McDonald’s and Yum! Need to Catch Breath in China

This morning’s news on McDonald’s (MCD) and Yum! Brands (YUM) is interesting.  To sum up the AP report, local Chinese officials are investigating whether the two American-based companies underpaid local workers in their restaurants located in the Guangdong province. 

The interesting part is that the story was “broken” by a local Chinese newspaper; reporters apparently posed as job applicants and uncovered rates of pay for part-time workers below the province’s “stated” minimum wage. 

Both companies have already made pseudo-responses to the general tune of “we are looking into it and working with local officials”.

It’s hard to imagine that McDonald’s and Yum! won’t both just roll over on this one, raise the wages if necessary, and make their smiles and apologies.  It is absolutely the wrong fight to bring attention to the $1 minimum wages found in China. 

You can be assured that neither company will be doing anything to jeopardize their operations in China, and in the present that means remaining compliant and patient as they allow the Chinese to work their way towards a capitalist economy – or at least whatever version of it China ends up with. 

If both companies don’t already have their absolute top talent heading up the China region, they most likely will after today.  Doing business in China is tricky; just keeping up with the laws and regulations from province to province involves both acumen and political savvy.  But it’s nice to see the local media getting involved at this level – good news for both the Chinese and the companies who do business there. 

Ryan Barnes