The Top 5 Listed Chinese Brands in 2013

TAIPEI (TheStreet) -- We already know Chinese consumers with enough money will line up for Italian hand bags, drive German cars and use electronics from South Korea or the United States.

Shoppers consider stuff from outside China to be a durable and high-status, a value to them despite the prices. Cheaper local brands, they'll tell you, break down easily and if you can find the maker at all, good luck getting the warranty honored. The thing might be counterfeit to start with.

But market researchers to whom I've spoken over the past half-year point to a list of Chinese brands that have firmly broken out of the white box, a term for cheap, non-branded stuff made in China with sketchy results.

I've picked five here that I expect to do especially well in 2013. I base predictions on recent company financials, long-term performance (what Chinese call a "lao zi hao") and their odds of filling a real, long-term market need in China. I also know that Chinese people eagerly use these brands.

Four of the five are listed either in Hong Kong or New York. Many have consumer bases overseas, as well as in China, seasoning them to offer the foreign-styled goods and services that their home market wants. As far as I can see and as far as Chinese companies go, their shares are also decent long-term investments.

I should also repeat the often-repeated: Consumer spending in China made up 51.6% of the economy in 2011, up from 37.3% a year earlier. The government hopes to use this trend to reduce dependence on exports to the West, where a parade of U.S. economic problems and euro zone debt crises have eroded demand since 2008.

What China Watch is watching:

Ctrip.com International ( CTRP): This online travel agency sells air tickets and makes hotel bookings for domestic travelers as well as some of the tens of millions who go overseas every year. In 2011, revenue went up 21% to 3.5 billion yuan and added a higher-than-forecast 1.17 billion yuan ($118 million) in the third quarter of 2012. Share prices of the Nasdaq-listed Ctrip barely changed last year.

Haier Electronics Group: Chinese consumers have long gone with Haier when buying the likes of air conditioner units, refrigerators and washing machines. Market research firm Euromonitor International ranked the brand -- also widely known overseas -- as No. 1 in appliances last year, with an 8.6% market share due to its "differentiated products" and its Internet platform, the manufacturer says.

Haier, started in the 1920s and rebuilt in the 1980s, reported 2011 revenue of 150.9 billion yuan, up from 2010. Share prices of the Hong Kong-listed firm (1169.HK) went up about 35 percent in 2012.

Hangzhou Wahaha Group: The bottler of water, teas, juices and packager of popular Chinese snacks such as congee and sunflower seeds has assets of 17.8 billion yuan. Its products are easily found on shelves around the country, where people thirst especially for bottled water as they don't trust taps even in the biggest cities.

Wahaha, once a joint venture with Groupe Danone of France, has toyed with an IPO despite several failed efforts. If it lists, buy shares. As Buck Pei, associate dean of Asia programs at the University of Arizona business school, told me during an interview in November: "Anything to do with food and beverages will do well as long as China's GDP does well." GDP growth may dip to 7.5% in 2012, if widespread predictions prove true, but that's still no downturn.

Lenovo ( LNVGY): The Beijing-based company that started out under the name Legend and bought IBM's ( IBM) PC unit in 2004 sells consumer electronics that are considered as advanced as its chief rivals such as Dell ( DELL), Hewlett-Packard ( HPQ) and Toshiba. It bought IBM's PC division in late 2004, placing it among the world's top five or 10 biggest computer makers on most market research charts.

Being local, Lenovo easily and eagerly offers nationwide after-sales service -- yep, it honors warranties. The Hong Kong-listed (0992.HK) firm that also produces smartphones reported revenue of $29.574 billion for the year ending March 31, with 42% of sales from China. Hong Kong share prices rose 18% in 2012. Lenovo's ADRs are also traded in New York.

Sina-Weibo ( SINA): Sina started out as a news aggregator and search engine before adding Weibo, which means micro-blog in Chinese and has become as essential to China as Facebook ( FB) has in the West. It was already one of the top three search engines-slash-aggregators 10 years ago.

Every day or two back then you would meet someone new with a sina.com e-mail address. Now the government blocks Facebook, among other Western social media, and encourages local alternatives that it can censor. Facebook's loss of China raises Sina's essentialness.

The Nasdaq-listed Sina reported revenue of $483 million in 2011, about twice what it took in five years earlier. Its share price was little changed last year.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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