One sunny Sunday afternoon in Shanghai, Boston native P.T. Black sits uncomfortably on a dingy bed in a one-room apartment littered with empty Coke bottles and dirty plastic bags, attempting to stay one step ahead of that mesmerizing change. Black, 26, is what's called a "cool hunter," a marketing expert who is looking for "the Next Big Thing," he says. Today, Black, who works at Shanghai-based market-research firm Jigsaw International, is getting the scoop on what's hot and what's not from Li Chun, a 21-year-old NBA fanatic who lives in the tiny apartment. Li tells Black he got hooked on basketball in junior high school after watching a Japanese cartoon called Slam Dunk, and began playing every day "to show off in front of girls."

He often skips his job selling gold foil used in household products to watch Yao Ming and the Houston Rockets on TV. Any respectable basketballer, he explains to Black, wouldn't be caught dead in counterfeit sneakers—"I'd get laughed off the court"—and he'll scrimp and save to splurge on $90 Adidas shoes. What about soccer, Black asks? Li snickers—soccer is way down the cool food chain: "Soccer players can get maybe one girlfriend, basketball players can get three, but the hip-hop dancers can get, like, 10 girlfriends!"

That same week, Black, head shaved and collar turned up, exchanged notes on bands like the White Stripes and Fugazi with a Chinese punk-rock group in Beijing. Then he's off shopping with two teenage members of a break-dance troupe and their girlfriends at a Beijing indoor market crawling with teens and selling everything from fake Levis to Boston Celtics jerseys. The dancers become fascinated with one shop hawking T shirts featuring the rock group Kiss and the late Nirvana front man Kurt Cobain (which disturbingly read I HATE MYSELF AND I WANT TO DIE). "It's the new style," explains one member of this shopping expedition, 18-year-old Chang Lu, holding a Pink Panther shirt to her chest. "Relaxed, being yourself."

To Black, whose clients include several multinational companies that he declines to name, this is priceless intelligence. China remains an inscrutable and financially perilous mystery to most outsiders; understanding the local youth helps big companies keep their brands cool and their products selling. "Chinese consumers are developing in their own way and at a very high speed," says Black. "It's hard to keep track." Today's Chinese consumers have gone way beyond the stage when they were just happy to own their first TV. They want to be trendsetters, they're brand savvy, and they're increasingly clued in to what's happening outside their country. Only a few years ago, most Chinese were cut off from global pop culture by tight censorship and travel restrictions. But their sources of information have multiplied. About 94 million Chinese surf the Internet, up 18% in 2004. Chinese took nearly 29 million trips overseas in 2004, up 42% from the year before. Korean and Japanese rap videos are widely available on Chinese TV. DVDs of American TV shows like Friends (almost always pirated) are wildly popular and shaping the aspirations of China's youth. Young Chinese "want to relate to Friends," says 17-year-old high school student Gondolewa Gao. "They really believe that is how people live in America."

These increasingly cosmopolitan Chinese consumers have embraced an astonishing array of foreign influences. Today's A-list includes the pop star Madonna, the Sex Pistols, body piercing, video games, break dancing, baggy T shirts, and Japanese schoolgirl uniforms. Chinese consumers "are making up for 40 years of lost history," says Black. Think of it as a kind of Pop-Cultural Revolution. After decades of strict social control, many Chinese are using what they buy to assert their individuality. The biggest consumer trends today, says Black, are "independence of thought, independence of lifestyle, the taking of risks." This is especially true among young Chinese women. A study by public relations agency Hill & Knowlton revealed that one of the hottest items for twentysomething women is G-string underwear. Once taboo or entirely unavailable, the skimpy panties have since become the mark of an assertive, modern woman.

This burgeoning love of all things foreign presents an enormous opportunity—and competitive advantage—to big-name international brands. Another Hill & Knowlton study found that the top 12 coolest brands among Chinese kids were all foreign. Nike took the top spot, trailed by Sony and Adidas. Meanwhile, a survey by advertising agency Euro RSCG showed the brands growing fastest in popularity included South Korean electronics giant Samsung, Internet search engine Google, and Crest (yes, toothpaste). Multinationals are eager to play up their foreign credentials. In 2003, after years of running China-specific ad campaigns, McDonald's imported its global I'M LOVIN' IT ads, but added a local twist last month by releasing a Chinese hip-hop version of the theme song. Starbucks has transplanted its U.S.-style shops into China with only minor innovations—such as green tea Frappuccinos—to suit local tastes.

Few have proved more adept at tapping into the new aspirations of young Chinese than Ilan Sobel, Coca-Cola's general manager for marketing in China. "Chinese teens today are yearning for individual self-expression," says Sobel, who was born in South Africa. "The key is how to take that insight and work it into our advertising campaigns." Sobel is always looking for what he calls the "passion point" of modern Chinese youth. Last year, for example, Coke launched a new slogan in China—"Get Refreshed Your Own Way"—that connects directly to consumers' desire to assert their individuality. Sobel has hired spokespeople who are all seen as major trendsetters in China, such as pop group S.H.E., Will Pan (a VJ for music station Channel V) and Olympic gold-medal hurdler Liu Xiang. This year, Coke is plastering cybercafés with special ads featuring characters from a popular online video game, World of Warcraft, and is giving away 10,000 free trips to Hong Kong Disneyland in an attempt to appeal to mainlanders' new love of travel. "Understanding the consumer is paramount," Sobel says. "You need to win their hearts and souls."

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