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. Many have come back to Earth, but Internet star Sohu (Nasdaq: SOHU ) has more than doubled in the past year, and a few others have, too.
This next bit, however, may come as a surprise.
There are still fantastic long-term growth opportunities among Chinese companies. With the Chinese market close to 50% off its highs, and other Asian markets off 20% or more, now is the time to be digging.
Where you won't find them
Picking up shares of infrastructure and commodity companies in China was a no-brainer over the past few years, but those companies are no longer cheap. Too many investors have caught on to the global boom in building.
What's more, current valuations suggest that many investors expect the growth in buildings and infrastructure to continue unabated. This means you need to tread lightly with Cummins (NYSE: CMI ) and other machinery and infrastructure plays; these are still cyclical companies with high fixed costs.
Instead, look to powerful brands
Iconic American names such as Coca-Cola (NYSE: KO ) and Papa John's (Nasdaq: PZZA ) don't immediately pop into mind when we think "China," yet these brands enjoy growing consumer appeal in China and should see their sales benefit from growth in the country's middle class.
There's also little doubt in my mind that consumer heavies such as Kimberly Clark (NYSE: KMB ) and Avon (NYSE: AVP ) will grow their sales as consumer spending increases in China and Southeast Asia. Today, almost three-quarters of Procter & Gamble's $81.5 billion in sales are in developed markets. We should expect that ratio to decrease as the company ramps up its presence in emerging markets.
Japanese and Korean consumer-goods companies such as Sony (NYSE: SNE ) , Kao, and Lotte also have opportunity ahead of them, though my favorite of this group is Unicharm -- a Japanese maker of diapers and other sanitary products that has pursued Chinese growth aggressively. Unicharm boasts a leading share of the disposable-diaper market in both Shanghai and Beijing. But although Unicharm's valuation is reasonable, you need access to the Tokyo Stock Exchange to pick up shares.
Foolish final thoughts
Although Chinese valuations are high, they have come back in the past few months, and the opportunity is too big to ignore. Investors looking for a little extra safety should look in some less obvious places to get a hold of Chinese growth.
The consumer-focused companies I mentioned here may take some time to fully capitalize on China, but the good news is that they haven't seen the sharp run-up or volatility that so many 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. Nathan has no ownership stake in any of the companies mentioned. Coca-Cola is an Inside Value recommendation and Kimberly Clark is an Income Investor recommendation. The Fool has a disclosure policy.