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19/08/02 . n/a . Associated Press . Hong Kong  
McDonald's Hong Kong Outlets Take on Local Rivals, Serve McRice  
HONG KONG -- Amid Hong Kong's deep economic downturn, McDonald's is trying to move in on the local culinary turf - not with burgers or fries, but with Chinese rice dishes.  

It remains unclear whether McDonald's can woo customers away from three local chains, Fairwood, Cafe de Coral and Maxim's, all of which serve Hong Kong-style rice dishes to customers seeking a quick and inexpensive meal.

But some small eateries are grumbling that the U.S. fast-food giant might muscle them out of business.

"We might have to pack up and go home sooner or later," said Ho King-wah, cashier at the hole-in-the-wall Mei Li cafe, right across the street from a packed McDonald's outlet in Hong Kong's Wanchai district.

"McDonald's is McDonald's. They should sell burgers, not rice," said Lam Yuet- kwan, an office assistant eating at Mei Li, which is slightly cheaper than McDonald's but much more cramped.

McDonald's says it is only trying to give customers more of a choice.

"Our decision to offer a rice-base alternative is a result of what our customers are asking for," McDonald's said in response to questions from the Associated Press. "The rice menu fits seamlessly into the dietary habits of Hong Kong Chinese with rice as their staple food."

The dishes on the McDonald's menu contain rice, chicken, broccoli and sauce, and cost 22 Hong Kong dollars (US$2.82). At Fairwood, Cafe de Coral and Maxim's, customers can get lunches and dinners between HK$20 and HK$35.

Independent food critic Lau Kin-wai did a taste test of rice dishes at McDonald's and Cafe de Coral and said the local chain had better food and more variety. The critic found the McDonald's rice rather sticky but said the chicken was good. "It's a good start," the critic said. "Compared with some Chinese restaurant dishes, they are even cheaper, so I believe they will definitely get a piece of the fast-food market share."

Not all Hong Kong diners are impressed, or even willing to give McDonald's a chance. Although McDonald's has been in town for 27 years, and many Hong Kong kids love its burgers and fries, quite a few Chinese still don't view it as the place to get a decent meal.

"I think it's a psychological thing - when I want to have a proper meal, McDonald's won't even cross my mind," said Steve Chu, stepping out of a Fairwood outlet where he just had lunch.

Fairwood marketing manager Ricky Ng said the McRice dishes haven't hurt his company yet, but he declined to predict whether there will be any impact. Maxim's declined comment, and Cafe de Coral didn't respond to questions faxed by the AP.

Securities analyst Tony Wong, who covers the food industry for ABN Amro (NYSE: ABN - News) bank, doubts McDonald's will cause much damage to the local chains because it isn't changing its focus from burgers and fries. "It won't switch its corporate culture to become a Chinese fast-food provider," Mr. Wong said.

It is unclear whether McDonald's will keep the rice dishes on the menu permanently. The company said it will see how well they are received.

But the burgers keep selling, at a time when Hong Kong people are looking for bargains during a severe economic downturn that has pushed unemployment to a record 7.7% and has many scared to spend too much money. Many local restaurants have gone bust, unable to cover costs as diners stayed away.

Stock trader Chan Kwok-wah, on his way out of McDonald's, said he didn't care much for the burger he just ate, but he liked the price, at HK$3. "It doesn't really suit my stomach, but it's cheap," Mr. Chan said.  
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