Check on China: Fuqi International, Inc.

No more powerful symbol of China's new prosperity exists than Shanghai, the cosmopolitan city of gleaming futuristic skyscrapers. Money has clearly found its way here, as five-star hotels, swanky boutiques, stylish art galleries and trendy cigar bars have supplanted rundown Mao-era commercial and government buildings. Shanghai today serves as the luxurious standard to which the rest of China aspires.

In fact, luxury is a white-hot market in China, which has become the world's third-largest consumer of luxury goods. China's new generation, in particular, has been seduced by flash. Merchandise with a high-end feel is being successfully marketed to the wealthy, borderline wealthy and middle-market consumers who are eager to sample the good life. Taking a cue from the West, conspicuous indulgences and creature comforts, ranging from designer clothing to diamond engagement rings and status-rich automobiles, are increasingly coveted by China's ever-growing relatively affluent middle class.

These newly-acquired expensive tastes play right into the hands of Fuqi International, Inc. (Nasdaq: FUQI), a company that designs, manufactures, markets and distributes precious metal jewelry to the Chinese luxury goods market. Fuqi, which currently has a design database of over 20,000 products, specializes in producing jewelry in a wide range of styles using gold, platinum, diamonds, and other precious stones and materials.  

The jewelry maker's extensive distribution network, spanning almost all of China's 22 provinces, gives it an important advantage over rivals, allowing the company to test-market, promote and sell its products directly to wholesalers, distributors and retailers nationwide.

After raising $63 million in an IPO priced at the top of its $7 to $9 forecast range, Fuqi made a heady market debut on Oct. 23, with its stock opening at $10.01, or 11% higher, before rising as high as $11.75 in afternoon trading. While shares fell back to earth on Nov. 7, closing at $6.32, the stock has since been rising somewhat steadily. It closed at $8 on Wednesday.

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