Kentucky Fried Chicken in China

PESTLE Analysis

I.Economic Forces
From the letter of Richard Mayer, “The poultry industry is one of the top
priority categories in China’s agriculture modernization and it is highly encouraged
by the government”. Supported by the study of Bingsheng and Han Yijun (2007),
Chicken production is the predominant subsector, accounting for 70 percent of poultry
meat production. Poultry output and poultry meat production have shown even greater
increases - with a growth of 277 percent and 814 percent, respectively, over the same
period. Poultry meat production increased from 1.60 million tonnes in 1985 to 7.24
million tonnes in 1995. This is an indication of much improved poultry production
efficiency.
The production growth has been achieved both by expansion of bird numbers
and by increased productivity. The improvement in productivity is associated with the
intensification of the process of production, as industrialized operations have a better
feed: meat or feed: egg conversion ratio and shorter production periods. Most of the
large operations have productivity levels that are similar to those of the poultry sector
in the most developed countries. Furthermore, the poultry sector has increased its
relative importance in the national livestock sector in China over the past years. This
was especially true for the period 1985 to 1995, when poultry meat production more
than quadrupled. Pork production grew much more slowly by comparison. As a result,
the share of poultry in total meat production increased from about 8 percent to 18
percent, while that of pork declined from 86 percent to 70 percent.Stick to the facts of
the case.

The increased importance of the poultry sector within the livestock sector has
been accompanied by a significant increase in the importance of the livestock sector
within the agricultural sector. The share of livestock in the total value of agricultural