Yum's spinoff shows way to other firms in China

Shanghai

GLOBAL consumer companies trying to find a business model for China's burgeoning domestic market will be watching closely as one of the oldest Western brands in the country starts a new strategy.

Yum! Brands Inc, which opened its first KFC restaurant in China in 1987 and also operates Pizza Hut outlets, has been losing market share thanks to a food-safety scare, changing tastes, increasing local competition and a host of other challenges that foreign companies face in China. It carved out its China operations into a separate company, Yum China Holdings Inc, which was to begin trading on Tuesday in New York.

Ring-fencing the business, the largest independent restaurant company in China with 7,000 outlets and more than US$900 million cash on hand, offers Yum a number of advantages in dealing with a fast-changing market. Yum's example could provide …