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Consumer Bulls in China Shops. Cash In Now

A consumer stampede? Maybe not yet, but American retailers would be popping champagne corks and setting off fireworks over numbers like the results I'm seeing from China.

China's top one-hundred chain stores report that their sales volume hit 1.66 trillion yuan ($253 billion) in 2010. That's a hugely impressive increase of 21.2 percent year over year.

At the top of the retail list was Shenzhen-listed Suning Appliance which is famous for marketing the three C's: consumer appliances, computers and communications products. Suning's sales jumped by a stunning 33.5 percent from the year before. Profits leapt by 38.8 percent.

Hong Kong-listed Gome Electrical Appliances (HKG: 0493) enjoyed an even bigger profit increase of 39 percent. This surge is especially impressive considering the turmoil that has engulfed Gome over the past year, with the jailing of its founder and the sudden resignation of its chairman.

But Gome revenues continue to surge as the sales giant closes unprofitable stores and opens new ones. The number of Gome's listed outlets rose from 726 to 826 last year. But those results do not include around 500 unlisted outlets owned by Huang Guangyu, the company's jailed founder.

Gome is now focused on expanding into smaller cities.

Crucial to the New China

Here's one thing that Washington and Beijing agree on. The Chinese people must consume more of the products they produce. And they must import more from the rest of the world.

Washington, for its part, is desperate to reduce its balance of payments deficit with China. That's why increased consumption by the Chinese people is essential to correct America's chronic imbalance.

Beijing also realized during the economic crisis that it could not depend on exports to support its economy indefinitely. The global crisis hit Chinese exporters especially hard as worldwide markets dried up. Now, with all the resources and determination that Beijing can muster, China is being steered to a more sustainable path of internal consumption.

The newest sales and profit reports indicate that the strategy is working well. Chinese stock markets have been buoyed by the upswing in profits.

Shanghai Composite Index: 3-Month Performance

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Manufacturing Profits

Stock markets are also responding to stellar profit reports from China's industrial companies. The profits of Chinese industrial enterprises rose by a stunning 34.3 percent year over year, to 645.5 billion yuan ($97.8 billion). That rise is from a measure taken during the first two months this year.

Also showing significant gains are the electronics and mobile phone sectors. The two sectors boosted revenues in China's electronics manufacturing industry by 21.6 percent year on year during the first two months of 2011.

In January and February, the revenue of the electronics manufacturing sector totaled $147 billion, the equivalent of 970 billion yuan. The industry is sure to beat the trillion yuan mark as China's top semiconductor firms, including Semiconductor Manufacturing International Corp. (NYSE:SMI) and Huahong, expand production. SMI, the biggest made-to-order chip manufacturer on the Chinese mainland, plans to invest at least $12 billion over the next five years to boost its production capacity and improve its technological expertise.

One last sign of increasing consumption: Chinese travel is booming.

China Southern Airlines Co. (NYSE:ZNH), the nation's biggest carrier, boosted its profits almost 18-fold last year as passenger and freight revenues rebounded. Net income climbed to $883 million in 2010, an increase of 167 percent from the year before. China Southern's passenger numbers climbed 15 percent last year as China shook off the effects of the global financial crisis.

The International Air Transport Association says China will probably lead an expected 32 percent jump in global passenger traffic in the next four years.

I've been placing my clients largely in the safe haven of cash during the worst of the Japanese crisis and ongoing middle-east turmoil. But China is showing irresistible growth.

It's going to be a key target as I search for the biggest opportunities of 2011.

Click HERE to know more about the China Stock Digest: China Stock Market Research & China Stock Analysis
How to Score Big on the World's Second Largest Economy...

China surpassed Japan as the world's second largest economy, right behind the U.S. as the strongest on the planet.

Chinese companies are making money hand over fist, and will continue to do so for years into the future.

For now, the Chinese stock markets are taking a break from their recent torrid pace.

That won't last much longer.

It's time to position your portfolio for potential monster gains the likes of which you've never seen before.

Click HERE for the exciting details on how to score big in the Chinese stock markets from the "Sage of Shanghai"...

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Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

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