I'm just stealing a much earlier posting:
Before returning home, I'd lived and traveled in Asia, including China, for several years and most recently (Jan. '99) I'd visited my sister who's presently working in Hong Kong. They're all very different countries with very different
cultures but the one thing they have in common is that they crave a western
lifestyle or at least the accroutrements of one. It's kind of a love/hate thing
where they want what we've got but don't necessarily want to be us. I say this
especially with regards to China. The Chinese by cultural nature, and despite
enforced socialist ideology, are the ultimate capitalists - for better or for
worse for the rest of the world. The clearest example is Hong Kong where
money talks like nowhere else on this planet. And what do they do with all that
money? They use it to buy Gucci shoes, eat PizzaHut pizzas, drive Mercedes
cars and, yes, to hang out in coffeeshops. Coffeeshops proliferate
themselves in Hong Kong because they're cool and trendy - same reasons
as here in N.America. I noticed, though, that in Hong Kong, there were no big
brand name coffeeshops. That's what GMCH will hopefully be astute enough
to exploit when it opens up on the mainland. The Chinese love brand names.
Forget the mom and pop shops, they want designer labels and fast food.
They want what's "in" not what's quaint. Check out Shanghai where ten years
ago the women were wearing nylons thick enough to insulate your hot water
pipes with. Today they're wearing hundred dollar shears that you and I (well,
me anyway) only get to see on t.v. runway models. I invested long in GMCH
not because of their franchise possibilities in the U.S. That's great short term
but it's peanuts compared to the long view. There are about 1.5 billion people
in China - we're talking mainland now, not just Hong Kong. Let's take away
the 80% who live a third world peasant lifestyle in the countryside. That still
leaves 300,000,000 urban dwellers who right now still don't have access to
much and who want access to everything. That's a relatively unexplored
market bigger than the United States. They may not all have enough money
to buy the most modern VCR's and cars but they can definitely afford a 2
dollar cup of coffee in a western style brand name coffeeshop and they'll dish
out that 2 bucks because it'll make them feel like they just joined the first
world club. That may be cynical and upsetting to some people but realistic.
Coffeshops have been immensely successful in Japan, Taiwan, Hong Kong
for years and years so I don't consider them a flash in the pan fad. The
mainlanders will imitate the lifestyles of their more westernized neighbours by
hanging out in coffeeshops because it's a stylin' thing to do, it's a cheap treat
and, of course, to keep face. In this environment, GMCH will, hopefully, make
millions for themselves and for us.
That post was from last month but obviously still applies. It'll probably take two years to get the China part of the plan implemented. That's okay because a good part of my holdings is going into my early retirement fund. The only real long term questions are:
1. Can Mr. Tilton deliver?
2. How much patience do you have?
I'm giving Mr. Tilton the benefit of the doubt on the first question seeing as how he's done a good job so far. The second one is entirely up to you.
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