If they haven’t, it’s not a surprise. You see, Snow Beer is only sold in China, where the greed-bottled brew is a ubiquitous denizen of any retailer that carries beer. According to beer-market-researcher Plato Logic Ltd., more than 6.1 billion kiloliters of Snow Beer was sold in 2008, up 19.1% from the year before – easily outselling such former worldwide leaders as Bud Light and Budweiser.

What may be a surprise is the fact that China is now the largest beer market in the world, having surpassed the United States way back in 2001.

“To many investors, China is an old, worn-out ‘been there/done that’ investing story,” says Money Morning Investment Director Keith Fitz-Gerald. “And some folks are downright scared of it. They got burned jumping into the “China Rush” back when China was the hot, next-big thing – and they jumped out for good. What those skeptical investors don’t realize is that they only experienced the first chapter of the China story.”

Says Fitz-Gerald: “Ironically, the worldwide financial crisis marks the beginning of the second chapter of China’s rise to economic dominance, as well as its emergence as a global economic superpower.”

Welcome to the new game of post-financial-crisis global investing, where the rules have changed completely, and where there are $300 trillion in profit opportunities – if you know where to look.

Global Investing Web Summit

In fact, these new profit plays are the focus of a free-of-charge Money Morning Web summit that Fitz-Gerald will host on Thursday afternoon. The 4 p.m. event – “The $300 Trillion ‘Recovery’ That No One’s Talking About” – is planned as a half-hour streaming video session in which Fitz-Gerald will address the changing rules of global investing, as well as a number of potential investment ideas that investors might wish to study more closely.

But the greatest benefit for investors who take the time to watch and listen to the free Web summit might be a perspective on globalization that they won’t be able to get anywhere else. Fitz-Gerald, a former professional trade advisor, is a well-known expert on global market trends who actually lives in Asia for part of each year. He heads an investing trip to Mainland China every year and in each of the past two years has actually written a multi-installment investment travelogue for Money Morning readers.

It’s that time actually spent on the ground in China – and the high-level contacts that he’s nurtured as a result – that’s enabled Fitz-Gerald to provide Money Morning readers with unique and independently conceived insights on China that just aren’t freely available.

Let’s take a look at some of the new rules of the global investing game that the Web summit will address – as they relate to China.

The Market Investors Can’t Afford to Ignore

Far too many investors view China as a near-term investing bubble. In doing so, they miss the real point: China is probably the single-biggest profit opportunity of this generation – if not of our lifetimes. But it’s a long-term opportunity, and one that admittedly will experience some ups and downs – and even some major bumps – along the way.

But any near-term risks are dwarfed by the long-term growth potential China poses. For one thing, China is using the global financial crisis as an opportunity to transform itself – both from an internal and external standpoint.

There’s plenty of long-term growth potential from an internal standpoint alone.

China’s leaders understand that they can no longer afford to allow their economy to function as an export-only machine – whose fortunes rise or fall depending upon the health of such trading partners as the United States. So they’re transforming the economy into one where there’s actual domestic demand from China’s consumers.

That creates a massive opportunity. China’s emerging middle class is already a major economic force. Estimates of its size right now range from 100 million to 247 million, although one prediction says it could reach 600 million by 2015. For some perspective, consider this: The entire U.S. population is about 300 million.

Right now, about 35% of China’s economic activity is consumer driven. But households there save 35% of their wages. In the United States, by contrast, consumer spending drives 70% of the economy and the household savings rate is in the low single digits most of the time.

Consider this: As China’s economy evolves into more of a domestic/consumer-driven market, there’s plenty of fuel to keep driving an economy that – even now, tempered a bit by the global malaise – will advance at about an 8% clip through the rest of this year. And that’s considered a conservative estimate.

That bullish outlook is one reason that China’s stock market has outperformed its U.S. counterpart in recent years [See accompanying graphic for additional insights]

Just think what will happen as China’s worker wages continue to advance, even as that country’s consumers save less and spend more, meaning that a greater percentage of China’s overall economic growth will be consumer driven.

Even as China makes that shift internally, however, that country will continue to become a bigger and bigger force in the global economy.

As we noted above, the global downturn is viewed inside China as a major expansion opportunity.

China’s companies are capitalizing on the weakness being experienced by the United States and Europe, and are working to grab market share away from their wheezing Western rivals.

And with U.S. stock prices still well below their record highs, expect to see cash-rich foreign firms – including those from China – buying market share, needed technologies or winning products by purchasing companies outright. The next round of U.S. takeovers will be made by foreign companies.

China has the financial firepower to make this happen: It’s foreign reserves are an all-time-world record of $2.1 trillion, meaning it will be able to help its companies finance deals that are deemed strategic in nature.

“The global blue chips of the future may well be companies whose names you have trouble pronouncing, with corporate headquarters in cities that are on the other side of the world,” Money Morning’s Fitz-Gerald says.

But don’t let that deter you. When it comes to profitable investing, the name of the game is ferreting out the most-promising profit plays – no matter where they are – while also managing risk.

And in the new global reality, one of the biggest risks is the risk of getting left behind – by failing to capitalize on the next round of global trends.

“Emerging” Profit Plays

Although his Thursday Web summit will focus a great deal on China, it won’t ignore the other developing investment opportunities that investors need to know about.

Take the emerging markets of Asia, Eastern Europe and Latin America, for example.

According to a 2008 report by the University of Pennsylvania’s Wharton Business School, the World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.15 billion in 2030. Muhtar Kent, chief executive officer of The Coca-Cola Co. (NYSE: KO) since July 2008, says this opportunity is the equivalent of adding a city the size of New York to the world every three months.

In 2000, developing countries such as Brazil, India, China and others were home to 56% of the global middle class. By 2030, that figure is expected to reach 93%. China and India alone will account for two-thirds of the expansion – with China contributing 52% of the increase and India 12%, the World Bank said.

Among the biggest winners will be the multinational companies that are able to conceive, develop and market products and services that are “tailor-made for the burgeoning ranks of first-time consumers,” Wharton faculty and analysts found.

It goes without saying that the other winners will be the investors who find those companies while they are still undiscovered gems – and who then stick with them, understanding, as they do, the magnitude of the profit opportunity that stands before them.

One early example is Snow Beer, which is a partnered product – the result of a collaboration between China Resource Enterprise Ltd., and London-based SABMiller PLC (OTC ADR: SBMRY).

And there will be plenty more to come.

Source: How the Economic Rebound and China’s Emergence Will Help Create a $300 Trillion Profit Opportunity for Investors

When Airbus recently announced the delivery of its first China-built passenger jet, it was more than just the usual bit of corporate PR. It was an admission that any company that wants to remain a global leader in its industry will have to embrace China as a customer – and probably as a partner.

Airbus – a subsidiary of defense giant European Aeronautic Defense and Space Co. NV, also known as EADS NV – said it assembled the A320 passenger jet in a plant in Tianjin, China’s sixth-largest city. The factory is 49%-owned by a Chinese consortium, and is expected to produce another 10 passenger jets this year alone.

The China connection doesn’t end there, either: The just-completed A320 will be sold to a leasing company and eventually put into service by Sichuan Airlines Co. Ltd., a regional carrier.

Both Airbus and its U.S. rival, The Boeing Co. (NYSE: BA), understand that the Chinese market is crucial to their futures. Boeing has said that China will become the largest aviation market outside the United States by 2028, with the mainland set to require 3,700 additional aircraft - worth more than $350 billion – in that time. Airbus, which projected a slightly lower figure of about 2,800 aircraft, hopes to see its market share rise from about 30% now to about 50% in the next couple of years.

In the near term, the global downturn has left China’s carriers feeling the pinch, too, but it’s the long term that has companies such as Airbus and Boeing feeling both excited – and worried.

In many industries, partnerships represent the price of entry. And in the long haul, China has ambitious plans of its own. In the commercial airliner business, for instance, it is already developing a regional airliner and more recently has launched plans to design and build a globally competitive jumbo jet of its own.

The Rise of China as a Powerhouse Market

One of the hallmarks of any great economy is its ability to produce technically complicated machinery. I’m not talking flat screen TVs here but stuff like spaceships and, closer to earth, commercial and military aircraft. While Airbus is a partner right now, the point is that China is moving up on the technology scale both hard and fast. Faster, in fact, than most Westerners realize.

But the rollout of a completely Chinese-built Airbus A320 highlights something else, the significance of which is lost on most investors: It’s not really about Chinese airplanes or even the fact that China is making something new. The real key here is that Airbus – like many companies – understands that the Chinese market is growing so fast, and has the potential to be so huge, that that it has to invest there, and do so as a partner, or risk getting left behind.

Chances are good that Airbus understands something else that I’ve been telling investors since I first visited China nearly 20 years ago: There will come a time when China makes the transition from just being the world’s biggest manufacturer and becomes the world’s biggest market. In the long run, it’s not about China the export machine – it’s about the Red Dragon’s transition into a full-fledged consumer market.

With more than 300 million people – the majority of whom save an average of 35% of their income, China’s quickly emerging middle class is by itself potentially larger than the entire U.S. population. And the top 2% of China’s academic community – I’m talking the best and brightest only – is larger than our entire university population.

The bottom line: China not only has the capability to produce entirely new and different products, but its consumers increasingly have the ability to buy them. Consider Snow Beer. Most people have never heard of the ubiquitous green bottled stuff because it’s sold only in China. Yet according to beer-market-researcher (yes, they do exist) Plato Logic Ltd., Snow Beer sold about 6.1 billion kiloliters of beer in 2008, up 19.1% from the year before – outselling such former brand leaders as Bud Light and Budweiser.

Not surprisingly, Snow Beer is a partnered product - the result of a collaboration between China Resource Enterprise Ltd., and London-based SABMiller PLC (OTC ADR: SBMRY) news portalalibaba.com reported.

Maybe this won’t surprise you, but it never fails to surprise the majority of people I talk with when they learn that China is now the world’s largest beer market, having surpassed the United States as early as 2001.

It’s much the same story with cars. For the past four months running, China has been the world’s largest automobile market. There are still a dozen or more automakers slugging it out for Chinese consumers’ hearts and minds, but all the biggies are there – including the only profitable business unit of General Motors Co., the Japanese, European makers and more. China this year also became the world’s largest producer, consumer and exporter of light-duty electric automobiles.

China Profits Poised to Zoom

And that brings us back to Airbus.

After delivering the 10 planned A320s from its Tianjin factory this year, Airbus plans to deliver aircraft at a rate of four a month by the end of 2011. Overall, Airbus expects to deliver 70 A320s to China in 2009 – a total that includes jetliners built in Europe.

But it’s just not enough, notes Airbus China President Laurence Barrons. In fact, the executive told the China Daily that the “ramp-up [production] capacity of 48 planes a year is insufficient to meet [domestic] demand.”

It’s not surprising, then, that Airbus is planning on boosting production to 286 aircraft a year in Tianjin, which puts the China production facility on par with Toulouse and Hamburg, where the company has its European plants. Ultimately, and again here’s the really important stuff, there’s no reason in the world why Airbus won’t begin selling Chinese-made aircraft overseas to non-Chinese carriers within the next few years. Not only will this further pressure Boeing, but also it demonstrates yet again that there isn’t an asset class on the planet that won’t be affected by China’s growth – a point that I’ve made so often that it’s basically become a Money Morning mantra.

Speaking of which, Chinese domestic air passenger growth would make a western air exec drool. According to China’s Aviation Administration, domestic traffic is up 17% to 56.9 million in the first four months of 2009, at a time while international traffic fell 17% to 5.6 million. Some consider that a wash, but get this: Over the past 30 years, air passenger traffic rose at an average annual rate of 16% – reaching 190 million at the end of 2008.

In a statement issued on April 8, Li Jiaxiang, the director of the Civil Aviation Administration of China, stated that China intends to boost travel to some 700 million trips a year by 2020. And that underscores yet again the projected growth in China’s middle class strength. Somebody’s going to be paying for all that travel. My own travel experiences in China suggest that it will be the Chinese Yuppies, or “Chuppies.”

With the increase in demand has come an escalation in quality – of products and services. Gone are the days when flying Air China meant taking your life into your own hands and ghostly silent terminals at a few scattered airports. Also gone are the formerly ubiquitous souvenir shirts depicting overcrowded aircraft with parts falling off as they zoom skyward.

Flying in China today is a wonderful experience that I look forward to each time I visit China. The airports are modern and well staffed, the security is generally excellent and the flight crews are as sharp as they get. Increasingly, the aircraft are mostly all new – a welcome change from some of the timeworn airframes I routinely hop aboard when traveling back here in the United States. Of course, having real food with real silverware is a nice perk, too, in an era when a boxed lunch sets you back seven bucks.

Now, before you guys jump all over me with comments about state subsidized travel and the like, I know – you’re right. But that doesn’t change the fact that air travel in China is a throwback to an earlier – and eminently more pleasurable – time when travel was an experience to be enjoyed, and not just time spent getting from Point A to Point B, as is now the rule in the Western world.

In a recent interview, the president of Sichuan Airlines Co. Ltd., showed me that China understands the path to take to win in the global game of business when he said that “when air travel becomes a consumer pastime, that’s when you will see the real peak of aviation demand and industry growth.”

That’s true of virtually every market in China these days – which is why investors better not miss their flight: The Red Dragon’s domestic market is just getting ready for takeoff … 

Source: Airbus Deal Shows Investors That China Profits Are Cleared For Takeoff

Editor’s Note: Fifteen trades. All profitable. Since launching his Geiger Indextrading service late last year, Money Morning Investment Director Keith Fitz-Gerald is a perfect 15 for 15, meaning he’s closed every single one of his trades at a profit. And he did this during one of the most volatile periods for the U.S. stock market since the Great Depression. Fitz-Gerald says the ongoing financial crisis has changed the investing game forever, and has created a completely new set of rules that investors must understand to survive and profit in this new era. Check out our latest insights on these new rules, this new market environment, and this new service, the Geiger Index.

The boards of both the St. Louis-based Anheuser-Busch and InBev have approved the all-cash deal, according to a joint statement released today (Monday).

Anheuser-Busch’s popular Budweiser and Bud Light beers will join InBev’s stable of beers that includes such well-known brand names as Stella Artois, Beck’s and Brahma. The resulting merger will produce the largest beermaker by volume, as the newly formed entity will surpass the current title-holder, the British-owned SAB Miller PLC (OTC: SBMRY).

“Together, Anheuser-Busch and InBev will be able to accomplish much more than each can on its own,” InBev Chief Executive Officer Carlos Brito, who will helm the new company, said in a joint statement. “We have been successful business partners for quite some time, and this is the natural next step for us in an increasingly competitive global environment.”

The takeover battle has been hotly contested for months in both the boardroom and the courtroom since InBev’s original $46 billion offer for Anheuser-Busch in May. Fierce opposition from the board, led by Chief Executive Officer August Busch IV, was finally overcome by InBev’s bid increase of 7.7% and the Belgian brewer’s agreement to name the newly formed global entity Anheuser-Busch InBev.

“This is about giving InBev a U.S. presence and this is the most effective way they can see to achieve that,” Grant Saligari, a beverage industry analyst at Commonwealth Securities Ltd. in Sydney, told Bloomberg News. “Consumers are very emotionally attached to their beers. A peaceful deal helps maintain that.”

Aneheuser-Busch and InBev Merger Just One of Many

This merger is the latest in a string of consolidations in the largely mature global beverage industry, as skyrocketing grain costs and softening economies have led struggling brewers to seek economies of scale. Two of the largest brewers, InBev and SAB Miller, are themselves creations of mergers that took place within the past 10 years, The New York Times reported.

In January, Carlsberg A/S and Heineken N.V. (HINKY) agreed to buy Scottish & Newcastle PLC for $15.4 billion. Late last year, British-owned SAB Miller PLC (OTC: SBMRY) and Canada’s Molson Coors Brewing Co. (TAP), agreed to merge their U.S. brewing operations.

Once InBev acquires Anheuser-Busch, it will leave The Boston Beer Co. Inc. (SAM), maker of the popular Samuel Adams beer brand, one of the last large domestic brewers still under U.S. ownership.

Source: InBev Finally Woos Anheuser-Busch with Higher Offer, Top Billing

As a sign of the times, InBev’s Chief Executive Carlos Brito did it with style – appearing on an interview-style video on InBev’s web site that directly addresses the fears of the legion of Anheuser workers and drinkers – jobs, foreign ownership, brand synergy.

“I think what’s in important here is that Budweiser the beer will continue to be brewed in the same brewers – we don’t have plans to close any brewers – by the same people according to the same recipe,” Brito said. 

The proposed merger, which appraises Anheuser at a 35% premium, is a combination of high performance and common sense, he said.

“This company is going to be the world’s leading brewer,” Brito noted, calling the merger a natural step. “It’s going to be among the top five consumer goods companies in the world.”

InBev’s line of beers includes Stella Artois, Beck’s, Hoegarden and Brahma.

Anheuser is the maker of Budweiser, Busch and Michelob brands. It also owns a 50% share in Grupo Modelo, Mexico’s leading brewer, and a 27% share in China brewer Tsingtao, whose namesake beer brand is the country’s best-selling premium beer.

News of the proposal sent shares of both companies up in morning trading today (Thursday). And that’s a more elemental to the proposal than before now that the long-time Busch family-run brewer owns only 3.5% of the company’s shares.

Instead, the top shareholder is Warren Buffet’s Berkshire Hathaway (BRK.A, BRK.B) with a 5% stake. And with controlling power dispersed, it’s much easier for shareholders to push the deal through.

Anheuser-Busch said in a statement that its board of directors will evaluate the proposal carefully and in the context of all relevant factors, including the company’s long-term strategic plan.

“The board will pursue the course of action that is in the best interests of Anheuser-Busch’s stockholders” and “expects to make its determination regarding InBev’s proposal in due course.”

Beverage Providers Stirring Global M&A

Yesterday, (Wednesday), Merrill Lynch & Co. Inc. (MER) analysts said that Foster’s Group Ltd. (OTC: FBRWY) – Australia’s biggest beer and wine maker – may be a takeover target after it conducts a review of its wine business.

Earlier this week, Foster’s cut its earnings forecast and announced a $730 million write-down of its wine unit, causing Chief Executive Officer and Executive Director Trevor Louis O’Hoy to announce his resignation from his post.

Should Foster’s put itself on the block, it would join Anheuser, InBev and other major global beverage providers that have been on the giving and receiving end of billion-dollar buyout offers.

In March, France’s Pernod Ricard SA won a highly contested auction to buy V&S Group – makers of Absolut vodka and Cruzan rum – from the Swedish government for $8.9 billion.

In January, Carlsberg A/S and Heineken N.V. (OTC: HINKY) agreed to buy Scottish & Newcastle PLC for $15.4 billion.

And late last year, British-owned SAB Miller PLC (OTC: SBMRY) and Canada’s Molson Coors Brewing Co. (TAP), agreed to merge their U.S. brewing operations.

Source: InBev Offers Anheuser $46.3 Billion, a Deal That Would the Create World’s Largest Brewer

European beermaker InBev is the world’s largest brewer. Its stable of beers includes such well-known names as Stella Artois, Beck’s and Brahma.

“The two companies would represent an excellent geographic fit,” Wim Hoste, an analyst at KBC Securities, part of KBC Groep NV in Brussels, said in a telephone interview with Bloomberg News. “The black hole for InBev is the [United States]. Buying Anheuser-Busch would fill up the last major hole in their geographic portfolio.”

Should the two brewers merge, the resultant entity would be a globally focused player that sends out 350 million hectoliters of beer annually and generates approximately $20 billion in annual revenue, MarketWatch reported.

Analysts are already expecting opposition from Anheuser’s fiercely independent President and Chief Executive Officer August Busch IV. But if Busch refuses to commence friendly talks, InBev would then be prepared to go straight to key shareholders with its $65 per share bid, The Financial Times’ Alphaville blog reported, citing unnamed sources.

Management opposition isn’t the only problem that could derail this merger, Craig Hutson, an analyst at GimmeCredit.com, said in a MarketWatch report.

“The cultures are vastly different,” Hutson said. “Anheuser-Busch was founded by a family that has deep beer roots and a focus on building brands and treating its employees well. Inbev is a global amalgamation of acquisitions that is intently focused on reducing costs while incentivizing employees to drive higher profits.”

Hutson wrote that, while a deal would be “a good geographic and product fit, we believe there are too many impediments.”

Shares of Anheuser-Busch gained $4.03 each, or 7.66%, to close at $56.61 on Friday. The stock has traded between $45.55 and $58.00 in the past 52 weeks.

The proposed merger is the latest in a string of consolidations in the largely mature global beverage industry. In January, Carlsberg A/S and Heineken N.V. (HINKY) agreed to buy Scottish & Newcastle PLC for $15.4 billion. Late last year, British-owned SAB Miller PLC (OTC: SBMRY) and Canada’s Molson Coors Brewing Co. (TAP), agreed to merge their U.S. brewing operations.

If Anheuser-Busch is acquired by InBev, it will leave The Boston Beer Co. Inc. (SAM), maker of the popular Samuel Adams beer brand, as one of the last large domestic brewers that still has American ownership.

Source: Global Beer Titan InBev to Make $46 Billion Offer for No. 1 U.S

• Deere & Co. (DE), the world’s biggest maker of farm machinery, said yesterday (Wednesday) that its second-quarter profit rose 22%, mostly due to a jump in overseas sales. However, the company warned that rising costs of raw materials could cut into its earnings in the months ahead, the Associated Press reported. Profit for the period ended April 30 reached $763.5 million, or $1.74 per share, up from $623.6 million, or $1.36 per share, last year.

• E.I. du Pont de Nemours & Co. (DD) – commonly known as DuPont – said yesterday (Wednesday) that it would form a new joint venture with Genencor, a division of Danisco A/S, to develop and commercialize cellulosic ethanol, or fuel derived from nonfood sources. The venture, to be called DuPont Danisco Cellulosic Ethanol LLC, will focus initially on making fuel from the leaves and stalks of corn and from sugar cane bagasse, the Associated Press reported.

• SABMiller Brewing PLC (SBMRY) said yesterday (Wednesday) that it would buy the rights from rival Anheuser-Busch Cos. Inc. (BUD) to distribute Grolsch beer in the United States, the Associated Press reported. Anheuser-Busch acquired distribution rights to the Dutch beer in February 2006, but SABMiller took over Royal Grolsch NV this past February for $1.2 billion.

• As China recovers from the devastating 7.9 magnitude earthquake, some economists say the government is less inclined to raise interest rates in the near future, despite widespread inflation. “In the coming months there will be no rate hikes,” Ting Lu, an economist at Merrill Lynch & Co. (MER) in Hong Kong, told Bloomberg. “During a natural disaster policy makers will be very careful not to use aggressive policy tools.”

• Shares of BHP Billiton Ltd. (BHP) rose yesterday (Wednesday) amid speculation that Aluminum Corp. of China Ltd. (ACH) is interested in acquiring a stake in the world’s biggest mining company, Bloomberg reported. If it happens, it could add an interesting twist to BHP’s $178 billion hostile offer for rival Rio Tinto plc (RTP), as Aluminum Corp. of China recently purchased a stake in Rio in February.

• Whole Foods Markets Inc. (WFMI) shares dropped 14% yesterday (Wednesday) when the high-end food retailer reported that same-store sales open for a year or more only increased 6.7%. The once-popular food chain has been hard hit as consumers seek out bargains to make the weak dollar stretch farther. Whole Foods shares shed $4.68 to close at $28.96.

• Higher food and packaging costs took a big bite out of Jack in the Box Inc.’s (JBX) bottom-line. Same-store sales dropped 0.1% for the San Diego-based fast food chain in its fiscal second quarter. Shares dropped over 10%, with a decline of $2.90, to close at $24.87 yesterday (Wednesday).

• Shares of U.S. mortgage giant Freddie Mac (FRE) gained more than 9% yesterday (Wednesday) after the firm announced a smaller loss due to accounting changes that reduced charges by $2.6 billion. Freddie Mac shares gained $2.29 to close at $27.25.

Source: Global Investing Roundups: Thursday, May 15th, 2008