McDonald's move not a warning about investment climate: Taiwan official

McDonald's move not a warning about investment climate: Taiwan official
PHOTO: Reuters

TAIPEI - McDonald's recent decision to sell its Taiwan stores does not indicate that Taiwan's environment for foreign investment is deteriorating, presidential adviser Sean Chen said yesterday.

McDonald's said this week that it is looking to sell its 413 stores in Taiwan to a franchise operator.

It has operated the stores itself since entering the market over 30 years ago.

The announcement has sparked speculation that the company is backing out over unfavorable legal fees and other foreign investment conditions.

Chen, a presidential adviser and former premier, said yesterday that the company's switch to franchising in Taiwan is an attempt to lower costs and boost profit.

It is not a sign of a deteriorating environment for foreign investors in Taiwan - if that were the reason, the international burger chain would choose to exit entirely from the market and shutter all outlets, he said.

Chen was responding to media inquiries on the sidelines of a book launch at Taipei 101.

At a separate venue, Central Bank Governor Perng Fai-nan was also asked if the McDonald's withdrawal warns of a decline in Taiwan's investment climate.

Perng replied that McDonald's is not withdrawing from the Taiwan market, but only increasing the proportion of franchised outlets.

30 Years of McDonald's

McDonald's has operated stores in Taiwan for some 30 years, Chen said.

When the chain first entered the Taiwan market, some observers predicted that it would flounder, and some said McDonald's would become the "nightmare of Taiwan's food industry."

Both predictions proved false, he said.

Opening up to foreign investment and integrating with the global economy has been positive for economic development, he said.

The former premier cited Thomas Friedman, who in 1999 posited that economic integration lowers the likelihood of conflict between countries.

At a Central Bank press conference yesterday, Perng remarked that he sometimes enjoys meals at the fast-food chain.

The international chain has been struggling, particularly in the United States, its largest market.

US sales last November were down 4.6 per cent year-on-year, due partly to competition from a Burger King revitalised under new management and growth in up-market "fast casual" outlets, according to The Economist.

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