My friend and Asia stock expert, Tony Sagami, is on an important research trip to China now. And the investment ideas he’s been sharing with us have been nothing short of fascinating. Today he has three short videos on some big businesses for you that I’m sure you’ll find informative and potentially profitable. — Tom |
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One of the consistent themes I’ve been repeating over the last few years is China’s transformation from an export-dependent manufacturing economy into a domestic-consumption-powered economy.
Consider this: 70 percent of America’s GDP is composed of consumer spending. That number is around 34 percent in China. So that shows you how much growth is still on the table as its emerging middle class races to catch up to its Western counterparts.
The fuel for that consumer spending boom is the rising incomes and growing middle class in China. Chinese consumers, some for the first time in their lives, have some extra money in their wallet, and they are spending that extra cash with zeal.
Where is All That Money Going?
The first thing people do when their income rises is enhance their diet, particularly the consumption of protein. No longer is an occasional pig knuckle or ox innards an acceptable dinner choice.
McDonald’s (MCD) is one example where Chinese consumers are lining up to get a taste of what America has to offer. Take a look at this short video to see the kind of big business this chain is doing in Asia.
The next thing they do with the extra cash is put a nicer roof over their head — plus all the accompaniments that make their home more enjoyable to live in: Air conditioning, washer/dryers and TVs.
After the basics are covered, the Chinese then begin to spend on fashion. Americans love their designer labels, but Chinese consumers take that to new heights …
In China, the purse on your arm, the watch on your wrist, the phone in your hand, and the clothes on your back tell your friends and business associates that you are not only stylish, but also successful.
The Chinese, by the way, love everything American. And some U.S. retailers are doing gangbuster business in China. Jewelry giant Tiffany & Co. (TIF) is one such beneficiary.
They love our coffee, too. Here’s a clip I took at a Starbucks (SBUX) in the China World Trade Center. As you see, it looks just like a typical coffee shop in the U.S.
Lastly, while China has the most-amazing public transportation system in the world, cars are perhaps the ultimate status symbol … perhaps even more so than new homes.
In fact, I have met people who live in what would be described as shacks, but they drive a BMW or an Audi.
“None of my customers visit my home, but they all see what kind of car I drive,” said one budding Chinese businessman.
So what kind of cars are they driving?
In the video below, I’ll take you on a quick tour of a parking lot in a busy shopping center in Beijing. Plus, I’ll show you the shopping area itself to give you a boots-on-the-ground view of what Chinese consumption really looks like and which companies are doing big business in China.
I’m not suggesting you buy any of these stocks right now — timing is everything. But at least you have an idea of how three U.S. companies are cashing in on China’s consumer boom.
And that’s just the beginning! I’m sure I’ll run across a few more before my trip is over.
So stay tuned!
Best wishes,
Tony
