McDonald's inks strategic partnership with Chinese property developer

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McDonald's China inked on Monday a strategic cooperation agreement with China Overseas Land and Investment Ltd. (COLI), enabling the fast food chain to expand into more commercial complexes in over 60 cities across the country, and further tapping into the market of China's third- and fourth-tier cities.

COLI started operations in Hong Kong in June 1979. It is a property platform of China Overseas Holdings Limited (often referred to as “COHL” or “the Group”), a subsidiary of the China State Construction Engineering Corporation, which ranked 24th in the "Fortune Global 500" list in 2017.

The strategic agreement allows McDonald's China to get a foothold in over 450 commercial property projects developed by the COLI in more than 60 cities on the Chinese mainland, further strengthening the presence of the Golden Arches.

McDonald’s will also actively promote "new generation" concept stores to quickly land in COLI’s commercial projects, providing consumers with a more convenient and comfortable dining experience.

"We attach great importance to long-term strategic cooperation with the COLI," said McDonald's China's Chief Executive Officer, Zhang Jiayin.

Representatives from McDonald's China and China Overseas Land and Investment Ltd. (COLI) signed the strategic partnership in the southern Chinese city of Shenzhen. /Photo via McDonald's China

“McDonald's, since 2016, has started promoting the future 2.0 restaurant experience upgrade, so as to make more innovative solutions and accelerate business development through cooperating with the COLI."

CITIC Group at the heart of the new alliance

CITIC Group, the second-largest shareholder of the COLI, is a bridge of the new strategic cooperation.

CITIC Group's two subsidiaries, CITIC Limited and CITIC Capital, bought 52 percent of McDonald's China's shares in July 2017. The deal also saw Carlyle Investment Group holding 28 percent of the shares and McDonald's owning the remaining 20 percent.

The new agreement is a big move not only for McDonald’s but also the COLI and CITIC Group.

After the acquisition, McDonald's China announced its “vision 2022” which will help the fast food chain increase its stores from 2,500 to 4,500 on the Chinese mainland in the next five years.

By then, about 45 percent of all McDonald's outlets will be located in third- and fourth-tier cities, and 500 new restaurants are expected to be open on annual basis, much higher than the present expansion speed of 250 new chains per year.

McDonald's China ups cooperation with Chinese developers

McDonald's China has been active recently in partnering with property developers in an ambitious drive to further expand into the market in third- and fourth-tier cities.

A few days earlier, McDonald's China established a long-term strategic partnership with Country Garden, one of China's leading integrated property developer. In August, it officially started cooperating with top leading real estate developer, Evergrande Real Estate.