Why it is smart to market to Chinese businesses?

Why is it smart to invest in Chinese business? The answer is simple, as of 2006, the Shanghai Index had 130% increase. From then on, the rate is becoming more and more solid that it has become a sound business to invest in China.

But although it may be smart to market to Chinese business, the first thing to do to ensure profit is to know which are undervalued. The undervalued ones are the ones which really tap on the spending power of the billions of Chinese consumers. Why is that? It is because the middle class in China is actually around 200 million. The number is actually more than the entire population of England. Moreover, analysts also predicted that the middle class Chinese will not reach its ultimate spending potential for 20 years.

All these create a change in the economic landscape in China. The change is gearing toward favoring companies for the middle class, like some of the fast food brands or the so called YUM brands. YUM’s KFC brand, for instance, entered the market in China in 1987 and then in 2002, it had its first drive-thru in China. Today, it has more than 2,200 restaurants in mainland China.

This shows that investing on the undervalued ones is like tapping on the markets which are already saturated in other countries.

Note: Facts and data from The Oxford Club Mid-Month Communiqué NOVEMBER 15, 2007, VOLUME 20, NO. 21