Hamburgers aren't really a food that you naturally associate with China, but McDonald's (MCD) is trying to change that, one quarter-pounder at a time.

The other week, the Illinois-based fast-food restaurant hosted investors in Beijing to show off its progress in the huge Asian country. Executives reported that unit growth was on the move, with plans to add at least 125 restaurants per year. That's up from just 49 new restaurants last year. Already this year, 49 new restaurants have been christened, so there are currently 806 restaurants open throughout China.

Revenues from China are up nicely, as you might expect -- with same-store sales up 12% in the first half of this year and earnings doubling. That amounts to less than 1.5% of all McDonald's operating income, so the contribution is tiny but the direction is what's important.

Of course, the king of quick-serve dining in China -- as any casual visitor to Beijing or Shanghai will attest -- is Kentucky Fried Chicken, a unit of Yum Brands (YUM). But McDonald's is trying to make up ground by innovating with concepts that have eluded the colonel, such as drive-through restaurants, extended hours and a focus on breakfast.

Why do we care? Well, China not only has 1.3 billion potential diners, but 500 million of them are in cities. That makes it the largest untapped consumer market in the world. Moreover, according to Bear Stearns, the "informal eating out" market in China is already worth $165 billion annually, with quick-serve amounting to almost $40 billion. Considering that the average annual income in the country is now $1,301 -- up almost 75% from six years ago -- the amount of money available to spend on McFlurries and Big Macs is ramping up.

At present, McDonald's restaurants are in 160 cities, mostly in the eastern half of the country near the Pacific coast. The firm's northern region, which is primarily Beijing, has 221 restaurants; the central region, mostly Shanghai, has 293; and the south, mostly Shenzhen and Guangzhou, have 300.

A key differentiator for McDonald's is that it serves beef, rather than the much more ubiquitous chicken served at KFC and local fast-food operators. McDonald's also does a nice job with fish in the good ol' Filet-o-Fish format seasoned to Chinese tastes. And, of course, you cannot forget about McDonald's marketing as a differentiator, as it focuses on core menu, value, convenience and brand trust, according to Bear analysts. Prices are said to be reasonable, with a BigMac costing the equivalent of $1.35 vs. $2.85 in the United States. And the stores are said to have great service since McDonald's starts workers' pay at 20% above the minimum wage.

All in all, it looks like McDonald's is making a lot of progress in China and that it will be a stronger contributor to the bottom line over time