Own the Future: 50 Ways to Win from The Boston Consulting Group

Chapter 8

Winning in Emerging-Market Cities

David Jin, David C. Michael, Paul Foo, José Guevara, Ignacio Peña, Andrew Tratz, and Sharad Verma

More than one-third of the world's population lives in cities that are located in the emerging markets. By 2030, the number of emerging-market urban dwellers is expected to increase by 1.3 billion. In contrast, cities in developed markets are expected to add only 100 million new residents in the next 20 years.

This massive growth will fundamentally change the competitive landscape in many ways. Consumer demand will rapidly increase as the middle class in these markets expands, new infrastructure will be required as cities grow, and those companies that are best positioned to capture the opportunity will tap into larger profit pools, grow faster, and use emerging-market cities as a catalyst for innovation.

Just consider this: at the time of writing in 2010, emerging-market cities drive more than 60 percent of world GDP growth. There are already 717 emerging-market cities with populations of more than 500,000, and another 371 such cities are expected to reach this size by 2030. There are only 240 cities of equal size in the developed world.

Income levels in emerging-market cities are reaching an inflection point, with the middle-class population expected to rise dramatically. The leap in the number and size of emerging-market cities, alongside the burgeoning number of middle-class households and the infrastructure required to support them, ...