Yum Brands, a Pepsico subsidiary is the owner of popular fast food brands KFC, Taco Belland Pizza Hut.
China contributes significantly to the top line of the company. However, like a Chinese puzzle, the company is finding it difficult to stay on top of issues which keep cropping up in their China operation, like competition, plagerism, food safety scares, etc., just to name a few.
Some of these issues have now threatened to affect the bottomline of the parent. To insulate itself from these issues, Yum Brands has decided to create a separate independent entity n China for it’s Chinese operations, which will have nothing to do with Yum Brands.
However, Yum Brands will continue to receive royalty for it’s brands from this operation, insulating it from the vagaries of the Chinese market.
