The company's corporate governance is a complicated story, so I will do more research into this stock before buying any shares. Also, shares have doubled since their lows in September, so I clearly missed the bottom on this China stock. Although I'm bullish on China's travel industry, I'm avoiding China stocks in the hotel sector such as Home Inns ( HMIN) and 7 Days Group ( SVN). My concern is that there's excess hotel capacity, which is related to the country's real estate boom. Whenever I travel I see many brand new hotels under construction, and in Beijing new high-rise hotels seem to pop up every week. With all this construction, the hotel business in China is getting very competitive. Just by shopping around a bit haggling, I am often able to get 50% discounts. The competition isn't just from Chinese companies either. International chains like Holiday Inn continue to expand their presence here. Please look for Part 2 of this article on Wednesday. I'll reveal my favorite China stock in the food and beverage sector. At the time of publication, Pearson had no positions in stocks mentioned.