For all the headlines surrounding geopolitical and trade tensions with China, it also remains one of the world’s most important markets and one that’s vitally important to many American companies. Chinese consumer confidence hit a ten year high in 2019. But as happy as stock investors might be to see the globe’s second largest economy happily buying luxury goods, trips and food, a recent McKinsey & Company survey (China Consumer Report 2020) shows that consumer tastes in China are evolving. Like U.S. millennial’s, the digital native generation in China is increasingly health conscious and a more discerning customer.

In this era of increasing globalization, “domestic stock” is often a bit of a misnomer. Large cap domestic companies sell and manufacture more of their products in China than they do here in the United States. Here are some factoids about China that might encourage you to pay closer attention to China:

  • If measured by purchasing power parity, China is the world’s largest economy.
  • The Chinese population is 1.384 billion, compared with 329 million in United States (as of 7/2018).
  • Sales on November 11 (Singles’ Day) in 2020 were $58 billion, double the projected sales number of $29 billion in the US for the entire Thanksgiving through Cyber Monday period.
  • The IMF projects the Chinese economy will grow by 22% from 2019 to 2021 to $17.762 trillion. China’s growth in GDP in 2015 was equal to the GDP of Switzerland.
  • KFC (YUM) is the most popular fast food chain in China, followed by McDonald’s. (Business Insider recommends we try KFC’s Dragon Twister.)
  • General Motors sold 26.5 million vehicles in China in 2018, versus 21.5 in North America.
  • In the mood for your daily Starbucks fix? There are 4,000 locations in China.

Our media overemphasizes China’s centralized government and suppression of individual freedom and understates popular support for the current system. Riots in Hong Kong against mainland control also give the impression that the current government is under siege. That is untrue. China’s citizens generally support their government’s policies and perceive the U.S. as unfairly demonizing China due to its rapid growth. That’s leading to boycotts against U.S. brands. Domestic Chinese brands have steadily improved in quality, leading to a shift in consumer preference towards their domestic products.

Some psychology studies indicate we overweight familiar information and discount things we have trouble understanding. It’s tempting to dismiss China due to its distance and different culture, but that would be a mistake. For many companies, China is the elephant in the room. If we’re to make informed investment decisions, we need to see that elephant as it is.