How do you like your growth? Do you prefer ground-floor opportunities where the upside is huge, or do you like to hop on at a much-higher floor with less upside but more proven alternatives to choose from?
That's what pitting China against Western Europe comes down to. In China, you have a burgeoning economy that has grown at 9.9% or better in each of the past three years. One annual spurt in China would equal a few years in the more developed European markets. In China, you have the world's most populous nation, with more than 1.3 billion citizens starting to realize their income-producing potential. In comparison, the CIA pegs the European Union population -- all of it -- at 457 million.
I know where I stand. It's at the other end of the world. I don't own a single share in a Western European company, although I've been rewarded with market-thumping gains by owning Chinese search engine leader Baidu
Entertainment, whether it's wireless-content providers like Tom Online
It only makes sense that these companies should be driving the stock market revolution. Despite their heady growth, less than 10% of the country has online access. More importantly, players are paying just pennies an hour to take part in some of the titles being put out by NetEase, Shanda, and The9
This doesn't mean that Chinese specialists are smarting. They are, by and large, wildly profitable. NetEase, a company that finds as many as 1.3 million players taking part in its popular Fantasy Westward Journey game, produced net margins of 58% this past quarter.
Can you think of a stateside or Western European company where $0.58 of every buck it earns wiggles its way to the bottom line? Favorable tax rates and an explosive economy are at the heart of the rich margin splendor you will find in many of China's leading companies.
Everywhere you turn, you will find immense upside. Granted, there is geopolitical risk here. China is just starting to come into its own as a pro-business region, and putting all of your eggs in one basket -- even if it's a beauty of a basket -- is clearly risky. Then again, the pursuit of greater rewards comes with the realization that one must take on greater risks.
As part of a diversified portfolio, how can you not earmark a chunk of your aggressive investments in China? The ground floor won't wait forever.
China is facing Western Europe in this Investing World Cup match. Go back to the intro page to navigate your way to another part of this contest, and then vote for the region that you think should advance to the next round of the tournament.
Tom Online is a Motley Fool Stock Advisorpick, while Ctrip is aMotley Fool Hidden Gemsrecommendation. NetEase and Shanda Interactive areMotley Fool Rule Breakersrecommendations. Take the newsletter service that best fits your investing style for a 30-day free trial.
For more international stock ideas, check out The Motley Fool International Report: Around the World in 80 Minutes.
This article represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc., or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts. So before buying, do your homework and review The Motley Fool's superbly sportsmanlike disclosure policy.
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