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The Rise of Alternative Payments October 13, 2008

Posted by mniring in E-commerce, Online Merchants, Online Payments.
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In the next five years, online transactions will more than double, reaching $355.2 billion, reports a consumer study in the U.S. from Javelin Research and Strategy.  According to the findings, by 2012, 30% of Americans will use alternative payment solutions for internet transactions instead of relying on their credit cards. In 2007, alternative payments accounted for 14% of transactions. The study also foresees that of all the alternative payment options, email payment accounts, like the accounts offered by Paystone, will see the largest growth, reaching 11% by 2012.

What is causing this striking shift in payment processing? Increased popularity of alternative payment systems can be attributed to the current economic situation. With  the credit market tightening, many people are looking to alternative payment solutions to fund their online shopping. This opens the way for services such as Paystone, that are debit based and funded by “cash” from a North American bank account, to take the place of credit card transactions.

Javelin researchers also found that people are turning to alternative payments for their convenience and enhanced security features. The Paystone system, for example, enables consumers to make online purchases without sharing any sensitive information with merchants, such as bank account numbers or billing information. This type of protection is becoming increasingly important to consumers.

Alternative payment solutions also offer benefits to merchants, and help to remedy shopping cart abandonment. By offering alternative payment options, merchants allow their customers the flexibility to choose the most convenient method of payment for them.  Merchants can create new sales opportunities by catering to their customers without credit cards or who no longer want to use credit cards for their purchases.

This is not deemed a short lived fad. “Although it took nearly a decade for alternative payment methods to secure their position in the online world, it’s apparent that everyday consumers are ready to view them as a trusted and viable way to buy online,” said Bruce Cundiff, a senior analyst with Javelin Strategy & Research. A recent survey conducted by First Annapolis Consulting found that 47 percent of the top 500 online retailers in the U.S. accept at least one alternative payment method.

It is believed that with the transformation of the payments industry, alternative payment methods will become mainstream.  This isn’t simply a trend… the way that people want to shop online and pay for goods is undergoing an evolution. Is your web store keeping up?

For  a copy of the complete Online Payments Forecast: Alternative Payments to Go Mainstream as Consumers Seek Security and Convenience, please visit www.javelinstrategy.com/research

Sources: Ecommerce Journal, Ecommerce Times, Javelin Strategy and Research

Globalization – How It Will Affect Your International Shipping October 10, 2008

Posted by paystone in Online Merchants, Sell to China.
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Here at Paystone we solve a key problem for online merchants selling their goods into the Chinese market – getting the RMB money from China and delivering it to the merchant’s bank account here in North America in US or Canadian dollars.  Receiving and converting the money is a major challenge – but it is only 1 of the challenges facing online merchants that want to expand sales into China.  Some of the other key challenges include:

– Shipping – how to get it there
– Duties and Taxes
– Finding out which products are allowed to sell into China
– Website optimization for the Chinese market – including translation and cultural issues

This posting will hopefully give you some insights into the Shipping part of this equation.

Taylor Systems Engeneering writes in a white paper that “as we reflect on what’s happening in the world of small parcels, we can see a clear trend emerging – globalization is going to affect our world more and more.”  The big 3 carrieres – Fedex, DHL and UPS are all working hard to address this issue.  23% of Fedex’s revenues come from direct international shipments.  Direct international shipments is also the fastest growing part of Fedex’s business.

Fedex is opening a $150 million Asian hub in China’s southern Guangzhou city.  UPS is opening a $180 million cargo hub in Shanghai. DHL has plans to double the size of it’s air freight operation at the Hong Kong Airport with a $200 million investment program to increase their parcel service in China.  DHL’s Jerry Hsu claims “China is today one of the fastest growing markets in DHL’s global network, registering and annual growth rate of 50-60% in 2004.”  Wow!

What does this mean to you the online retailer?  You can speak with your existing light parcel carrier about shipping goods into the massive Chinese market.  The big 3 are investing heavily into that country to expand their network and expand their reach past only the Tier 1 cities of Shanghai, Beijing and Guangzhou.

With that said, you now have 2 of the major challenges of selling and shipping to China solved – getting the payment and delivering the product.  We’ll talk more about the other issues of duties, taxes, restrictions, website optimization, translation etc in another post.  In the meantime you can find lots of resources in the Sell to China section of this blog.

Taylor Systems Engineering Corporation is a leading consultant and provider of computerized shipping systems.  Read their whitepaper on global parcel shipping here.

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The Real China Miracle October 9, 2008

Posted by mniring in Online Merchants, Sell to China.
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Reposted from: The Motley Fool
By: Paul Elliot

Want to see my “China credentials”? Fair enough. How’s this?

I might be the only American you meet all year who learned to use chopsticks in China. Of course, I was 42 years old at the time.

I’m just saying …

Don’t write me off as some expat poseur trying to spook you with the horrors of a “post-American world.” Heck, no. I love the old U.S. of A., both as a citizen and investor. But my trip to China  opened my eyes to a few things.

This time last year, I accompanied my friend and colleague Bill Mann to China. From Beijing to Shanghai, from Hong Kong to Taipei to Macau, we took it all in, pausing to pick the brains of local business leaders and relay our findings to readers back home.

I’d never seen anything like it. These magnificent cities are exploding with people. And that spells opportunity for you.

You can look in four directions as far as the eye can see, and you see nothing but spectacular high-rises. At night it looks like Las Vegas: All the buildings are lit up; they look like rocket ships going off. It looks like the Fourth of July.

Our fortunes lie elsewhere
In case you think I exaggerate, that’s how a top U.S. real estate developer described Shanghai to business students at Wharton. Of everything I’ve heard, it comes closest to capturing the feeling of being there. What it doesn’t convey is the sense that this is only the beginning.

While we were in town, Oracle (Nasdaq: ORCL) unveiled a state-of-the-art research center, its third in China. Intel (Nasdaq: INTC) already had full-scale manufacturing, research and development, and sales operations in Shanghai, and Microsoft (Nasdaq: MSFT) and Cisco (Nasdaq: CSCO) had been there since 2005.

That’s small potatoes
Even without big tech, China’s economy has been growing at 10% per year for three decades, lifting more people out of poverty than any country in history. National Geographic dubbed it “the largest urbanization in human history” — with 150 million people and counting migrating to major cities.

One in four current residents of Beijing is a migrant from the countryside. You can hardly blame them — urban workers earn more than three times as much money as those living in rural areas. Buying a home, once beyond the dreams of the average Chinese family, is the latest craze in Beijing, where 1,000 new cars hit the roadways daily — and 96% are bought for cash.

Shanghai, once called “the Paris of the East,” accounts for 5% of the country’s GDP. One-fifth of the country’s total exports pass through its ports, now the busiest in the world. A top chef in Beijing or Shanghai earns as much as he or she would in New York or Los Angeles.

Living the good life
The Great Wall is the most awesome structure I’ve ever laid eyes on, but when I close those eyes and think of Beijing, what pops to mind is Rolex (22% of affluent Chinese men own one) or Rolls Royce. The affluence of the new luxury class in Shanghai and Beijing is simply a sight to behold.

In a mall in Beijing, you can browse three or four storefronts featuring Apple (Nasdaq: AAPL) products, and the company is aiming to open its first direct-run store by the time the Olympics begin later this summer. Lacoste, Valentino, Cartier, and Chanel are everywhere. Armani plans to open seven new stores in China in 2008, where young shoppers dig McDonald’s (NYSE: MCD) and pop into Starbucks (Nasdaq: SBUX) for an afternoon jolt.

No wonder 60% of the Fortune 500 has a presence in Shanghai, a number that grows by the day. You can’t help but wonder what the remaining 200 could possibly be thinking. China is already the planet’s largest consumer, for Pete’s sake, and the third-largest consumer of luxury goods in the world.

“The investment opportunity of a lifetime”
Nine times out of 10, you can dismiss statements like that as pure hype. But this is the rare case when the shoe fits. China may have hurdles to overcome, but the mass migration, urbanization, and rise of its middle class may be the investment story of our century.

But there’s a catch. This transformation will be measured in years, not decades. The smart money, as I discovered on my last trip to China, is already restless. Investors are looking beyond the skylines of Shanghai and Beijing to what I call The Real China Miracle. And I’d suggest that you and I should look there, too.

Morgan Stanley’s chief economist calls it, “The biggest economic story to come out of China in 25 years.” As far as I’m concerned, any company that doesn’t have a defined focus and strategy to exploit this demographic tsunami isn’t worth your time, energy, or money.

7 Ways To Improve International E-Commerce Usability October 8, 2008

Posted by mniring in Online Merchants, Sell to China, Shipping.
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Reposted from: Palmer Web Marketing

The following guest post comes courtesy of Linda Bustos from the Get Elastic Ecommerce Blog.

When you run an ecommerce website, you have the potential to sell products to people around the world — even from your own basement. But many online retailers expect to make international sales without doing all they should to help convert international shoppers. Here are a few ideas to help make the online shopping experience smooth for your international customers.

1. Have an International Shipping page

Sure, you could have it buried in an FAQ section, Help area or some other hard-to-find place — but why not make it easy for users to find International Shipping policies by making it its own link visible from every page on the site?

The footer menu is a common location for shipping information, as is the top right hand corner of your page. Conventions like this have conditioned online shoppers to check these areas for shipping information. If it’s not there, customers might just assume it’s not available. Placing this information in one of the two areas the customer is likely to look is a good idea. Placing it in both areas is even better.

Avoid hiding International Shipping information in the “Help” section. People can’t find it easily by scanning the page they are on, and some associate the word “Help” with technical assistance, not customer service.

2. Include Important Information on Shipping Page

Whenever possible, clearly state your:

– Return policies
– Telephone customer service hours of operation (and time zones)
– Estimated shipping times
– Order tracking availability

A list of all countries you ship to is also recommended. Remind customers that they may have to pay additional duties and taxes depending on where they live.

3. Make Your Shipping Policy Searchable

Make sure your international shipping page can be found using your site’s internal search engine. It’s a good idea to program your search engine to deliver this page for searches for “international,” “intl,” “international orders” and “international customers” too.

4. Show International Shipping Availability on Product Pages

You may carry some products that you can’t ship abroad even if you can ship most products. For example, certain health supplements are legal in some countries and illegal in others. It’s a courtesy to mention this before the customer gets to the checkout.

5. Convert Currencies, Weights and Measures on the Product Page

Most of us can’t convert centimeters to inches in our heads (clothing size charts, for example) or kilograms to pounds, let alone currencies that fluctuate daily. Providing conversion tools can increase conversions!

6. Estimate Shipping Costs on Your Product Pages

E-Commerce usability rockstars offer shipping cost tools right on product pages, which not only helps international customers but also locals. FedEx, UPS and USPS all provide API access for your web developer to make this happen. Offering the tool at the product page level also will reduce your rate of abandoned carts.

7. Send a Post-Sale Email

If you can segment your customer database by location, you can send targeted follow up emails to your international customers. For example, as the Canadian dollar rises more Canadians will shop online at US stores. Motivate your Canadian customers to visit you again by offering free shipping, discounts or other offers. Or, send an email from time to time asking how you can improve the shopping experience for international users. Even if they don’t respond, you send a powerful message that your business cares about foreign shoppers.

Of course, your own usability testing with international customers is the best way to learn about how your own site can be improved. There are even consultancies that offer international usability testing services. But these seven tips will give you a head start.

China: Ten Things You Should Know About an Online Superpower October 3, 2008

Posted by mniring in Online Merchants, Sell to China.
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Reposted from: SEOmoz.org

Chinese Sun Set by Steve Webel


China. Even in this day and age, sensitive information rarely leaks out of the Great Internet Firewall.

Fortunately for Western pundits, China toots its horn every six months with the release of a half yearly report on Chinese internet development. The July 2008 edition was recently released in English, but to save you from reading through 27 pages of dry research and occasional Engrish, SEOmoz has summarized the report for you.

Here are the top three facts that China wants you to know about the internet:

1. China has the most internet users in the world

“…by the end of June 2008, the amount of netizens in China had reached 253 million, surpassing that in the United States to be the first place in the world.”

2. China has the most broadband users in the world

“This report, the 22nd Statistical Report on the Internet Development in China, also indicates the number of broadband users has reached 214 million, which also tops the world.”

3. China has the most cc-TLD domain names in the world


Source for charts: CNNIC, Nielsen Netratings, ITU
    • “…by the time of July 22, the number of CN domain names, which was 12.18 million, had exceeded .de, the country-code Top Level Domain for Germany, thus becoming the largest country code Top-Level Domain names in the world.”

So that’s what the Chinese government wants you to know about their internet, but SEOmoz couldn’t resist creating a top 10 list, so we humbly suggest seven more nuggets you should know about China.

4. China’s internet penetration rate continues to grow and grow and grow…

  • US internet usage has hovered around a 70% penetration rate in the last five years, while Chinese internet penetration has jumped from 7% to almost 20% in the same time period.
  • Translation: China could plausibly reach a similar penetration rate to the US within 20 years.
  • What impact would a single nation of almost one billion Internet users have on internet activities such as blogging, creating videos or online commercial transactions (i.e., buying stuff)? How much additional user generated content would Chinese users unleash on the world wide web? What Western companies are ready to take advantage of this flood of internet usage?

5. China loves instant messaging QQ

source: Pew Internet May 2008, CNNIC July 2008
  • IM usage is more popular than email and using search engines in China
  • 195 million Chinese (an incredible 77.2% of Chinese internet users) have used an instant messaging service in the last 6 months, compared to just 40.0% of US internet users who have _ever_ used IM
  • Once online, 39.7% of Chinese internet users cite IM as the very first thing they do, more than any other internet activity
QQ client (look familiar?)
  • Tencent’s QQ program is the leading IM program with 77% market share
  • QQ has 342 million active user accounts
  • QQ has 42 million peak concurrent users
  • QQ has 26.1 million paying internet subscribers & 13.4 million paying mobile subscribers – wow, an IM program with 40 million paying subscribers  (envious, MSN and Yahoo?)
  • QQ.com is one of the biggest websites in the world, ranking in the top 3 web properties in China, alongside Baidu and Sina

6. China loves mobile phones

  • China has 601 million mobile phone users according to the latest government report
  • From January 2008 to June 2008, there were 53.3 million new mobile phone users
  • One carrier, China Mobile, has over 414 million mobile subscribers, ranked #1 in the world
  • However, bad news: only 12% of these users have accessed the Internet. Because of the lack of proper 3G network (none of the Chinese telcos have a 3G license), an estimated 73 million had accessed the internet from a mobile phone                                                                                                        
  • Good news – the Chinese government plans to issue 3G licenses to the major telcos within the next 6 months, which means…
  • A potential bonanza for phone manufacturers around the world as someone has to come good with 601 million new 3G handsets (the sheer size of the Chinese market will be beneficial for all as economies of scale ensure global prices for 3G handsets/accessories will fall)

7. The Great Firewall of China is alive and well

  • Think you know how to game social networks? Try going head-to-head with the “Fifty Cent Party” – an estimated 280,000 strong army of government-trained social networkers
  • The Far East Economic Review says the Fifty Cent party has one objective – “To safeguard the interests of the Communist Party by infiltrating and policing a rapidly growing Chinese Internet”
  • According to the Feer.com’s source, high authority Chinese websites are forced to have their own in-house team of government goons patrolling content for political correctness      

8. China’s Tier II & Tier III cities – wait, there’s more to China than just Beijing and Shanghai?


Tianjin, a Tier II city in full construction mode. Photo credit – yakobusan
  • According to this fool.com article, 93 cities in China have more than 1 million population, compared to just 9 in the US
  • Beijing, Shanghai, Hong Kong and Macau (and sometimes Guangdong and Shenzhen) are usually referred to as China’s Tier I cities.
  • Tier I cities are already saturated by foreign companies and foreign direct investment in just about every market you could think of…
  • Which is where Tier II cities come in – boasting huge populations, transport hubs and booming economies, most Tier IIs fly under the radar despite having lower barriers to foreign entry. For example, Chongqing is a Tier II municipality with a whopping 32 million residents and more than 3 million internet users
  • Check out the big 30 Tier II and Tier III cities showcased in this April 2007 China’s 30 Rising Urban Stars

9. There are no girls on the Chinese internet

  • Not sexism, as Chinese women are as likely as their male counterparts to go online –  the internet gender ratio corresponds almost exactly with China’s actual gender imbalance of 53% Male, 47% Female
  • Included the above chart because I’m stumped, pretty sure the disparity has nothing to do with the infamous One Child policy (it was introduced in 1979), so what’s going on with the over 50s?

10.  The rise of Chinese superbrands

  • Q: What does China Mobile have in common with Google, GE, Microsoft, Coca~Cola?
  • A: They represent the top 5 brands in the world, as measured by the dollar value of their brand
  • From the way this dragon has risen from its slumber, it may not be long before the first Chinese superbrand goes global – in 2007 four of the world’s 100 most powerful brands were from China (five if you include HSBC bank)

So there you have it folks, 10 things you should know about China. I hoped SEOmoz has helped lift the red curtain enough to unveil the potential in the East.

US Postal Service – Made Easier for Online Retailers September 29, 2008

Posted by mniring in Online Merchants, Sell to China.
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The United States Postal Service (USPS) has redesigned its website to improve customer satisfaction and increase ease of use. It is now easier for retailers to find shipping information and services for both domestic and international needs.

“We are committed to making USPS.com one of the best government web sites, and one of the best web sites in the nation,” says Robert Bernstock, president, U.S.P.S. Shipping and Mailing Services. “These changes help guarantee that our web site is relevant, customer-focused and, most important, easy to use.”

The new business section is of particular interest for e-commerce merchants selling and shipping their products both nationally and internationally. Online retailers can choose between a variety of shipping methods, that include options such as tracking, guaranteed delivery, insurance and express services.

Retailers selling overseas can take advantage of the international shipping section , with resources and information on topics such as customs, shipping rates and export regulations. Online merchants selling to Chinese consumers can check out the USPS’ country specific pricing and guidelines for China.

Paystone Payment Module for Zen Cart September 22, 2008

Posted by paystone in Developers, Online Merchants, Payment Modules.
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A Paystone payment module has been written for the Zen Cart shopping cart software and is available for download here.

Download Paystone Payment Module for Zen-Cart here
http://www.zen-cart.com/archived_contributions/payment/ (scroll down on page)

Please note this module was not written by Paystone. We do not have any documentation or support available for this module.  We are providing a link to the payment module as a convenience only.

Paystone Payment Module for osCommerce September 22, 2008

Posted by paystone in Developers, Online Merchants, Payment Modules.
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A Paystone payment module for osCommerce has been written and is available for download here.  Thank you to user “Adam Young” for this contribution.

Download Paystone Payment Module for osCommerce here
http://www.oscommerce.com/community/contributions,2591/page,26

Please note this module was not written by Paystone. We do not have any documentation or support available for this module.  We are providing a link to the payment module as a convenience only.

Shipping Cost Reduction Strategies September 15, 2008

Posted by mniring in Online Merchants, Shipping.
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By: Maxim Mironov

Reprinted from: http://www.optimalogica.com/

There are two most commonly used strategies to reduce shipping cost: negotiate volume discounts or shop around each time for the best price. While both strategies produce results, consolidation is the better one for rapidly growing online retailers.

Strategy 1. Consolidation
Do an assessment of your current shipping agreements. Are you shipping on your account? Using vendor`s accounts? Working with a freight forwarder? If you work with many partners – likely you are a small fish for each of them. Promise to become a big one, share your shipment statistics and ask carriers to make you a proposal.

Even small retailers can significantly improve their shipping discounts by just doing the math and discussing their business. Shippers love volume and growth. Demonstrate both and 8 out of 10 carriers will offer you better discounts.

I dealt with 70,000 products being shipped from anywhere in the US to anywhere. Consolidating shipments with 2 carriers for each delivery method – UPS and FedEx for small parcels, Roadway and BAX for LTL and Sun Delivery and Home Direct for White Glove orders – proved to be the best strategy. By doing so I justified better discounts yet kept some flexibility to chose better shipper for specific cases. After figuring out BAX had excessive damage rate in one of their terminals I promptly switched vendor to Roadway and prevented further issues.

The choice you are to make is do you want to ship on your own account or work with a freight forwarder. To set up your accounts you need to learn a bit about the transportation industry and negotiate a lot. Freight forwarders usually look at your data and make a prompt offer. In your case going with a freight forwarder may be a better decision, but none of the forwarders came close to the discount rates I negotiated myself.

Along with reducing shipping costs you make your fulfillment transparent. Vendor ships the order using your UPS account, specifies your Purchase Order in the Reference Field and, voula, you have ship confirmation, expected delivery date and actual shipping cost.

Third benefit is scalability. By putting your logistics on autopilot you simplify vendor setup process. With a system in place setting up a new vendor takes less than an hour.

For the reasons above I believe that consolidation is a better strategy for online retailers. Having said this I still think that in some cases shopping around is a great strategy.

Strategy 2. Shopping around
The underlying assumption of the strategy is that shippers have underutilized routes (true), are willing to deliver your shipment for pennies to increase utilization (true) and you can catch those deals (sometimes true).

Some companies prefer to maintain rate tables for multiple carriers in their system and run a rate comparison for each shipment internally. Others utilize services like FreightQuote. Both ways have significant maintenance cost. Either you need to constantly synchronize rate tables with the carriers or you need a person who would manually obtain quotes from the freight comparison websites.

A sweet spot for the Shopping Around strategy is single large shipments and exceptions. Let`s say you have a container coming from China, or one of the customers wants a delivery to a lonely rock around Hawaii. These cases are to rare to focus on during your discounts negotiation and your default rate will likely be suboptimal.

In conclusion, I want to restate my recommendation for online retailers to consolidate shipments. Along with lower shipping costs you will make customer happier by providing them with accurate information about their orders and simplify your cost reconciliation process.

How to Cash in on Chuppies September 10, 2008

Posted by mniring in Online Merchants, Sell to China.
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By: Tony Sagami

Reprinted from http://moneyandmarkets.com/issues.aspx?How-to-Cash-in-on-Chuppies-1797

Even though I’m the right age, I’ve never considered myself to be a yuppie. Even when I was young and dumb, I never drove a BMW … bought a Rolex … or belonged to a country club. But I know a yuppie when I see one and China is full of them.

And unlike the U.S. where there is debate about how rapidly the economy and consumer spending are slowing, chuppies are making sure there is no such concern in China.

The Chinese National Bureau of Statistics reported that retail sales soared by an eye-popping 22% in April!

Those Chinese shoppers aren’t just buying chopsticks or tofu, either. They’re buying big ticket goods like crazy. Jewelry sales jumped by 37.5%, apparel by 32.6%, and furniture climbed 41.7%.

The fuel behind that spending boom is growing urban incomes, which rose by 17.6% over the last 12 months, and gave chuppies (also known as “little emperors”) large disposable incomes.

These chuppies are often the sole children due to the one-child policy in China and have been spoiled with an overblown sense of self-importance and entitlement. They often live at home and spend their entire paychecks on luxuries…and frequently on luxury goods.

Asia: The Epicenter of the Luxury Boom

It doesn’t matter where I travel in Asia — Hong Kong, Shanghai, Tokyo, Singapore, Taipei, Beijing, Kuala Lumpur, or Shenzhen — I always find a sea of Louis Vuitton handbags. You’d have to see it with your own eyes, but the number of women without Louis Vuitton handbags is in the minority.

A Louis Vuitton handbag, more than any other luxury good, is the ‘must have’ status symbol for women in Asia. In fact, the last time I was in Singapore, so many shoppers were crowding into the Louis Vuitton store on Orchard Road that the manager had to hire security guards to keep people out. Talk about demand!

And get this: China bought only 1% of luxury handbags five years ago but according to a recent Goldman Sachs survey, China is now the third-largest consumer of luxury handbags at 12% of the market. And it is expected to become the #1 luxury market in the world.

The reason for the luxury spending spree is simple — China’s booming economy is rapidly creating an army of millionaires as well as a bulging eager-to-spend, affluent middle class population.

  • There are 100 million middle class Chinese today and that number is expected to double by 2010. These affluent middle class Chinese yuppies are educated, have well-paying city jobs, and have money in their pockets to spend.
  • 50 individuals in China had wealth of at least $1 billion, while 2,000 were above $100 million, 35,000 exceeded $10 million, and 150,000 people had $5 million. At the same time, total assets owned by Chinese millionaires reached $1.7 trillion, increasing 8.8% year over year.

Asia is all about consumption. Every time I visit, I’m bowled over by the sheer volume of shopping going on. I’m not talking about people buying crappy tourist-type t-shirts, either. These rich Chinese are buying so aggressively that they are pushing up the prices of all luxury goods.

A popular China luxury index that tracks 32 items, including Rolls-Royce Phantoms and the Louis Vuitton Speedy Bag, showed that the price of luxury products in China jumped 8.7% in 2007.

That’s why luxury retailer Cartier has opened 25 new stores in mainland China as of March 2008 and Hermes International said that it will triple its stores in China over the next five years.

China isn’t the only country that is minting millionaires and a free-spending middle class. India is the second fastest growing economy in the world after China and its economy is growing at a 9.4% annualized rate — the fastest pace in 18 years!

India had 83,000 millionaires in 2006, a 19.3% year-over-year increase, and now has a middle class population of 300 million, roughly equal to the entire population of the United States!

According to the Knowledge Company, a New Dehli consulting company, there are now about 1.6 million Indian households that spend an average of $9,000 a year on luxury goods.

While I don’t usually talk about specific companies here in Money and Markets, I’m going to break that rule today and tell you about a company …

One of the Best Ways to Play The Chuppies’ Luxury Spending Spree

As I see it, few luxury retailers are better positioned to profit from the Chuppies’ spending boom than Louis Vuitton Moet Hennessey (LVMH).

LVMH was formed after mergers brought together Moet et Chandon and Hennessey, a leading manufacturer of cognac, and Louis Vuitton in 1987. The end result was one of the most prestigious luxury brand names in the world.

There is a lot more to LVMH than just Louis Vuitton handbags, though. The conglomerate owns 60 sub-companies that offer a wide variety of luxury brands that are sold only through exclusive boutiques in upscale locations in wealthy cities. As of the end of 2006, LVMH operated approximately 1,900 stores worldwide.

LVMH’s main product lines can be divided into four distinct segments of the luxury market …

1) Fashion and Leather Goods: Louis Vuitton, Givenchy, Donna Karan, Fendi, Celine, Berluti, and several other luxury names that mere mortals like me have never heard of.

2) Wines and Spirits: Moët & Chandon, Dom Pérignon, Hennessy, Glenmorangie, Domaine Chandon, and many other premium brands. The oldest of the LVMH brands is wine producer, Chateau d’Yquem, which dates its origins back to 1593.

3) Perfumes and Cosmetics: Christian Dior, Guerlain of Paris, Kenzo, Loewe, Acqua di Parma, La Brosse et Dupont

4) Watches and Jewelry: TAG Heuer, De Beers, Zenith, Chaumet, FRED of Paris

And get a load of this — LVMH CEO Bernard Arnault said he expects global spending on luxury goods to almost double in the next five years to $440 billion. According to Arnault,

“This is due to three factors. The creation of new wealth, the amount of existing consumers is increasing, and we are continuing to develop new markets.

“Russia, India, and China represent very important business and one third of all luxury goods will go to these markets in the next 10 years.”

Coincidentally, the top four markets for luxury products are the United States, Japan, China, and Russia.

Bottom line: It is no coincidence that LVMH’s fortunes have increased with Asian incomes and that trend is not going to change. In fact, the long-term economic growth story of Asia is still in its infancy.

I have to confess that I wouldn’t dream of dropping $200 on a bottle of Dom Pérignon and I don’t own any Louis Vuitton bags, but all my status-conscious friends and most middle-class women in Asia do. And that’s why I recommended LVMH to my Asia Stock Alert subscribers back in December.

I’m not saying you should run out and buy the shares right now, but I do think the company proves that the explosive Asian economy is creating its own base of money-spending chuppies and that will benefit not just manufacturers and exporters but also plenty of retail concerns.

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