China a key destination for US-based companies

Despite slower economic growth, China remains a key destination for United States-based companies.

US retailers that have entered the Chinese market with long-term plans, in particular, are looking into further expansion in the world's second-largest economy, according to a recent report by ratings agency Standard & Poor's.

Among the 150 US retailers and restaurant companies rated by S&P that have operations in China, five were analyzed in the recent report in terms of their exposure to China and the strategic importance that they attach to the country.

Three out of those five companies - McDonald's Corp, Starbucks Corp and Yum! Brands Inc - are restaurant companies. The other two are retailer Wal-Mart Stores Inc and clothing chain Gap Inc.

Helena Song, the New York-based director of S&P corporate and government ratings, said US retailers that expand into China tend to be the "largest players in their category".

Referring to the five sample companies in the study, Song noted that these companies have already penetrated the domestic US market, have experience in international expansion projects, and boast strong global brands and solid cash flow to support meaningful and longer-term investments.

"As the companies establish a base and accumulate more experience in China, they develop more local operational knowledge and expertise," said Song, who led the study.

Most US fast-food restaurant companies have shown a big appetite for China, with some entering the nation as early as the 1980s. Yum! Brands, for example, entered the country by opening a KFC in Beijing in 1987. Yum! Brands' officials have called China the "greatest restaurant opportunity of the 21st century".

And for good reason.

After more than two decades in the country, KFC is the largest fast-food chain in China with more than 4,400 restaurants in some 850 cities across the nation. In 2012 alone, Yum! Brands' Shanghai-based China division opened nearly 900 new restaurants in the country and generated more than $1 billion in profit.