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3 Top Companies to Benefit from Real Consumption in China
Aspire | 19 October 2015
By: Raymond Leung
Articles (142) Profile

Chinese billionaire, founder and chairman of Alibaba Group, Jack Ma, has something to say as the global community worry about a slowdown and potential recession in China. He expressed that there is no need to worry about China as the private sector will take over the role from the government and take lead in driving the economy.

When compared with the US, China has the advantage of a large population, which is four times more than that of the US. Its domestic consumption supported by 1.36 billion people and its total consumption contributes to about 50 percent of its GDP. We have highlighted 3 counters below that will benefit from China’s strong domestic consumption.

Since it first opened its first concept store in China in 1993, OSIM has been aggressively expanding its presence in the Greater China region. As of FY14, North Asia accounts for 53 percent of the group’s turnover. OSIM is taking its strong branding as an advantage to pursue affluence in China.

OSIM group also operates luxury tea brand, TWG Tea and premium nutritional supplement brand, RichLife. TWG Tea is a marketing success in China and is expanding at a fast pace. With its first flagship store opened last year, TWG Tea currently has expanded to 4 stores in 2 cities across China.

2. Sino Grandness Food Industry

Sino Grandness Food Industry Group (SFSGI) is a Chinese manufacturer and distributor of canned fruits, canned vegetables and bottled juice. The group owns popular juice brand Garden Fresh, which is known as the top selling loquat juice in China.

Its products can be found in the greater China region and on the racks of major supermarkets and convenience stores such as 7-11 and Wellcome in Hong Kong. At times of economic turbulence, companies in fast moving consumer goods tend to weather through better. SFSGI is also in a good position to reap from the huge population of 1.36 billion in China.

3. China Mobile
Even though it is not a SGX-listed company, China Mobile (CHL) is worth a mention. The NYSE and HKSE listed telco is the world’s largest mobile phone operator and has the largest market share in China with an estimated subscriber of 806 million (approx. 70 percent market share).

Telecommunication companies are defensive stocks and are less affected by the performance of the economy. Given its lion share of the market, CHL is a good example of how a company can benefit from the domestic consumption of China’s large population.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

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