Chinese get a bite at McDonald's

CHINA'S legion of eager equity investors will today get their first chance to buy into Ronald McDonald's compelling fast-food story.

Sanyuan Foods, which holds the franchises to McDonald's international burger chain in the Chinese capital, Beijing, and the prosperous southern province of Guangdong, will issue 150m shares at 2.60 yuan (7.6p) apiece.

Sanyuan, a diversified food company which also has extensive dairy interests, is controlled by Beijing Enterprises, a conglomerate linked to the Beijing city authorities.

McDonald's restaurants have spread quickly in China since their arrival in 1990, although they remain confined to the more wealthy parts of the vast country.

Sanyuan holds 50% of the Beijing McDonald's franchise and 25% of the Guangdong franchise, and income from the sale of burgers, fries and soft drinks accounts for a substantial portion of its income.

'By 2004, Beijing McDonald's plans to set up 130 outlets in places such as Beijing and Hebei and Shanxi provinces,' the company said in its listing prospectus. 'Guangdong McDonald's plans to open 90 stores by the same time frame.' It is unclear, however, how many branches Sanyuan operates at present.

Executives from McDonald's, the world's largest fast-food chain, have said they see potential for at least 100 store openings every year in China for the foreseeable future.

Sanyuan's new stock will be listed on the Shanghai exchange as A shares, which are open to local investors and a restricted number of major foreign investment banks.