2.

Introduction.....................................................................................................................2

2.0

Differences between Secret Recipe in China and Indonesia...........................................2

2.1

Secret Recipe in China................................................................................................2

2.2

Secret recipe in Indonesia............................................................................................2

3.0

Factors driving Secret Recipe to open branches abroad.................................................3

3.1

New market.................................................................................................................3

3.2

Lower labour costs......................................................................................................3

3.3

Opportunity to gain financial capital...........................................................................3

3.4

Availability of supplies................................................................................................4

4.0

Way of Secret Recipe go International............................................................................4

5.0

Characteristics of the best location.................................................................................4

5.1

Population....................................................................................................................4

5.2

Culture.........................................................................................................................4

5.3

Source of raw materials...............................................................................................5

5.4

Political stability government policy...........................................................................5

5.5

Economy......................................................................................................................6

5.6

Geography...................................................................................................................6

6.0

Marketing Strategy of Secret Recipe in China................................................................6

6.1

Geographic segmentation............................................................................................6

6.2

Demographic segmentation.........................................................................................7

6.3

Culture.........................................................................................................................7

6.4

Language.....................................................................................................................7

6.5

Attitudes and Values....................................................................................................7

6.0

Conclusion.......................................................................................................................8

7.0

Appendix.........................................................................................................................9

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1.0

Introduction

Secret Recipe Cafe is a lifestyle concept cafe chain that features a modern and metropolitan
setting that has more than 150 outlets throughout Malaysia and Asia. It is one of the fastest
growing cafe chain in Asia. Secret Recipe is a lifestyle cafe chain established since year 1997
by Yang Bahagia Dato Steven Sim. He had successfully transformed a small business into a
market leader within a short period of time. Secret Recipe has established a firm presence in
Asia, including Malaysia, Singapore, Philippines, Indonesia, Thailand and Pakistan. A large
variety of cakes and fusion of foods are served under the brand name of Secret Recipe. Now,
this company has become a leading and largest cafe chain in Malaysia.
Secret Recipe promises a value lifestyle proposition of great variety and quality food
at affordable prices. The uncompromising quality of food and desserts using quality
ingredients, coupled with moderate pricing, has created a new lifestyle cult, compromising of
a loyal base of food and cake lovers. Secret Recipe Cakes & Cafe offers a friendly and
personalised full-service dining experience for customers and incorporates a modern
contemporary and vibrant interior concept with comfort ambience and great food. It provides
a great respite for customers to enjoy good food and quality time with friends, family or
associates, after a long day at work. Besides that, secret recipe also has a standard with Halal
certification awarded by Jabatan Kemajuan Islam Malaysia (JAKIM) and will continue to
follow the guidelines that had been decided.
One of the biggest achievement that secret recipe achieve is the growth of the
company that become more bigger day after day. With now have over more 250 cafes
throughout the region, this company will continuously straight to the goal and achievement
to be recognized as a leader in the industry around the world.

2.0

Differences between Secret Recipe in China and Indonesia

2.1

Secret Recipe in China

Secret Recipe had expended to China as well. They expended to China after receiving
invitation from Carrefour to open their outlet inside Carrefour owned shopping premise. This
first outlet was open in 2007 at Shanghai. According to Secret Recipes CEO in his recent
interview, he had admitted that current China operation is not encouraging but yet the
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revenue is sufficient for the unit. This first outlet was used as pilot operation to test their
weakness. Up to date, Secret Recipe has 3 outlets in China and still not franchised. The CEO
believes that the sales will be encouraging after opening it to franchisee which will be
considered soon.
The Prime Minister of China, Mr. Li, they have agreed to help improve the quality
and efficiency of economic development of china. In Beijing he has set a goal for economic
growth this year at 7.5 percent, a slight slowdown from the 7.7 per cent achieved in 2013 and
the deceleration of frequent double-digit growth rates of the past three decades. This is related
to the industry secret recipe as most outlets have been opened because Beijing is the fastest
growing areas in the business of that industry. The Government also intends to china to find a
way to support growth, which may include loosening in policy monetary.
Before entering a new market in the country, Steven Sim, CEO secret recipe will
conduct market research related to lifestyle, cultural differentiation, types of food and food
culture community in the country. This is to ensure that the product Secret Recipe is easily
accepted by the local community. For example, the product Secret Recipe for Thai and
Indonesian markets more spicy than in Malaysia. As for the Chinese market, increasing the
Secret Recipe noodle-based menu like char kuey teow, Hokkien mee and mee Cantonese.
Operating costs would involve the transport, communications and raw materials.
Transportation is an important factor supporting market access. Locating close to the raw
material supplies can reduce production costs. Modern companies also need to find where
they have access to excellent information technology link. The selection of strategic locations
where people are most likely to go and the places where products and services can easily be
accessed by the user. Some industries rely heavily on a highly skilled workforce. In contrast,
other industries that require cheap labour will seek locations where there are a lot of people
looking for work that are prepared to accept low wages. Although China experienced rapid
growth but the cost of labour there is cheaper and has a very high skill.
2.2

Secret recipe in Indonesia

Total outlets in Indonesia today is 11 outlets only. It is much less than China. The outlets in
Indonesia is concentrated in the city of Jakarta and Tanggerang only. This may be due to the
quality of life which is lower than China. Poor demand on this business make it only focuses
on major cities only. Their purchasing power is also relatively low due to the low value of
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their currencies. Moreover, the political situation in Indonesia that is often experienced riots,
may cause investors are afraid to open up many branches in Indonesia. The political situation
in a country is important to keep the business running last longer.
Next, Indonesian environment itself. Although Indonesia has abundant land and
abundant raw material resources, but Indonesia located near the equator. It cause a frequent
occurrence of earthquakes there. A business that is affected by this natural disasters will
definitely suffer losses. Thus, it is also one of the factors causing the difference in the number
of outlets in Indonesia and China. Despite Indonesia is one of the countries with low labour
costs, but, Indonesia is less advanced in terms of technology when compared to China.
Investors would prefer a country with high technology because it can reduce the cost of
production of a product.
Indonesian government's role is also one of the reasons for the differences between
China and Indonesia outlet. Governments of Indonesia have less of an incentive to attract
foreign investors to invest in Indonesia. One of the incentive that can be given is reduce the
tax burden for locating and expanding a business.

3.0

Factors driving Secret Recipe to open branches abroad

3.1

New market

If home market which is Malaysia is stagnant or saturated, we need new market in another
country to make more sales and gain more profits.
3.2

Lower labour costs

Low labour costs will encourage the secret recipe to expand its market. With low labour
costs, production costs will be reduced. This will increase the revenues received by the Secret
Recipe.
3.3

Opportunity to gain financial capital

Secret Recipe Company is interested to open branches abroad is due to capital provided by
foreign companies. In addition, there are also foreign governments offering assistance such as
low taxes to attract a company goes into his country and thus can create jobs in his own
country.

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3.4

Availability of supplies

The next factor is the availability of supplies. Raw material is the most important thing in
running a business. Secret Recipe open branches in other countries due to the ease in
obtaining supplies of raw materials in that country.

4.0

Way of Secret Recipe go International

There are many ways that can be used to expand business into another countries. For Secret
Recipe, the method used is through franchising. According to Twarowska and Kakol (2013),
the franchising system can be defined as a system in which semi-independent business
owners (franchisees) pay fees and royalties to a parent company (franchiser) in return for the
right to become identified with its trademark to sell its products or services and often to use
its business format and system.
Advantages of the international franchising are low political risk, low cost, allows
simultaneous expansion into different regions of the world and also well selected partners
bring financial investments as well as managerial capabilities to the operation.

5.0

Characteristics of the best location

5.1

Source of raw materials

The location for your business establishment needs not only the strategic position but

should also ensure that the availability of some resources such as the power, the fuel and the
water are accessible. These resources are important factors in running your business and it
should be considered as the factors that should be first ensured upon choosing the right
location for the business. China also the best location to make a business operation because
there are a lot of raw material sources. We can easily get water, electricity, and so on. Chinas
government already built some infrastructures for the investor to do their business. But, in
Indonesia, their government does not give much contribution regarding to the infrastructures.
So, we can see that China can be the best location to make an business investment. This
makes Secret Recipe easier to open their business there. An electricity and water source was a
thing that is needed because without those sources, business operation will be distracted.

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5.2

Population

The population of the country is one of the characteristics that should be consider before
choosing a location for business. High population in certain area means high potential for a
good business. China is the highest population country in the world with 1.3 billion citizens.
While Indonesia, the biggest country in ASEAN, also has high population with 246.9 million
people. This has given Secret Recipe a good chance of business opportunities in choosing
those countries as the target market to do an investment. However, to compare these two
countries, China was the best location than Indonesia. Chinas capital city, Beijing, is the
countrys political, cultural and international exchange center. So, this factors make Secret
Recipe have the interest to make more investment in China.
5.3

Culture

Beside that, before choosing the location, we should know about the culture of some location.
In China, they are very few exposed to outside food. Secret Recipe had to localise some of
the products by introducing more noodle-based products. Chinese does not know much about
Malaysian food. They do not know what satay and nasi lemak are, but Secret Recipe
introduced those products there along with mee goreng mamak and hokkien mee. In
Indonesia, they are quite familiar to our local food because we share the same culture with
them. So, there are not too many changes with the menu with us. In China and Indonesia also
have large number of Muslim population, so this is an opportunity for Secret Recipe to have
an outlet there because they also provide halal food like what they provide in Malaysia.
However, because of the Secret Recipe outlets in China have more menus due to the
introducing Chinas local food than Indonesia that does not much adding menus, the profit in
China is better than in Indonesia makes them the best place to do business.
5.4

Political stability government policy

Political stability in every country is very important to take into consideration before
expanding the business globally. Peace and less of the riot is a good location for other
countries invest in the location specified. Government policy in providing incentives is also
taken into account for all intrepeneurs. Malaysia and China has a good diplomatic relations in
global. With that, secret recipe more likely to open outlet at china compared with the others
countries. The country like Thailand and Indonesia always happened a riot cause by politic or

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terrorist, this cause secret recipe only open few of their outlet to that country eventhough
there are good marketplace for business.
5.5

Economy

The economy of a country also will encourage more investors to conduct its business.
Countries that have large purchasing power will guarantee the size of the market is vast and
can be lucrative to the merchant. China has a very good market economy and the world
forecast that china will become a major economic power in the future. This has prompted the
secret recipe for more open outlets in china than in other countries. Beside that, china's
currency (Yen) is higher than the Indonesian currency (Rupiah), and this makes secret recipe
more tempted to open outlet in china.
5.6

Geography

The surface of the earth an area has also become an important aspect before the dealer carries
on business. The surface of the road with highway better for businesses to facilitate the
transport of materials products. In addition, less experienced natural disasters in that country
will make investor more safe to open a business in that country. Secret recipe just opened 11
outlet in Indonesia than in China because the country Indonesia frequently suffered natural
disasters such as volcanic eruptions. China less experienced natural disasters as well as less
traffic congestion has caused the secret recipe company more open the outlet at China.

6.0

Marketing Strategy of Secret Recipe in China

6.1

Geographic segmentation

Geographic segmentation describes the separation of market into various geographical

components which defines provinces or foremost cities for international marketing. Since the
majority of targeted customers fall in the medium and higher income classes and who are
willing to spend their income rather than the basic needs only, Secret Recipe outlets will be
opened in metropolitan areas which targets mostly Beijing and Shanghai at the beginning.
This is merely for the reason that the average revenue levels in the main and large cities are
higher compared to the smaller ones. Secret Recipe outlets are also subjective by the
infrastructural and transportation convenience in the particular areas of the market. Finally,
individuals living in Beijing and Shanghai are more likely to spend their earnings and
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willingly to enjoy a better life and also to fulfil their desire by having meals at a sophisticated
place to maintain the level of luxury with upper class individuals.

6.2

Demographic segmentation

The first concern that needs to be considered is demographic segmentation. Demography is

defined as the study of human population in terms of size, density, location, age, sex and
others. Demographic segmentations are crucial for Secret Recipe to control its potential target
market. It must be considered to target the teenagers aged from 0 to 14 years old which is
21.4% of Chinas whole population. According to this information, Secret Recipe will be able
to concentrate more on the wants and likings of its target market.

6.3

Culture

Culture is considered vital for marketing because it reflects perceptions and social
interactions. Culture influences affect the buyers decision on the product. However, Secret
Recipe needs to understand the Chinese culture in driving the consumers behaviour and
perceptions. The younger generation may slightly moving towards western but the tradition
they have to follow.

6.4

Language

Language is the key to enter a countrys culture. It plays a vital role in international
marketing communications. China has many diverse cultural groups which communicate in
their own respective tongue, but yet most of the Chinese people understand one common
language, which is mandarin. Language important as marketing communication tool in
advertising, promotion, public relations and business negotiations.

6.5

Attitudes and Values

The Chinese are more friendly, therefore, word-of-mouth becomes critical because they are
able to influence one another in being favourable to a brand. Chinese are very concern about
the brand so new entrants in the market must compete with giant competitors. For Australians
and Europeans, individualism is their value. Persons self-fulfilment and realization of
individual prospective are genuine. This view contradicts strictly with most of the Chineses
views which are wedged in traditional view. Establishing this secret recipe, it uses Malaysian

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artist who is already famous among the Chinese. It is important because it helps only not to
promote the product but also educate customer about its quality.

6.0

Conclusion

As a conclusion, we can say that in making a business, selection of the right location is the
most important thing we need to consideration. This is because location can lead a business
either it success or failure. In business food, location to open shop must strategic because it
can be a ways to attracted people come to our shop. In many business in the world I think
food business is one more the most profitable business because eating is a compulsory
activity for humans. Maybe if I thought to enjoy a piece of cake, secret recipe is my choice
compare to other brand. I think that the choice food business secret recipe is one of good
selection as people know the brand, quality, taste and more.
As we know China is the largest country in the world, so it has many advantages on
his side either yourself in population, resources, economy to open business secret recipe. It is
capable of delivering more profit to the manufacturer or supplier of the product. At here what
we can see that the concept of marketing we will be used in the National China is more
varied as described above. With the marketing concept such as geographic segmentation,
demographic segmentation, culture, language and the high population of China is able to
achieve a profitable customer base. It was explained how the ability to grow secret recipe is
much better when compared with other countries such as Indonesia. So, based on the point
above we can conclude that the best location to open the outlet of secret recipe is in china.

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7.0

Appendix

Secret Recipe has successfully established its brand name in Malaysia, Singapore, Indonesia,
Thailand, China, Philippines, Brunei, and Australia by virtue of its fine quality cakes, fusion
food and distinctive service.

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Secret Recipe In Indonesia

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Secret Recipe In China

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References
Chow, H. B. (2008, July 19). Secret Recipe for China. The Star Publication.
Twarowska, K., & Kkol, M. (2013). International business strategy reasons and forms of
expansion into foreign markets. International Conference 2013, 10051011.

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