The single largest commercial growth opportunity globally in the decade ahead is the rise of cities in emerging markets. And the most pivotal decisions that many companies will make in the near future are those regarding their commitment to winning in these cities and their strategies for doing so.
Yet most global companies are failing to recognize this opportunity, its magnitude, and the high-stakes nature of the choices confronting them. When they approach the emerging markets, most companies think of countries, not cities. And those cities that do spring to mind are a few “megacities,” rather than the large number of other, smaller cities that present the real opportunity. Most crucially, some companies tend to view business decisions related to cities tactically rather than strategically—if, indeed, they recognize the need for such decisions at all. These companies are making a huge mistake.
Is your company among them? Ask yourself just a few simple questions:
How many emerging-market cities does your company serve currently, and how many does it plan to serve by 2020? There are 717 such cities with populations of more than 500,000, and most are growing at rates far above the global average.
Does your executive team understand the growth opportunity? Emerging-market cities will account for 30 percent of global private consumption by 2015, and private consumption is growing at a rate of 11 percent per year. The infrastructure investment in these cities is forecast at $30 trillion to $40 trillion cumulatively over the next 20 years.
Does your executive team know which current and up-and-coming competitors are taking these markets seriously and winning? Global scale in many industries will be determined by those that play these cities well.
How many emerging-market cities has your executive team visited? Most executives know about the megacities, but those are yesterday’s growth story. Do you know the needs and habits of customers in the cities that will matter in the future? Understanding and winning in the new paradigm of the “many cities”—which means determining which and how many of the hundreds of smaller cities to enter and when—has become the new imperative.
This report is one result of a year-long global research effort spanning key urban centers of the developing world, led by our business strategists in each location. It is not an academic treatise on urbanization policy or a primer for governments. Instead, it is a commercially focused wake-up call for companies under pressure to grow.
As best we can tell, it is the first handbook that frames the emerging-market growth opportunity as one built upon cities, and that quantifies what is at stake while outlining a set of practical steps for embarking on a path to success. Its insights and recommendations represent a fundamentally new way of defining and approaching the world’s largest growth opportunity. We hope that it stirs debate, reflection, and accelerated action within your organization. We look forward to your feedback and to engaging with you directly on this vitally important growth driver.