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A Bull in China

January 2, 2008

Tags Free MarketsGlobal EconomyMedia and Culture

Imagine the irony. While my girl was attempting to become Shanghai Tang's customer of the month, I noticed a Newslink bookstore in the SkyMart portion of the Hong Kong International Airport. The SkyMart could pass for any high-end mall in the U.S. — Cartier, Channel, Dior, Fendi, Gucci, Prada — you name it. Not the dreary trinket shops provided in U.S. airports. The first book I spotted had a picture of the adventure capitalist himself, Jim Rogers, on the cover of A Bull In China: Investing Profitably In The World's Greatest Market.

Rogers has been a bull on China since 1984 when he motorcycled cross the huge country. But the China of today is vastly different than the backward country that Rogers pushed, dragged and rode his motorcycle through 23 years ago. High-rise cranes are everywhere, and millions of peasants are flocking to the major cities in search of employment and a better life.

This hyper-capitalism all started in 1978 when China's supreme leader, Deng Xiaoping "restarted traditions of commerce suppressed for decades by wars, civil strife, and Communist dogma," explains Rogers. With 1.3 billion people who save and invest at a rate of 35 percent of their incomes, China is poised "to become the most important country in mankind's future."

That's a bold statement. And the vast majority of Americans, who don't own a passport, might laugh. But as Americans save nothing and go into hock, while their government lives off inflated dollars to fight wars around the world and fund the nanny state, the Chinese are producing goods at an astounding rate. And all one has to do is spend some time there to see the commerce and capital investment.

In A Bull In China, Rogers provides investors with a simple primer on how to financially take advantage of China's growth. Of course most investors would rather have someone fish for them, rather than learning to fish. But while Rogers doesn't give away any hints as to what his personal holdings are in the region, each chapter offers investment ideas — "Jim's Sino Files" that provide company names, industries, what exchanges the stocks are traded on, and a quick glimpse at recent financial highlights. But the book is not all company summaries. In between Rogers provides a fast-paced history of a country that is just over 4,000 years old.

Of course, China is still a communist country so buying shares is complicated. But Rogers breaks down the alphabet soup of China's "split-share" system that ensures "that the common people of the People's Republic get first crack at the country's corporate future." But, if buying foreign shares makes you queasy, or your discount broker can't snag you some shares in Shanghai, many of the companies Rogers mentions have American Depository Receipts (ADRs) traded on US exchanges or on the NASDAQ Bulletin Board.

Other than the eye-stinging pollution, the first thing you notice in Shanghai or Beijing is the incredible amount of traffic. A local TV program I watched while in Beijing reported that the capital city gets a thousand new cars added to the city's roads each week. There may not be many opportunities to invest in your local expressway here at home but there are more than 20 toll-road construction and management companies listed on Chinese and Hong Kong Exchanges.

For those who want to invest in air travel, Rogers provides the names of four airlines and three airports as possible investment ideas. That's right, you can buy shares in the Beijing Capital International Airport Co., Ltd. or Shanghai International Airport Co., Ltd. Most people know the summer Olympics is coming to Beijing in 2008, but Shanghai will attract even more visitors when it hosts the 2010 World's Fair.

Rogers makes a point that China's major airports aren't the dingy crowded variety like New York's Kennedy and LaGuardia in the US. In addition to high end shopping and dining, China's airports are clean, expansive, well lighted and have in-house hotels and healing centers.

The Chinese are passionate about eating and drinking. But don't expect to see many fat people if you make the trip. And with over a billion hungry people, investing in food and drink would seem to be a Yao Ming slam-dunk. By the way, Chairman Mao has nothing on Mr. Ming in the PR department. The 7-footer's picture is everywhere. Rogers provides a number of investment angles in this area, from First Tractor Co., Ltd. to Dynasty Fine Wines Group Ltd.

Housing and all types of real estate development are also in great demand, and Rogers has ideas to take advantage, but warns "today's property-development industry is probably the sector of the Chinese economy most rife with fraud and scandal."

A Bull In China provides a complete buffet of Chinese investment concepts. However, Rogers stresses that none of the companies mentioned are recommendations, and he is also mindful of a potential bubble forming in these burgeoning stock markets. Investing in China's growth isn't a strategy to make a quick buck (or Yuan). "If the twentieth century was the American century," writes Rogers, "then the twenty-first century belongs to China."

After spending time there, I'm convinced it is time to start building a portfolio in the Far East, and A Bull In China is the roadmap. As Jim Rogers says, "China won't wait."


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