Beijing Impact

The New York Times has an interesting article today on thriving state-owned companies in China-”China’s Policies Ensure State Enterprises Grow“.

The article makes no mention of China’s Internet industry, which will generate 6-7+ billion dollars in revenue this year from gaming, advertising and other sources, is growing 20% or more per year, and which has publicly listed companies with a combined market capitalization approaching 100 billion dollars (partial list here), and much more if you include the value of private firms like Alibaba Group and its Taobao subsidiary. A few billion dollars in annual revenue and 100 billion dollars or so in market capitalization still pales compared to China’s overall economy and to some of these state-owned behemoths. But as the Internet increasingly becomes embedded into hundreds of millions of people’s daily lives, its influence on Chinese society and China’s economy will be much greater than its current revenue would suggest.

Who hasn’t given some thought to how to invest in China’s remarkable economic growth? Forbes China magazine’s 2010 Investment Guide hit the streets today, and offers 10 domestically traded stocks that the magazine’s editors consider to be worth buying. Even if you can’t buy domestically traded stocks in the mainland, the group offers a good window into industries and businesses that are doing well in the world’s most dynamic economy.

Here are this year’s picks, with their China-exchange ticker number in parentheses:

*Suning Appliance (002024), China’s largest retail appliance chain. A messy battle for control of rival Gome Electrical Appliances and government encouragement of retail spending by Chinese can only be great news for Suning and its

suppliers. Among U.S. companies that sell products in Suning’s stores are Dell, Hewlett-Packard, IBM and Apple Computer.

*Jiangsu Yanghe Brewery (002304), China’s no. 4 manufacturer of rice wine. Some 70% of its sales are concentrated in Jiangsu province, leaving a lot of room to grow in other areas.

U.S. agricultural exports to the Chinese market are surging. Yet the burgeoning trade in food and agricultural goods could eventually face headwinds, especially if Beijing takes further steps to subsidise its rural economy.

The Chinese market is extremely attractive to U.S. agricultural and food producers:

Homes Inns, an economy-hotel chain that’s been a big beneficiary of China’s travel industry boom, expects to keep up its rapid expansion in the next few years, CEO David Sun told reporters.

Since 2004, the Shanghai-based company has increased the number of hotels in its chain from 20 to 700. It hopes to have 1,000 hotels open by the end of next year, Sun said at a gathering of the Shanghai Foreign Correspondents Club on Wednesday.