I grabbed my duffle bag before exiting the train. Passengers poured onto the escalator. I’m claustrophobic in crowds, so I chose the stairs instead. Breathing heavily after my climb, I walked towards the train station exit. That was when I stopped.
If I were hungry or thirsty, my five closest choices were a Starbucks coffee shop, a Chinese food restaurant, a Burger King, a McDonald’s and a KFC selling Coronel Sanders’ famous chicken. That might not sound strange–until you learn where I was standing. I was in Guangzhou, China. I took this video last week, so you can see it for yourself.
I’ve visited China many times. And let me start by saying this: China is a poor country. That might not jibe with what you’ve heard. After all, Business Insider reports that China has more billionaires than any other country. Many people believe that the Chinese are rich. That, however, is only half-true. In the largest cities, incomes are high. But most Chinese people still live in the countryside. I’ve volunteered at Chinese schools with broken windows and busted desks. Many Chinese schools can’t heat their classrooms in the winter.
According to Trading Economics, the typical Chinese worker earns about $10,600 per year. But, unlike workers in many developed countries, that income has been growing far faster than inflation. In China, average salaries have risen more than 130 percent over the past ten years.
But we shouldn’t see that as a threat. After all, in the cities, where wages are higher, they’re opening their wallets to fuel American businesses. According to the 2016 RTC Brand Relevance Report, young Chinese consumers favor Apple over every other brand.
Four of their five favorite food and beverage brands are American. They include KFC, Starbucks, Coca-Cola and McDonald’s. The Chinese count Uber as their second favorite app. Nike is one of their top-three fashion brands. In other words, when the Chinese prosper, Americans do too.
For example, according to Apple’s 2016 annual report, Americans spent about $86 billion on Apple’s products in 2016. U.S. sales increased by a total of 8.1 percent between 2013 and 2016 (Apple hasn’t yet released its 2017 annual report).
This played a part in pushing the price of Apple’s shares. But it was Chinese consumers that likely pushed the stock the furthest.
In 2013, Chinese purchasers spent $31.8 billion on Apple’s products. In 2016, that jumped to $48.5 billion. That’s a total increase of 52.2 percent–helping the stock price soar 68 percent over this three-year period.
As I stood beside a busy street in Guangzhou, I noticed something else that I had never seen before. I saw more Tesla cars than I’ve seen in any U.S. city. I noticed the same thing in Hong Kong. The Chinese love Teslas. Standing at a corner, I began to count cars. On average, every 20th car was a Tesla. In 2017, Americans spent about $6.2 billion on Tesla cars. That’s up 48 percent from 2016. The Chinese spent just over $2 billion on Tesla cars last year. That’s up almost 100 percent since the previous year.
China’s income levels are rising along with their love for American brands. In a few short years, China could become Apple’s and Tesla’s biggest sales market.
After eating at a restaurant in Guangzhou, my wife and I took an evening stroll down a busy city street. We passed a Starbucks coffee shop. It was packed with people. Within a single block, we had passed another, and another. There were also plenty of local, Chinese coffee shops. But by comparison they were almost empty.
Starbucks opened its first shop in China just 18 years ago. The company now boasts more than 2,800 coffee shops in China. It’s their fastest growing market.
U.S. stocks continue to hit all-time highs. And the Chinese, it seems, can’t get enough of U.S. products. If your IRA or 401(k) has experienced solid growth, celebrate your country’s prosperity. But don’t forget to tip your hat to our fastest-growing global neighbor.
Andrew Hallam is a Digital Nomad. He’s the author of the bestseller, Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas