What Buffett Is Buying Next,    By Tim Hanson, May 22, 2008

Every so often, Berkshire Hathaway (NYSE: BRK-B) Chairman Warren Buffett meets with business school students. Because so few people ever get to sit down with the Oracle of Omaha, those who do have a responsibility to take good notes.

The folks at The Ben Graham Centre for Value Investing in London, Ontario, did just that.

What Buffett had to say
According to those notes, in addition to his usual advice to think long-term, read a lot, and take advantage of market volatility, Buffett said:

The 19th century belonged to England, the 20th century belonged to the U.S., and the 21st century belongs to China. Invest accordingly.

That means “Buy China,” and that’s because, as National Geographic Editor-in-Chief Chris Johns wrote in a recent column, “The shock waves of its growth reverberate in every corner of the globe.”

“Buy China” is interesting advice, given that Buffett recently sold out of his somewhat controversial position in PetroChina (NYSE: PTR). The explanation there was that Berkshire had already made a lot of money on the investment and the valuation was looking stretched.

So while Buffett is bullish on China, he’s still paying close attention to valuation — and would likely urge us all to do the same.

But don’t buy it blind

Where to start
Buffett’s modus operandi, however, suggests that he works on identifying superior companies first and then waits for market volatility to give him his buy-in price. Using some of the financial criteria Buffett says he looks for in acquisitions (at least $75 million in pre-tax earnings, consistent earnings power, and good returns on equity with little debt), here are a few Chinese companies he may be looking at today: