Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Rules for Making Stock Market Profits in the Next Decade

Stock-Markets / Investing 2010 Dec 16, 2009 - 09:14 AM GMT

By: Tony_Sagami

Stock-Markets

Best Financial Markets Analysis ArticleYour town probably has a Chamber of Commerce. Even my little town of Bigfork, Montana (population 6,000) has a Chamber of Commerce.

The Chamber of Commerce isn’t restricted to only the U.S. either. One of the largest chambers is located in Shanghai, China.


The American Chamber of Commerce in Shanghai was founded in 1915, was the third American Chamber established outside the United States, and is the largest Chamber in Asia. 

The Shanghai Chamber’s membership is virtually a who’s who of American business that includes companies from Amway to Intel to McDonalds to Xerox. So when the Shanghai Chamber surveys its members, you can bet the results tell an accurate tale of business conditions in China.

The American Chamber of Commerce in Shanghai released its 2009 China Business Report last week, and it shows that business is booming in China.

arrow Two Rules for Making Stock Market Profits in the Next Decade  More than 90% of the businesses surveyed reported they were "optimistic" or "slightly optimistic" about the five-year outlook going forward. That is an improvement over the 81% in 2008.

arrow Two Rules for Making Stock Market Profits in the Next Decade  82% expect Chinese revenues to increase in 2010 from this year.

arrow Two Rules for Making Stock Market Profits in the Next Decade  40% said the profit margins of their China operations in 2009 were better than their global averages.

arrow Two Rules for Making Stock Market Profits in the Next Decade  74% ranked China as one of their top-three expansion priorities, and 64% plan to increase their investments in China in 2010. That’s an amazing statistic because 58% of the companies already increased their investment in China this year.

arrow Two Rules for Making Stock Market Profits in the Next Decade  Only 5% were planning to scale back their operations in China.

“Many American companies are finding that their performance in China has outshone those in other markets. AmCham Shanghai has conducted this survey every year since 1999, and optimism among American companies in China has never been higher," said Norwell Coquillard, the American Chamber of Commerce of Shanghai chairman.

Every Portfolio Needs a China Strategy

Yum! Brands, which operates KFC and Pizza Hut, has an effective and profitable China strategy.
Yum! Brands, which operates KFC and Pizza Hut, has an effective and profitable China strategy.

What’s this mean to you as an investor? It means that you need to review every stock in your portfolio, yes even American companies, for a China strategy.

The U.S. economy is still sick and isn’t going to get better anytime soon with our runaway government spending and reckless deficits. American companies looking to grow their business better figure out a way to sell their products in China.

At the same time, American companies need to keep looking over their shoulders to make sure Chinese companies aren’t going to steal their business with lower (cheap labor) production costs and lower prices.

Let me give you some examples:

China Success Example: Yum! Brands, the operator of Pizza Hut and KFC, gets more than 60% of its revenues from outside of North America and is doing big business with more than 4,000 KFCs and Pizza Huts in China. Yum! Brands has an effective and profitable China strategy.

Kentucky Fried Chicken — China Style

When you travel the back roads of China like I do, lunch time can turn into a game of gastronomic Russian roulette. I’ve been offered grilled scorpions on a stick, dog hot pot, monkey brains, and lots of other things I couldn’t begin to identify.

Fortunately, the conspicuous red “KFC” and Colonel Sanders logo can easily be found on the facades of shopping centers and office buildings. When approaching such buildings, it is often easy to notice that both floors of the restaurant are packed with customers. Of all the KFCs I’ve visited in China, no matter what time of day or night, business was overflowing.

The accessibility of the KFC restaurants is unmatched by any other fast-food chain in China. In nearly every place where there’s a crowd, there’s a KFC. They can be spotted just off of highways, in shopping areas, and prime tourist locations.

Yum! Brands has done an excellent job tailoring this American chain to the Chinese market. The menu is different from the United States, featuring smaller-sized meals and new entrees with desserts and ingredients well liked by the locals. Better yet, according to Peking University marketing Professor Jianfeng Wu, the Chinese consider KFC to be somewhat of an upscale restaurant (in contrast to the “fast food” cliché it has in America).

The menus for Pizza Hut are substantially different from that of the states, featuring bizarre ingredients such as seafood and corn (yes, corn!). The atmosphere inside is more elegant, as if it were an expensive steakhouse. The good news is that the Chinese seem to like it, as each Pizza Hut I’ve seen was almost as busy as the adjacent KFC.

On the flip side, here are some strategies that haven’t worked out:

China Failure Example: McDonalds just reported a drop in same-store sales by 1% in Asia. McDonalds beat Yum! Brands to the punch and was one of the first American companies to make a big push in China. What McDonalds didn’t realize is that Chinese greatly prefer pork and seafood to beef, and that slapping a pineapple ring and teriyaki sauce on a hamburger does not make it Asian enough for most Chinese tastes.

China Failure Example: North Carolina used to dominate the furniture industry, but low-cost competition from China has crushed the profits of U.S. furniture makers and has stolen 40% of the market share from American companies.

Clearly, if the Chinese decide they want to become a meaningful competitor in your industry … you’re in a big heap of trouble.

Two Rules for Making Stock Market Profits in the Next Decade

Here are the two most important investment rules for making stock market profits in the next decade: (1) get ‘long’ whatever the Chinese are buying and (2) get the heck out of any U.S. company that is fighting what will be a losing battle against cheap Chinese competition.

What are the Chinese buying? Oil, copper, natural gas, coal, gold, steel, cement, English lessons, American pizza, hotel rooms, pollution-control equipment, homes, designer clothes, gambling junkets, solar power panels, and cell phones to name a few.

All those companies spending billions of dollars to establish a business beachhead in China are there for one reason: TO MAKE MONEY. And according to the members of the American Chamber of Commerce in Shanghai, the opportunities have never been better.

Best wishes,

Tony

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules