By Ian Wyatt

NEW YORK ( TheStreet ) -- Michael Porter is one of the world's leading authorities on the subjects of corporate strategy and the competitiveness of nations. His books and case studies form the foundation for many business school curriculums. As a Harvard Business School professor he has helped many CEOs position their companies for success.

It can be hard to decipher such nebulous topics as strategy since there are so many variables: What's the timeframe? Who are the stakeholders? What are the threats? And so on...

There is no such mystery surrounding China's strategy for world domination right now, however. And you don't need to be an Ivy School MBA to understand why you need to care -- and how you can potentially profit.

We'll use one of Porter's simple and elegant business school models to explain why -- the value chain. In its simplest form, the value chain analyzes the activities through which a country (or company) can gain advantage over its competitors.

There are five value chain activities, and each step up the value chain is supposed to add value above the cost of achieving that next step.

This image from QuickMBA helps explain. As an example in the second activity, the operations of China's economy -- for instance the manufacturing sector -- adds tremendous value to inbound materials. This activity is what has fueled much of American consumerism over the past 25 years.

In the context of China's goal to become a global economic leader, this simple model means that China is working on five fronts simultaneously -- all with the goal of moving its entire economy up the value chain to the point where it is a global exporter of technology and high value services.

One recent example of this strategy playing out was the 2005 buyout of IBM's ( IBM) PC business by China's number one computer maker, Lenovo. Lenovo's chairman, Liu Chuanzhi, clearly referred to the acquisition as helping China achieve its strategy to move up the value chain when he commented, "This acquisition will allow Chinese industry to make significant inroads on its path to globalization."

If you think I'm trying to pull some voodoo-magic with this model, don't be so quick to stick a pin in my eye.

You need to care about this if you want to make money investing over the next decade -- period.

Right now, companies around the world are trying to figure out how they can be a piece of the puzzle that will help China achieve its goal to create high value goods and services. Not necessarily because they want to help the 1.3 billion people that live in China, but because doing so will help their own company gain advantage over its competitors.

China's progress toward its goal has been astounding. Consider the following comparisons from consulting group Accenture. The "gap" is the number of years difference between China and the U.S. on four competitive fronts, from low value to high value: OEM (Original Equipment Manufacturer), ODM (Original Design Manufacturer), OBM (Original Branded Manufacturer), and finally, to high value services.

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