In the Hutong
Breathing those little airborne cotton balls
2056 hrs.

Via Danwei, China Economic Review is quoting Krispy Kreme's HK CEO explaining why they're looking to go to Shenzhen as the confection pushers plan their invasion of the mainland.

"Shenshen is a migrant city, many are from the north, and the people are more receptive to fried products."

Krispy Kreme is doomed in China.

Write it off.

It's going the way of Jack-in-the-Box. Of Wendy's.

First, anybody company that would stoop to concocting such a nonsense justification for locating a high-value franchise is engaged in some high-level self-delusion. I would bet that real reason they're going to do Shenzhen first is that the HK CEO is getting stuck with the job on the mainland, probably likes his mid-levels flat, and doesn't want to be flying to Beijing or Shanghai all the time. Shenzhen, on the other hand, is 45 minutes from Central by car.

Second, if Krispy Kreme was really serious about China, they wouldn't hand the responsibility to a guy in Hong Kong. They would do their research and put a guy on the ground in Shanghai, Beijing, or wherever to act as representative, get to know the local government, and find local franchisees. Behaving like you need to enter the mainland from Hong Kong, then Shenzhen, is a modus operandi far more appropriate to the situation 15-20 years ago.

Third, if Krispy Kreme really understood the way into China, they would start someplace where there are a lot of people who already like donuts, can't get them, and will form a long, slavering line outside your door each morning. If you're afraid of Shanghai, go with Beijing. Call me crazy, but tens of thousands of American and Canadian businesspeople, students, diplomats, and families seem like a built-in market for a store or ten.

But, no, they're content to sit in Hong Kong and wait for the franchisees to come to them, and invade the market slowly.

Take your time, guys. After all, you've got all the time and money in the world to burn, right? After all, Dunkin' and Mr. Donut aren't interested in Beijing, are they?

Time to study the tactics of companies like Starbucks, McDonalds, KFC, Pizza Hut, Dominos, and Papa John's. They knew where their ready markets were, started with those places, put people on the ground in the mainland separate from Hong Kong, and have insanely thriving businesses today because of it.