The People’s Republic of China has a population of over 1.3 billion people and a rapidly growing consumable-hungry middle class of over 300 million people. The Goldman Sachs Group, Inc. (NYSE/GS), an investment bank, predicts China will become the largest economy by 2040.
The Organization for Economic Cooperation and Development (OECD) predicts China will grow its economy by 8.2% this year, but rebound to 9.3% in 2013. While China’s GDP growth is lower than the previous year’s, it is well above the global economic growth averages of 1.6% and 2.2% in 2012 and 2013, respectively. (Source: OECD, www.OECD.org/china.)
In my stock analysis, the rapid growth of the China’s middle class will be key. In a research finding, Credit Suisse predicted that the household wealth in China will double to $35.0 trillion by around 2015, based on achieving sustainable GDP growth at or near the current levels.
A strong area for growth investors will be the Internet sector in China, based on my stock analysis. This country is the epicenter of the Internet world, with online demand growing at a staggering pace. My stock analysis suggests there is strong potential in this area.
The number of Internet users in China is tops in the world, with 585 million on the Internet at the end of June, according to the China Internet Network Information Center (CNNIC). By comparison, the next four largest Internet countries were the U.S. (245 million), India (121 million), Japan (101 million), and Brazil (82 million), according to Internet World Stats.
Internet users commonly roam the Web via their smartphones. The number of mobile Internet users in China was 388 million at the end of June, according to the State Council Information Office.
Based on my stock analysis, these are massive numbers that point to the staggering growth in China.
The biggest player in the Internet e-commerce space in China is Alibaba Group, controlling about 85% of China’s online shopping market. Online sales in China are estimated to surge to about US$360 billion by 2015, according to Alibaba Group.
There are numerous Internet plays in China, according to my stock analysis, including those operating in gaming, retail sales, mobile, education, social networking, and travel.
According to my stock analysis, an intriguing kid-oriented small-cap is Shanghai, China-based Taomee Holdings Ltd. (NYSE/TAOM), which has a market cap of $136 million.
The stock debuted on June 9, 2011, at $8.23 per share, but has since steadily slid to the level where I see above-average price appreciation potential for the aggressive trader who is willing to take a risk and hope the company can deliver as my stock analysis indicates it could.
Founded in 2007, some in the market refer to Taomee as the Chinese Disney in its infancy, but this is clearly wishful thinking. Taomee produces children’s entertainment via the Internet and other platforms. The company is aiming to develop online virtual worlds comprised of iconic characters, images, and story lines for children in China. The company was rated the largest online entertainment community for children in China, based on its market share and active accounts as of June 2010, according to iResearch.
Please note the stock analysis presentation of Alibaba Group and Taomee are only meant for illustrative purposes and should not be construed as an actual recommendation.