In my last column, I talked about the unprecedented investment opportunity that exists across Chinese stocks today and about how you, as an American investor, can take advantage of it.

To summarize, you can't rely on index funds, money managers, or even multinationals that have targeted China as the next growth frontier. That's because, as we discovered during our Global Gains research trip to China in June, while big names such as Honeywell (NYSE:HON) and General Electric (NYSE:GE) will often be awarded high profile work in Tier 1 cities such as Beijing and Shanghai, the real beneficiaries of China's rapid growth are the domestic companies -- such as China Fire & Security (NASDAQ:CFSG) and China Security & Surveillance (NYSE:CSR) -- that are cleaning up in the faster-growing Tier 2 and 3 cities such as Xi'an and Yichuan.

Now, it can be tough for American investors to get comfortable with these companies because they are so far away. But when it comes to emerging-market growth, the players that are best able to adapt to these nascent markets are the ones that are 100% focused on them. They know their customers better, can react to changes faster, and know what it takes to be successful in "less formal" economies.

Here's another example
Perhaps you've heard of Millicom International Cellular (NASDAQ:MICC). The $8 billion Luxembourg-based company specializes in providing cellular phone service in frontier markets such as Laos, Cambodia, Senegal, Ghana, and Paraguay. In doing so, it competes with entrenched telecommunications giants such as America Movil (NYSE:AMX) and France Telecom (NYSE:FTE).

But what sets Millicom apart from its competitors is that by doing business in nothing but frontier markets, it's able to rapidly spread effective best practices. For example, while most telecoms focus on signing long-term usage contracts, subsidizing handsets, and billing by the minute, Millicom's Tigo brand -- thanks to company learning in Latin America -- generally sells nothing but SIM cards, specializes in prepaid service, and offers low denomination top-ups (as little as $0.20) so customers can take advantage of "per second" billing.

All of this is designed to enable the Latin American, African, or Asian consumer who does not have a lot of money to become a loyal customer. And it works. By addressing a previously ignored market segment, Millicom is increasing its subscriber base at a 58% annual rate while earning excellent returns on capital. What's perhaps more exciting is that the company has just begun to crack these markets. Millicom's penetration in Africa -- the fastest-growing market in the world -- checks in at less than 20%.

This, in the words of CEO Marc Beuls at a recent investor presentation, makes Millicom "the best business you can be in in the whole world."

Valuation matters, of course
Even if Millicom is the best business in the world, that fact alone doesn't make it the world's best investment. That can only be the case if investors are sure not to overpay in order to participate in this fascinating story.

And despite the precipitous drop in Millicom's stock price since June, it's not a no-brainer. Remember, though Millicom's service is affordable, the company is still relying on the growth of a spending class in places such as Chad and Congo, alongside stable political regimes in these sometimes very volatile places, in order to realize its extraordinary potential.

In other words, when valuing the stock, investors should employ a larger than normal discount rate before salivating at all of the potential upside. And while I'm still waiting for Millicom to come down a bit in price, the company's experience proves beyond a shadow of a doubt that if you're to succeed in emerging markets, you need to know your customer cold.

If you're looking for more promising emerging markets stock ideas, click here to join our Motley Fool Global Gains international investing service free for 30 days. Our team of analysts travels abroad frequently in order to bring the world's best investment opportunities home to you.

Tim Hanson owns shares of China Fire. China Fire & Security is a Motley Fool Global Gains recommendation. France Telecom is an Income Investor selection. The Fool has a disclosure policy.