Conditions in China appear to be going from bad to worse.
On Monday, another bloodbath ensued in Chinese stocks. The Shanghai Composite Index nosedived 8.5% – the largest single-day decline in eight years. For every stock that rallied, 75 plummeted.
So much for all those government stimulus measures!
I’m afraid the latest news on the economic front isn’t much better. Once the poster child for GDP growth, China’s economy is now decelerating – and at a faster rate than many expected.
After decades of double-digit growth, we can now expect, at best, 7% growth moving forward.
Believe it or not, though, there’s one Chinese trend on the up-and-up that we can safely exploit for double-digit gains.
It’s All About Mobile
For over four years, I’ve been on the record stating that theexploding use of mobile devices promises to be the world’s biggest tech trend and, in turn, profit opportunity. Ever.
Given the country’s population of nearly 1.4 billion people, China is a big part of that trend.
The latest data from the China Internet Network Information Center (CNNIC) shows that in the first half of the year, mobile internet traffic increased 36.8 million to 594 million users. That works out to 89% of China’s internet users, up from 85.8% at the end of last year.
When we’re dealing with such large numbers, it’s easy to lose perspective. After all, we’re talking about a single country’s mobile internet device user base being bigger than a single continent’s population (North America).
Even more mind-boggling, there’s still room to grow. Consider: Over 700 million Chinese citizens still don’t have access to the internet.
Now, you’d think the smartest way to play the boom would be to scoop up smartphone manufacturers like Apple (AAPL), Huawei, or Xiaomi. Think again!
Most don’t make any money. Except Apple, of course. It earns 92% of the industry’s operating profits, despite accounting for less than 20% of global sales volumes. The other 1,000 or so smartphone companies either break even or lose money, according to Canaccord Genuity.
