The Rising Influence of Rising Affluence

[DewDiligence]

YUM initially hid problem with China sales from investors:

http://online.wsj.com/article/SB10001424127887324442304578234261756463182.html

On Dec. 21, Yum told U.S. investors that a recent Chinese state media report on a government investigation of improper antibiotics use by its chicken suppliers was hurting its huge KFC business in China. The announcement sent Yum's struggling shares down further.

Within China, though, consumer concerns about the safety of KFC chicken had been circulating widely on the Internet for nearly a month, since a Nov. 23 Chinese news report raised similar concerns about the practices of a KFC supplier. Yum's China operation quickly rebutted those assertions, and defended its safety practices repeatedly on Chinese social media.

Yum alerted its U.S. shareholders at the end of November that it expected a 4% drop in its same-store sales in China in the fourth quarter—the first such decline since 2009. But in that Nov. 29 release—and in comments at an investor conference a week later—the company made no mention of Chinese consumer concerns, citing instead a wobbly economy and the difficulty of outperforming a strong quarter the year before. This week, Yum said the sales decline this quarter would be even worse than thought.