Mediaboss Marketing

By Chris Moore - March 15, 2012 | Tickers: AAPL, BIDU, GOOG, INTC, SINA, SOHU, TUDO, VZ, YOKU | 0 Comments

Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

China is a huge country by almost any metric you choose. Theyre the second largest economy, have the largest total population, the greatest number of cell phone users, internet users, and rank in the top 5 in terms of total landmass. What makes investing in China particularly interesting is the fact that its people are achieving greater and greater wealth across the board and the middle class is growing rapidly and so is demand for the internet and web services of all sorts. Given my personal preference for tech stocks, I've been spurred to take a look at what China has to offer, weighing the pros and cons of investment.

First the pros:

The math is pretty enticing, a large number of people in China have yet to obtain access to the internet, and when they do, companies like Baidu (NASDAQ: BIDU), Renren, Sohu.com, and Sina (NASDAQ: SINA) are likely to be the places they frequent. This is particularly appealing given the fact that each of these companies already boasts millions of users on top of being poised to gain more.

Total Number of Internet Users in China and the US

Even though the chart above ends at 2010, it is clear Chinas current population with internet access is on pace to more than double that of the U.S. and likely already has. According to Analysys International the number of Chinese mobile internet users was 400 million in the third quarter of 2011, where the global total for mobile internet users is somewhere around 1.2 billion for 2011, according to the International Telecommunication Union. The Chinese market is already very large, but even more importantly; the major Chinese internet companies have control of the market, thanks in part to their restrictive government. Companies like Baidu and Sina benefit enormously from the absence of their U.S. counterparts. For instance, in the global search market, Google (NASDAQ: GOOG) is the leader by a wide margin, with Baidu in second place with just 11% of the market.

In China, however, the tables are turned, due to Googles smaller presence within the borders.

Link:
Investing in China’s Internet Boom