Vital Wave Field Teams Latin America Argentina Brazil Chile Costa Rica Dominican Republic Mexico Peru Asia India China Cambodia 10 Facts About Uzbekistan Eastern Europe Emerging-Market Cities Estonia Ukraine September 8, 2011 Africa Egypt South Africa Nigeria Kenya Middle East United Arab Emirates Julie Pohlig Chief Project Architect United States California (Headquarters) Agenda 1 Review 10 Key Characteristics about Global Emerging-market Cities 2 Introduce a Segmentation for Emerging- markets Cities 3 Discuss Implications for Multinational Corporations © 2011 Vital WaveTM 1 Proprietary and Confidential: Do not copy or distribute. Fact 1: Urban population is soaring in emerging markets Moscow Istanbul Beijing Tehran Tianjin Wuhan Delhi Cairo Shanghai Dhaka Karachi Guangzhou Mexico City Mumbai Kolkata Chennai Manila Lagos Bogota Kinshasa Jakarta Lima Rio de Janeiro Sao Paulo Buenos Aires Nearly half of top-25 emerging- market cities are in BRIC countries Top-25 Cities in Emerging Markets © 2011 Vital WaveTM 2 Proprietary and Confidential: Do not copy or distribute. Fact 1: Urban population is soaring in emerging markets Moscow Istanbul Tehran Baghdad Lahore Cairo Dhaka Mexico City Riyadh Karachi Chittagong Bangkok Manila Lagos Ho Chi Min City Bogota Kinshasa Jakarta Lima Luanda Belo Horizonte Rio de Janeiro Sao Paulo Santiago Buenos Aires Nearly half of top-25 emerging- market cities are in BRIC countries Top-25 Cities in Emerging Markets Cites in the Top 25 in Emerging Markets after Removing Cities in China and India © 2011 Vital WaveTM 3 Proprietary and Confidential: Do not copy or distribute. Fact 1: Urban population is soaring in emerging markets Population 2010 (000) Mumbai 20,072 (Bombay) Guangzhou Sao Paulo 19,582 Jakarta Mexico City 19,485 Istanbul Moscow Delhi 17,015 Chennai (Madras) Shanghai Bogota Shanghai 15,789 Wuhan Lagos Kolkata Lima 15,577 Beijing & Metro Manila (Calcutta) Dhaka 14,796 Buenos 13,089 Karachi Aires Karachi 13,052 Tianjin Rio de Janeiro Dhaka Cairo 12,503 Rio de Kinshasa Mexico City 12,171 Mumbai (Bombay) Janeiro Buenos Aires Beijing 11,741 Tehran Metro 11,662 Manila Lagos 10,572 Cairo Sao Paulo Istanbul 10,530 Moscow 10,495 Jakarta 9,703 Delhi Guangzhou 9,447 Kinshasa 9,052 Lima 8,375 Urban population in emerging markets represents a Bogota 8,320 concentrated opportunity. Cities comprise large markets and Tehran 8,221 Chennai can provide an entry point into national markets. 7,559 (Madras) Wuhan 7,542 Comparable Country Tianjin 7,468 © 2011 Vital WaveTM 4 Proprietary and Confidential: Do not copy or distribute. Fact 2: Nearly half of the world’s population will live in emerging-market cities by 2030 2010 2030 33% 46% Emerging- market Cities Emerging- market Cities A collection of emerging-market megacities represents a market that rivals the United States or Europe in size. These rapidly growing cities will increasingly demand a wide variety of goods and services. © 2011 Vital WaveTM 5 Proprietary and Confidential: Do not copy or distribute. Fact 3: Economic growth is closely linked with urbanization Top 15 Emerging-market Cities in Total GDP (2010, USD Billions in PPP) $421 $421 $388 $342 $265 $236 $218 $198 $189 $189 $163 $163 $160 $138 $129 © 2011 Vital WaveTM 6 Proprietary and Confidential: Do not copy or distribute. urbanization with linkedgrowth isclosely Economic 3: Fact Philadelphia / Washington DC Philadelphia / Washington DC Boston Hong Kong Toronto Madrid Sydney 7 San Diego Barcelona Barcelona Denver Do Proprietary and Confidential: Proprietary © Denver 2011 not copy Vital Wave or Montreal distribute. TM Milan Tel Aviv Fact 3: Economic growth is closely linked with urbanization Top-15 Emerging-market Cities in GDP Per Capita (2010, USD in PPP) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- Companies can benefit from the urbanization trend in emerging markets through an ability to target many different market segments in a smaller geographic area © 2011 Vital WaveTM 8 Proprietary and Confidential: Do not copy or distribute. Fact 4: Consumption in emerging-market cities is on the rise. As consumers in these cities become more influential, multinationals will benefit from understanding and addressing their needs with new products and services. © 2011 Vital WaveTM 9 Proprietary and Confidential: Do not copy or distribute. Fact 5: Midsized emerging-market cities should not be overlooked GDP Per-Capita (2010, USD in PPP) <$10,000 $10,000-$15,000 $15,000+ Kolkata (Calcutta) Delhi Beijing Mexico City Lagos Mumbai (Bombay) Shanghai Istanbul Dhaka Cairo Sao Paulo Buenos Aires > 10M Karachi Metro Manila Rio de Janeiro Moscow (Megacity) Chongqing Baghdad Tianjin Lima Guangzhou Ahmedabad Lahore Bangalore Bogota Bangkok Hyderabad Pune Tehran 10M Wuhan Belo Horizonte - Chennai (Madras) Kinshasha Ho Chi Min City Santiago 5M Chittagong Jakarta Chengdu Dar es Salaam Shenyang St Petersburg Population (2010) Population Changchun Addis Ababa Hanoi Guadalajara Xi’an Fortaleza Alexandria Brasilia Lucknow Yangon Casablanca Monterrey Surat Recife Algiers Ankara 5M Jaipur Luanda Curitiba East Rand - Kanpur Nairobi Caracas Izmir 2M Bandung Abidjan Johannesburg Salvador Kabul Puebla Kano Pyongyang Cape Town Faisalabad Porto Alegre Medellin Top-25 city in GDP per-capita growth over next 15 years © 2011 Vital WaveTM 10 Proprietary and Confidential: Do not copy or distribute. Fact 5: Midsized emerging-market cities should not be overlooked Jakarta Xi’an Hanoi Fortaleza Managers who take a closer look at some of these mid-sized cities might find a diamond in the rough, and discover market opportunities that give them a competitive edge. © 2011 Vital WaveTM 11 Proprietary and Confidential: Do not copy or distribute. Fact 6: Passenger travel through airports in emerging-market cities is skyrocketing World's Busiest Airports 2000 2010 1 Atlanta Hartsfield-Jackson 1 Atlanta Hartsfield-Jackson 2 Chicago O'Hare 2 Beijing Capital 3 Los Angeles International 3 Chicago O'Hare 4 London Heathrow 4 London Heathrow 5 Dallas-Fort Worth 5 Tokyo International 6 Tokyo International 6 Los Angeles International 7 Frankfurt 7 Paris Charles de Gaulle 8 Paris Charles de Gaulle 8 Dallas-Fort Worth 9 San Francisco International 9 Frankfurt 10 Amsterdam Schiphol 10 Denver International 11 Denver International 11 Hong Kong International 12 Las Vegas McCarran 12 Madrid-Barajas 13 Minneapolis-Saint Paul 13 Dubai International 14 Seoul Gimpo 14 New York JFK 15 Phoenix Sky Harbor 15 Amsterdam Schiphol 16 Detroit 16 Jakarta Soekarno-Hatta 17 Houston George Bush 17 Bangkok Suvarnabhumi 18 Newark Liberty 18 Singapore Changi 19 Miami International 19 Guangzhou Baiyun 20 Madrid-Barajas 20 Shanghai Pudong Developed-market airports Emerging-market airports © 2011 Vital WaveTM 12 Proprietary and Confidential: Do not copy or distribute. Fact 6: Passenger travel through airports in emerging-market cities is skyrocketing These major shifts over a relatively short time span indicate that emerging- market cities are rapidly becoming hubs of commerce. The world's fastest-growing airports 1. Istanbul Sabiha Gökçen Airport, Turkey 2. Viracopos-Campinas, Brazil 3. Rio de Janeiro, Brazil 4. Charleroi, Belgium 5. Moscow Sheremetyevo, Russia 6. Belo Horizonte, Brazil 7. Bogota, Colombia 8. Phuket, Thailand 9. Shanghai Pudong, China 10. Muscat, Oman 11. Ankara, Turkey 12. St Petersburg, Russia 13. Medan, Indonesia 14. Shanghai Hongqiao, China 15. Milwaukee, WI, USA © 2011 Vital WaveTM 13 Proprietary and Confidential: Do not copy or distribute. Fact 7: China dominates rankings of emerging- market cities on IT connectivity Harbin Beijing Dalian Nanjing Chengdu Wuhan Shanghai Hangzhoui Xiamen Guangzhou While emerging-markets cities are engines of regional growth, their potential is shaped by the market environments of the countries in which they are located. © 2011 Vital WaveTM 14 Proprietary and Confidential: Do not copy or distribute. Fact 8: Emerging-market cities are economically diverse Shengyan Beijing Benxi Baoji Irbid Zarqa & Mafrq Xian Wuxi Jerash & Ajloun Amman Wuhan Shanghai Balqa & Madaba Fuzhou Mexico City Chiangmai Hanoi Udonthani Barranquilla Caracas Ho Chi Minh City Cebu City Lagos Addis Ababa Bogota Ipoh Cali Johor Bahru Quito Nairobi Fortaleza Pointe-Noire Brasilia Goiana Belo Horizonte Catamarca Johannesburg East Rand Santiago Maseru East London Chillan Buenos Aires Most Unequal: Gini Coefficient over 0.55 Unequal: Gini Coefficient between 0.51 and 0.55 Most Egalitarian: Gini Coefficient Less than 0.39 Understanding distinct customer segments within cities helps to open up new possibilities, such as greater opportunities for BoP marketing that can be harnessed in cities with high levels of inequality. © 2011 Vital WaveTM 15 Proprietary and Confidential: Do not copy or distribute. Fact 9: Emerging-market cities represent market opportunities and risks While there are tremendous growth opportunities in emerging-market cities, there are hazards as well that need to be mitigated, such as ease of doing business and livability. 10 Least Livable Cities 1.Harare, Zimbabwe 2.Dhaka, Bangladesh 3.Port Moresby, PNG 4.Lagos, Nigeria 5.Algiers, Algeria 6.Tripoli, Libya 7.Karachi, Pakistan 8.Douala, Camaroon 9.Tehran, Iran Beijing, Mexico City, Johannesburg, Moscow, 10.Abidjan, Côte d’Ivoir New Dehli and Sao Paulo have intense traffic © 2011 Vital WaveTM 16 Proprietary and Confidential: Do not copy or distribute. Fact 10: Booming infrastructure investment in emerging-market cities signals growth Infrastructure is key to growth. Cities that are investing