Cracking the Chinese Consumer
Many investors are talking about the Chinese consumer behind their back! Yesterday, Credit Suisse revealed there were more Chinese in the world’s wealthiest 10% than Americans, so where are the opportunities for investors to tap into that market?
In education and travel, that’s where. An era of cheap, low-skilled labor is making way for an educated, competitive society. Chinese parents in the new middle class are shelling out thousands to ensure their kids can compete with an internationally sound education, and for that, TAL is your ticker.
In the booming after-school business, TAL Education is the pick of the bunch. However, it can’t cover the whole of China! There are still gaps in the market as cities bigger than London go without private schools, so if you can get a government permit, you’re in the big time!
However, for every wealthy member of a millennial, online shopping middle class, there are 10 Chinese consumers on the fringes. The country’s supersonic rise as a global superpower has left many households with more debts than assets.
Not only that but unlike in the US, Chinese consumers are starting to crack under strains from the trade war. In a touch of irony, the same “unfair quick fixes” in Chinese monetary policy (think devaluing the currency!) that brought on the trade war might be needed to see it out the other side! The wealthiest 10% is a critical demographic for the country, and it will call the shots on this one.
