This may not be news to you, but I'll lead with it anyway:
China's stock market has been on fire the past few years, and all things China in our markets have enjoyed a similar, rapid rise. Even Baidu.com (Nasdaq: BIDU ) , an $8 billion Internet search titan, has more than doubled in the past year.
This next bit, however, may come as a surprise:
There are other fantastic long-term growth opportunities to be had among Chinese companies.
Where you won't find them
Picking up shares of infrastructure and commodity companies in China was a no-brainer the past few years, but these companies are no longer cheap. Too many investors have caught on to the global boom in building.
What's more, current valuations imply that many investors expect the growth in buildings and infrastructure to continue unabated. But as Kubota made clear with its most recent earnings release, these are still cyclical companies with high fixed costs.
Instead, look to luxury
Iconic American names such as Anheuser-Busch (NYSE: BUD ) and Wrigley (NYSE: WWY ) don't immediately come to mind when we think "China," but these are solid brands that enjoy widespread consumer appeal there. Their sales will benefit from growth in the country's middle class.
There's also little doubt that consumer heavies such as Procter & Gamble, Johnson & Johnson (NYSE: JNJ ) , and Brown-Forman (NYSE: BF-B ) will grow their sales as consumer spending increases in China and Southeast Asia. Today, almost three-quarters of P&G's $76.5 billion in sales is in developed markets. That ratio will decrease as the company increases its presence in emerging markets.
Japanese and Korean consumer-goods companies such as Kao and Lotte also have opportunities ahead of them. My favorite of this group is Unicharm -- a Japanese maker of diapers and other sanitary products -- which has pursued Chinese growth aggressively and boasts a leading share of the disposable diaper market in Shanghai and Beijing. Unicharm's valuation is reasonable, and you need access to the Tokyo Stock Exchange to pick up shares.
Foolish final thoughts
Chinese valuations do seem high, but opportunities for investors there are too numerous to ignore. They're just in less obvious places.
The consumer staples mentioned above might take time to fully capitalize on China; they haven't seen the sharp runup that so other Chinese companies have.
If you're looking for more ways to profit from growth in China and around the world, take a look at our Motley Fool Global Gains international investing service. Our team recently returned from a research trip to China, and you can see all of our picks by joining the service free for 30 days. There's absolutely no obligation to subscribe.
This article was originally published Oct. 29, 2007. It has been updated.
Nathan Parmelee is a Global Gains analyst. He owns none of the companies mentioned. Johnson & Johnson and Wrigley are Income Investor selections. Anheuser-Busch is an Inside Value selection. Baidu is a Rule Breakers recommendation. The Fool has a disclosure policy.