Let's be honest: The rich (I'm talking "135-foot yacht" rich) are different from you and me. They generally look nicer, definitely smell nicer, and they use black toilet paper. Seriously.

These rich people are the reason why companies like Tiffany (NYSE: TIF) can report a 23% rise in first-quarter sales at its flagship store in New York City and raise full-year guidance, while discount retailer Wal-Mart (NYSE: WMT) tries to turn around two straight years of declining same-store sales in the U.S.

A world without borders
When you're rich, borders are just imaginary lines on a map. Luxury-goods companies like Tiffany have invested heavily in their brands, which provides them with not only pricing power, but also international recognition. If you don't think that little blue box gets ladies' hearts racing the whole world 'round, you've got another think coming.

Japanese consumers are famous for their appetite for high-end goods; they represent the second-largest luxury-goods market in the world. Oil money also keeps Middle Eastern shoppers returning to the premier labels. According to a recent report, Middle Eastern tourists to London drop almost $3,000 every time they stroll into one of the city's many high-end retailers.

The Chinese are the new money on the block, but their money is still green (or whatever color money is these days) and thick. Chinese tourists trail their Arab friends by a bit, at $1,000 per shopping spree, but they've moved past Russian shoppers on store owners' preferred-visitor lists.

Go where the money is
Companies that cater to these expensive tastes have been doing well as we put the financial wreckage of 2008 and 2009 behind us. Even with the tragic events in Japan marring recent results, luxury brands have been putting up impressive growth -- most of it in Asia:


Sales Growth

In Asia





25 times




52 times

LVMH (Louis Vitton)



18 times




21 times

Sources: Company releases, Capital IQ.

If you have to ask, you can't afford it
As you can see, luxury stocks generally also come with a premium, which generally makes it hard for value investors like me to get interested. But after watching prices steadily move upward without me, I've had to take a second look. When you add the ability to raise prices nearly at will with the enormous market potential presented by China and its emerging market brethren, I'm starting to see how paying up for quality makes sense.

You have to ask, eh?
For those still uncomfortable splashing out that much for a taste of the growing wealth in China, perhaps stepping down a bit to the more aspirational brands makes more sense. You might be more comfortable with companies such as Coach (NYSE: COH), Nike (NYSE: NKE), and Adidas (OTC BB: ADDYY.PK), which aren't necessarily regarded as luxury brands to Westerners. However, these companies have demonstrated an ability to demand premium pricing. Their widely recognized brands convey the status that upwardly mobile Chinese shoppers crave, as well as a trusted level of quality.

Coach was able to double its retail sales in China to $100 million last year, and it's expecting another 85% increase this year. Although Nike disappointed markets with its most recent earnings release, it reported 18% sales growth in China last quarter, with a 21% increase in earnings before interest and taxes. Not only is the leading shoemaker growing rapidly in that region, but it's also doing so more profitably. Rival Adidas also reported a strong rebound in China this year, after suffering a bit of a post-Olympics hangover. Its past quarter saw sales in China jump 36%.

Who's next?
The rise of the Chinese consumer will be one of the major economic themes of the next century, and Tim Hanson and The Motley Fool's Global Gains team (of which I'm a proud member) have been looking for ways to capitalize on it.

Our search hits the road in a few weeks, when we will be heading to China to do some boots-on-the-ground research and meet with the management teams of several local companies positioned to make the most of growing consumer demand in China. To get our notes and thoughts during the trip, just enter your email in the box below.

Nate Weisshaar's girlfriend is expecting some flashy presents from China, but he doesn't own any of the stocks mentioned above. The Motley Fool owns shares of Adidas, Coach, and Wal-Mart .Wal-Mart is recommended by Income Investor, Inside Value, and Global Gains. Adidas is a Global Gains recommendation. Coach and Nike are Stock Advisor recommendations.

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