter and Gamble’s Tide detergent vies with White Cat, a Chinese brand from Shanghai.

Procter and Gamble is one of the most visible U.S. companies in China. But not surprisingly, the plastic bags of Tide that sell for 67 cents are not as popular as the bags of White Cat, containing 50 percent more laundry soap and selling for 9 cents less.

“Chinese people don’t believe that the quality is that much different,” says Dai Yan-Ping, who earns $54 a month as a clerk at the store. And, after all, “Nine cents is nine cents.”

Down the aisle stroll Chen Shiyu and her friend, Li Lan, carrying a tube of Colgate toothpaste. They have picked it up not because it is American but because they’ve seen it advertised on TV - and because the 47 cent price is hard to beat.

“The most important thing for us is the price,” says Chen, a 40-year-old accountant, “not where it is made.”

For an American, spotting U.S. products in a grocery store here is easy because they are familiar. For Chinese, though, they are sometimes hard to recognize.

“I don’t know where this is from,” says Chen, picking up a green, plastic bottle of Rejoice shampoo, which she often buys. Except for the word “Rejoice,” the rest of the lettering on the bottle is in Chinese and makes no mention of the United States. One has to look at the small print on the back to learn that it is made by Procter and Gamble.

Some U.S. companies emphasize their products’ American roots. Packaging for Oreos announces in Chinese and English that it is “America’s Favorite Cookie.” Act II microwave popcorn features a cartoon popcorn kernel wearing sunglasses, a crown and carrying an American flag.

Other companies, though, try to insulate themselves from bouts of Chinese nationalism and take the same low-key approach as Procter and Gamble. As one U.S. Embassy official says: “Why tie your wagon to something that can change?”

Some say that many U.S. goods sell for higher prices than their Chinese counterparts because they are higher quality. But the price difference would be even larger if these American brand items weren’t made in China, because of tariffs of 40 percent to 80 percent. The cost of shipping and other taxes pushes the price of most imports far beyond the means of many Chinese.

For example: A bottle of Sutter Home White Zinfandel from Northern California costs $4.99 at Annapolis Wine and Spirits in Maryland. It is $18.13 in Beijing.

But some American products made in China would be a bargain in the United States. The Big Mac meal at McDonald’s - which includes medium fries and a medium coke - costs $2.34 in Beijing. A nearly identical meal at a McDonald’s in Towson, Md., is $3.14.

Some American companies owe part of their success to having arrived in this market early. Coca-Cola was selling soda in China before the 1949 Communist revolution and returned soon after Deng opened the country to the world, in 1978. Today, Coca-Cola has one of the highest name recognitions among foreign products - 62 percent.

But in the battle to capture the attention of consumers, American companies can’t match the Japanese. The Gallup Organization in 1995 conducted a nationwide survey to measure recognition of 100 brand names. Although the survey included nearly twice as many U.S. brands as Japanese, six of the top 10 came from Japan: Hitachi, the electronics company, placed first with 65 percent, followed by Coca-Cola. Mickey Mouse placed seventh with 54 percent and Marlboro eighth with 51 percent.

American companies also have succeeded in China by catering to Chinese tastes. KFC is a natural in a land where people prefer chicken to beef. Sitting in a KFC recently, a Chinese woman said she enjoyed dishes such as the spicy chicken wings because they reminded her of the hot food from her home in Hunan Province. While McDonald’s emphasizes hamburgers in the United States, three of its four value meals in Beijing are chicken and fish.

Newcomers such as Dunkin’ Donuts - now owned by a British conglomerate - may have a tougher time selling such foreign concepts as jelly doughnuts in an area where people aren’t as fond of sweets.

“They don’t know that doughnuts are for breakfast,” says company representative Donny Huang. At a newly opened Dunkin’ Donuts in one of the city’s embassy districts, employees are unfailingly polite, opening the doors for customers and smiling constantly. But some haven’t quite got the hang of doughnuts yet. When placing a Boston Creme with chocolate icing in a bag recently, one of the clerks put it in upside down.