Global Biz

Emerging markets to reshape competitive landscape

By Xie Jingwei (chinadaily.com.cn)
Updated: 2010-09-14 13:58

The massive growth in emerging-market cities will fundamentally change the competitive landscape, according to a report released today by the Boston Consulting Group (BCG).

"The 717 emerging-market cities that currently have population of more than 500,000 and the additional 371 cities that will reach this size by 2030, will constitute the biggest commercial opportunity in the coming decades," said David Michael, a senior partner in BCG's Beijing office and one of the report's authors during the fourth Annual Meeting of the New Champions held in the Northeast China's port city of Tianjin.

"Executives tend to focus on the 'megacities' of emerging markets, when they need to be shifting their attention to the 'many cities', " said Michael.

He deemed those companies that are best positioned to capture the opportunity will tap into larger profit pools and grow faster, explaining that consumer demand will rapidly increase as the middle class in emerging-market cities expands.

The report predicts that by 2015, 130 million households representing 460 million residents of cities in China, Brazil, India, Indonesia, Mexico, Russia, South Africa and Turkey will have graduated to the middle class.

Companies will need to adapt their business models to reach future and deeper into the emerging-market cities. In 2020, a company wishing to reach 80 percent of China's middle class will have to be in 212 cities in the country, according to the report.

The report suggests the emerging-market cities' growth is to spur massive demand for infrastructure since those cities will need better housing, transportation, water, sanitation, and electricity.

"The massive infrastructure-development needs across so many emerging-market cities dwarf anything the world has seen before," said David Jin, a Shanghai-based BCG partner and another coauthor.

Convened by the World Economic Forum, the fourth Annual Meeting of the New Champions, also dubbed the 2010 Summer Davos, is scheduled to be held from September 13 to 15, attracting more than 1,000 registered participants from over 80 countries and regions to discuss the latest issues of world economic development.