Cities in emerging-markets to offer vast biz opportunity: BCG

Cities in emerging markets like India are likely to offer the biggest commercial opportunity for businesses worldwide in the coming decades, a study by The Boston Consulting Group has said.

According to the report, the surge in the number and size of emerging-market cities, alongside the burgeoning middle-class households within them, is creating both new opportunities and challenges for companies.

"The 717 emerging-market cities that currently have populations of more than five lakh people, and additional 371 cities that will reach this size by 2030, will constitute the biggest commercial opportunity in the world in the coming decades," the report said.

With dramatic improvements in lives of emerging-market urban residents, the spending power in such cities is increasing rapidly, opening up new avenues for companies.

Emerging-market cities may account for 30 per cent of the global private consumption by 2015, creating vast opportunity for businesses to sell their products, it stated.

"Executives tend to focus on 'megacities' of emerging markets, when they need to be shifting their attention to the 'many cities'- the large number of smaller cities that constitute the bulk of future urban-market demand across the emerging markets," BCG senior partner David Michael said.

The massive growth in size and number of emerging-market cities would fundamentally change the competitive landscape in many industries, it added.

One-third of the world's population--2.6 billion people --live in emerging-market cities and by 2030 the number is likely to increase by an additional 1.3 billion.

In contrast, cities in developed markets would add only 100 million new residents in the next 20 years. "Companies need to track and manage the number of cities in which they have a strong presence, not simply the number of countries," Michael added.

Moreover, emerging-market cities would need better housing and infrastructure—most urgently, transportation, water, sanitation and electricity.

Driven by huge portion of the demand from Brazil, China, India and Mexico, emerging markets would require an estimated $13.8 trillion in housing investment from 2010-2030.

"The massive infrastructure-development needs across so many emerging-market cities dwarf anything that the world has seen before," the report stated.