Stimulus plans have been executed in most developed and emerging countries this year. The results include many exporting nations searching for additional growth inside their own boarders. US retailers, including Wal-Mart Stores (NYSE: WMT) and Coach (NYSE: COH), are either forming joint ventures or with government approval opening their own stores in these faster growing markets. One of the fastest growing domestic markets is no surprise: China.
I was enlightened of the revenue potential for US companies by a simple analogy about the growth of basketball in China. At this very moment, there are more people playing basketball in China then there are people in all of the US. Now that is a visual that lends itself to understanding scale and why as its population earns money beyond basic needs that Chinese domestic retail can grow exponentially.
I read Monday in China Retail News of the surge in retail sales in October.
The National Bureau of Statistics of China has published major economic statistics for October 2009 and stated that China's retail sales increased by 16.2% year-on-year to CNY1.172 trillion. The growth rate was 5.8 percentage points lower than that of the same period of last year, but was 0.7 percentage point higher than that of September 2009. By region, China's urban retail sales in October were CNY796.8 billion, a year-on-year increase of 16.6%; while its rural retail sales were CNY375 billion, a year-on-year increase of 15.4%.
By industry, retail sales of wholesale and retail industries were CNY982 billion, a year-on-year increase of 16.8%; retail sales of hotel and catering industries were CNY169.6 billion, a year-on-year increase of 15.1%, and retail sales of other industries were 20.2 billion, a year-on-year increase of 1.8%.
So far, it has been a good year for the Middle Kingdom and China is not being strong armed by outside forces to move in different directions or a different pace than their own long-term strategy dictates.
Smart, swift financially capable US firms are paying close attention to where wallets are opening, populations are massive and consumers’ desire for goods and services can only increase. If the global recovery gains more traction, even these double digit growth numbers could accelerate. Exports and international operations are not just the result of a weaker dollar. Follow the growth, better yet, follow and invest in the firms who are already executing where the growth is in our global economy,
Disclosure: Mr. Corn is Chief Investment Officer – Equities of Beacon Trust Company. Through various equity strategies under his supervision he is currently long WMT.