Top brands worldwide share an immediate urgency to woe the Chinese buyer, partially because with a +100 billion headcount, it is the worlds biggest market and more importantly due to rapidly increasing number of people upgrading their status to middle and upper middle class. The branding trend, which is now almost frenzy, is resulting on big budget spending by the managements to ensure the loyalties of these Asian Households. Markets, however are responding most positively with sizable investments finding their way into the China Consumer Industry Stocks and particularly Global X China Consumer ETF [CHIQ] that managed to increase its Net Assets under Management [AUM] close to US$ 150 million in the past year.
Apple CEO Tim Cook has even gone on record, expressing jubilation on the success of I phones and I pads in the dragon land, saying that the response for apple products from China is immense and at this speed it will soon be the top or easily the second biggest market for Apple Inc. No wonder Apple operates more than 2000 service centres in the country.
A projected figure of 600 million new middle class population in the nation by 2020, in fact means a 70% rise as per the numbers available today.
Chinese leaders have begun to follow an approachthat would aim at a more balanced economy. They wish to show less dependency on exports and investment and more focus on domestic consumer spending. The rising population especially the rising numbers of the middle class will very naturally lead the country towards this goal. As they expand and upgrade their lifestyles and follow their western counterparts.
The Chinese retail sales saw a growth of around 14.4% at the end of last year.
Credit card balances have risen more than 17% in the past couple of years.
Many Chinese citizens are moving from villages to urban centres in quest of an improved life. The rise in labour wages to as much as 40% by many Chinese companies has helped in the disposable income of the middle class to increase to record levels. A strong Yuan has also helped in this trend.
The Shanghai stock exchange composite index has been experiencing a negative close in the financial year 2012. It has fallen 12% lower than the preceding year. Yet the growth has been uninterrupted and posting a progress four times that of Canada and United States. To shun out this market from ones portfolio will not always be in the best interest of foreign investors as China presents itself with a robust economic expansion.
Casino operator Wynn Resorts limited now produces approximately 70% of its revenue in China, Yum Brands a fast food chain of restaurants in this nation has seen operating profits as high as 22% in a short span of time and Southbys (auctioneer) has seen its profits rise from 3% in the year 2004 to 17% in 2012.
Investing in China via stocks still seems a decent option, amid investor sentiment that seems to be poor and pessimistic. First and foremost the Chinese shares are now available at cheap valuations compared to their previous prices and other markets. Inflation levels in the country are moderate. Further interest rates are higher than any other country in Asia excepting India. Also here public debts to their proportion to GDP are lower, than the ratio in many other nations. One simplistic and unnerving method to achieve exposure to this broad economy is through a single investment such as the bench mark bound China Consumer ETF.
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