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China Revenue Surges (Right Where I Said It Would)!

|Includes: Alibaba.Com Limited (ALBCF)
You won't find China's biggest retail boom in any of the usual places. Forget about those glitzy new shopping malls. And don't wear out you shoe leather on the high end boulevards of Beijing or Shanghai.


The fastest growing sector of the Chinese economy is racking up spectacular gains right where I said it would. On the Internet.

The rate of growth in this sector is unbelievable. (Even by Chinese standards.)

In the first half of the year e-commerce sales in China more than doubled! Revenues topped 211 billion yuan ($31 billion) in the first half of 2010. For the whole year, sales are expected to rocket to $64.5 billion.

Sales at China's e-shops more than tripled between 2007 and 2009! That is much faster than the average 18 percent yearly growth of all retail sales, an impressive that China has routinely chalked up in recent years.

China Revenue Surges (Right Where I Said It Would)!

The latest figures come from a report on China's Internet market released by Alibaba, the nation's largest Nasdaq-listed e-commerce company.

Alibaba is a thinly traded pink sheet on the Nasdaq (OTC:ALBCF). It is a much, much more liquid stock on the Hong Kong Exchange which is easily accessed from most brokerage accounts. The company can be tracked as HKG: 1688 on Google Finance and on other websites.

Can We Believe These Numbers?

We predicted a coming explosion of online shopping just a month ago. Now the proof is coming in. And not just from companies with skin in the game.

Nielsen Online says consumers from China are the most prolific online shoppers in the whole Asia Pacific region. Nearly 95 percent of Chinese shoppers are planning a web purchase in the next six months.

The potential for growth is still huge. The number of Internet users in China climbed to 420 million this year. (That is already 36 million more than at the end of 2009.)

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But China's Internet penetration rate still lags far behind many other countries. Total penetration only reached 31.8 percent of its potential in China by June of this year. China's Internet presence is set to grow by hundreds of millions of users.

And, once Chinese shoppers do go online they shop more than anyone else.

The new Nielsen report shows how online spending as a percentage of total monthly spending varies by country. Chinese and South Korean online consumers make the most purchases through the web.

Chinese consumers are very price sensitive but also insist on quality and prefer brand names. On average they spend 6 to 25 percent of their average monthly outlays through the web.

Here's what they're buying:

China Revenue Surges (Right Where I Said It Would)!

Follow the Future Money

Future trends indicate China's online shopping binge will surge in coming years.

It will also explode onto the international scene.

Deutsche Bank has just come out with an eye-popping prediction about the Chinese online market. Web sales are expected to reach 1.5 trillion yuan ($220 billion) by 2014.

E-commerce is one of the most exciting fields in the country, Deutsche Bank enthuses. Online commerce will continue to boom among existing users. And the number of Chinese people online will mushroom to 812 million by 2014!

Companies benefiting from this trend will include which is a hybrid of eBay and Amazon. is not available to western investors. is a globally traded stock. But so far Alibaba shares have not performed as well as revenues. reported a 46% jump in second-quarter profits in August. But shares continued their year-long decline. Year to date, shares have lost almost 17 percent. Shares still sport a P/E multiple above 55.

As I'll describe in future postings, has major ambitions outside of China. And global growth may propel this Chinese company into the revenue stratosphere.

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