Mohacsy's Safe Portfolio Member Forum

[Elroy Jetson]

I don't see the Chinese market the same way.

Since 1988 KFC owned only 51% of KFC China with Chinese government entities owning the remaining 49%.

KFC initially hired all their managers from Taiwan, who fully localized their menu offering and in turn hired local Chinese which has been the main factor in their success. They fully localized their restaurant supply in 2011 which led to quality problems by 2012 - but food quality problems are hardly a unique event in China.

By incorporating their stake in KFC China into a separate company in 2016, KFC was able to set up a licensing arrangement with KFC China obligating it to continue paying KFC royalties, even if KFC eventually chooses to reduce their stake to 0%, and this will also make it easy to list KFC China on a local stock exchange if they ever find that advantageous.


China has always preferred locally-owned products to imports and refusing to license foreign Covid vaccines was a particularly self-harming example.

Huawei phones provide far greater value in China than does Apple, but many in China prefer to pay more for Apple phones. As long as that's the case I believe Apple will continue to make phones for the Chinese market in China.

Tesla shares rose in price today on a strong 32% rise in sales in China. In 2018 China's import tariff of 40% on imported Teslas, combined with the fact that Musk claimed US manufacturing cost 55% more to produce the same car in the US than China helped Elon Musk decide to manufacture more in China. Since 2019 Tesla has periodically imported Tesla's from China, but their full Chinese output is currently consumed by Chinese buyers.

All automobile manufacturers try to build their cars in the market where their intended sale will occur. They were more specialized previously, such as importing smaller cars from their European plants and larger cars from America, but tariff ruined that model of manufacture.