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Chinese rule big Mac is a restaurant to take away

As dawn broke in Peking yesterday, there was no sign of Ronald McDonald on his prime-site bench two blocks from Tiananmen Square. Indeed, the bench had disappeared too.

But this was not simply another statistic in the city's crime wave. In a rare defeat for the world's biggest fast-food chain, the might of the Peking Municipal Government has shut the world's biggest McDonald's. Ronald has moved out and the bulldozers will be moving in to make way for a massive Hong Kong-financed shopping and office development. Yesterday, the building was fenced off by striped plastic awning.

McDonald's was told two years ago that it would have to vacate its flagship premises on the corner of Peking's most famous shopping street, Wangfujing, and the city's main east-west artery, the Avenue of Eternal Peace. This came as something of a surprise to the company, which opened the 750-seat outlet in 1992 believing that it had signed a 20-year land-use agreement for the site. The foreign business community was generally taken aback by the news, fearing for other such agreements.

With the demolition men approaching from all sides, negotiations opened between McDonald's and the Peking government. Then came an unexpected stay of execution when work was halted on the proposed massive Oriental Plaza development because it was deemed to break height restrictions for central Peking. Oriental Plaza is backed by the Hong Kong tycoon Li Ka- shing and his company Cheung Kong.

When the Oriental Plaza finally renegotiated its plans earlier this year, Ronald McDonald's tenure began to look tenuous. Yesterday, Marvin Whaley, president of McDonald's China Development Company, said in a statement that the company had agreed to move its restaurant "in a spirit of teamwork and partnership" with the Peking government. The general manager of McDonald's in Peking, Tim Lai, said: "Both sides are still happy, and I think the Peking government helps us a lot."

Details of the agreement, and any compensation payment, remain secret. According to Mr Lai, McDonald's expects in two years to have opened two new outlets on Wangfujing, but the sites have not yet been finalised.

Judging by the fast-paced expansion of the Big Mac in Peking over the past year, the company seems to have used leverage from the Wangfujing situation to secure the swift opening of other premises. The number of McDonald's restaurants in Peking has jumped from six when the removal notice was mooted in 1994, to 29 by the end of this year. There are more than 100 branches of McDonald's in China.