Many companies, including Yum Brands (NYSE: YUM), are seeking profit from China, as the growth is robust and consumerism is alive and well. Chinese exchange traded funds and shares will be looking at profit, as well, if the trend continues.
When you think of Prada or Samsonite, do you conjure images of the Chinese consumer? Soon, the Chinese consumer will be the consumer as companies get ready to hone in on the spending habits of the Chinese.
McDonald’s (NYSE: MCD) is another company betting on China. Kabya Ghosh for The Motley Fool reports the fast food behemoth is competing directly with Yum Brands in capturing the fast food market within this developing nation. MCD is aiming for 700 more stores in China, in addition to the 1300, by 2013. Yum, in contrast, has about 3,000 already in place and is heating up the race for market share.
Other indicators of the Chinese consumer boom:
- Frederick Balfour for Bloomberg reports the number of millionaire households in China has jumped 31%, to 1.1 million in 2010. China is now third in the ranking, with the U.S., at 5.5 million, holding more millionaires than Japan, with 1.53 million.
- Samsonite is aimed at less affluent Chinese consumers, therefore, serving a wide portion of the consumer population. China still only makes up 10% of the company’s profit, with about 40% of sales accounted for in Asia, reports Peter Stein for The Wall Street Journal on Yahoo Finance.
Yum is about 5.3% of PowerShares Dynamic Leisure and Entertainment (NYSEArca: PEJ) and accounts for 5.15% in PowerShares Dynamic Food And Beverage (NYSEArca: PBJ). MCD is about 5.2% in PEJ, and 5% of PBJ.
Major China funds, such as the $7,414 million iShares FTSE Xinhua China 25 Index (NYSEArca: FXI), invest heavily in financials and telecom, targeting a higher end consumer already.
Tisha Guerrero contributed to this article.