Despite the market's sentiment today, I decided to jump into a...

Despite the market's sentiment today, I decided to jump into a company I would usually not consider buying (due to their relatively low volatility).

What drew my attention to this company is the investment that this company is made in China. This company has almost 100 different product lines that they are selling to Chinese customers from an online store at Kaola.com and these products are being sold at a premium that are as much as 1000 per cent. It must be noted that Woolworths have been selling these products to Koala.com at wholesale prices (so most of the margin is currently goes to Koala.com).

So what does this mean?
I think Woolworths Limited has something big up their sleeve. They are are aware of the potential that arises from expanding in China, where they can service the high demand that comes from the gigantic middle class there. Think of what happened with A2M, BAL, and and even Weetbix.

Once China has an established distribution channel established in China, I would expect Woolworths to start leveraging their power (that being they are the ones with the Australian goods that Koala.com requires in order to reap their hefty margins) to take a more reasonable share in the profits. And by the time competitors realize what has happened, Woolworths would already be a step ahead of the competition with that established distribution channel.