Dining chain should not duck overseas move

Roast duck being served at a branch of China Quanjude (Group) Co Ltd. The name's association with China's emperors has created an extremely powerful set of emotional brand values, such as prestige, exclusivity and success. Zhang Xu / Xinhua

Unfortunately it was with no great surprise that a drop of nearly 30 percent in net profit year-on-year for 2013 was reported recently for Quanjude, one of China's leading brands in the catering sector.

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This is in spite of the fact the company, with its chain of ultra-high-class duck restaurants, remains one of the most revered and respected Chinese brands, an integral part of Chinese food culture and history, steeped in nostalgia.

First established in 1864, during the Qing Dynasty, Quanjude enjoys an almost unrivaled status among the Chinese public with its heritage of roast duck preparation, using open ovens and non-smoky hardwood fuel that contributes to a subtle fruity flavor and a golden crispiness to the skin.

Crucially, it is not just the unique flavor that distinguishes the Quanjude brand but the association with China's imperial families that has infused it with an almost insurmountable and emotional competitive advantage.

As a result, the Quanjude brand represents far more than a wonderfully aromatic culinary experience and even more than a fantastic family fun and friendship experience. Quanjude's association with China's emperors has created an extremely powerful set of emotional brand values such as prestige, exclusivity and, above, all success.

In short, Quanjude is the Rolls-Royce of the Chinese catering world.

And yet this recent downturn in profits appears to be the result, at least partly, of the Chinese government's anti-extravagance campaign. It also appears that management of the Quanjude brand has reacted to this campaign with a series of initiatives designed to make it more affordable to the general Chinese public.

But this anti-extravagance campaign also comes at a time when luxury-brand consumption in China continues in an ever-upward spiral. Indeed, it was Rolls-Royce Holdings Plc itself that announced in 2013 China had become the single biggest market for its cars, so long the epitome of extravagance and status.

Far from building the Quanjude brand, recent initiatives, which include reducing the overall cost of a meal with lower priced items, have severely diluted the brand and created considerable confusion in the market.

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