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10 Facts About

Emerging-Market CitiesSeptember 8, 2011

Julie PohligChief Project Architect

© 2011 Vital Wave ConsultingTM

Proprietary and Confidential: Do not copy or distribute.

Agenda

1

Review 10 Key Characteristics about

Global Emerging-market Cities

1

Introduce a Segmentation for Emerging-

markets Cities

2

Discuss Implications for Multinational

Corporations

3



Fact 1: Urban population is soaring in emerging

markets

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Nearly half of top-25 emerging-market cities are in BRIC countries

Top-25 Cities in Emerging Markets

Delhi

Mumbai

Sao Paulo

Mexico City

Shanghai

Kolkata

Dhaka

Buenos Aires

Karachi

Cairo

Rio de Janeiro

Beijing

Manila

Lagos

Istanbul

Moscow

Jakarta

Guangzhou

Kinshasa

Lima

Bogota

Tehran

Chennai

Wuhan

Tianjin




markets

33333333

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

Sao Paulo

Mexico City

Dhaka

Buenos Aires

Karachi

Cairo

Rio de Janeiro

Manila

Lagos

Istanbul

Moscow

Jakarta Kinshasa

Lima

Bogota

Tehran

Lahore

Chittagong

Baghdad

Ho Chi Min City

Bangkok

Riyadh

Belo Horizonte

Santiago

Luanda




markets

44444444

Population 2010 (000)

Mumbai (Bombay)

20,072

Sao Paulo 19,582

Mexico City 19,485

Delhi 17,015

Shanghai 15,789

Kolkata (Calcutta)

15,577

Dhaka 14,796

Buenos Aires

13,089

Karachi 13,052

Cairo 12,503

Rio de Janeiro

12,171

Beijing 11,741

Metro Manila

11,662

Lagos 10,572

Istanbul 10,530

Moscow 10,495

Jakarta 9,703

Guangzhou 9,447

Kinshasa 9,052

Lima 8,375

Bogota 8,320

Tehran 8,221

Chennai (Madras)

7,559

Wuhan 7,542

Tianjin 7,468

Mumbai (Bombay)

Sao Paulo

Mexico City

Delhi

Shanghai

Urban population in emerging markets represents a concentrated opportunity. Cities comprise large markets and can provide an entry point into national markets.

Comparable Country

Dhaka

Buenos Aires

Karachi

Cairo

Rio de Janeiro

Beijing & Metro Manila

Lagos

Istanbul Moscow

Jakarta

Guangzhou

Kinshasa

Lima

Bogota

Tehran

Chennai (Madras)

Wuhan

Tianjin



Fact 2: Nearly half of the world’s population

will live in emerging-market cities by 2030

55555555

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.

46%Emerging-

market Cities

2030

33%Emerging-

market Cities

2010



Fact 3: Economic growth is closely linked with

urbanization

$421 $421

$388

$342

$265

$236$218

$198 $189 $189$163 $163 $160

$138 $129

Top 15 Emerging-market Cities in Total GDP (2010, USD Billions in PPP)

6




urbanizationPhiladelp

hia

/ W

ash

ingto

n D

C

Philadelp

hia

/ W

ash

ingto

n D

C

Bost

on

Hong K

ong

Toro

nto

Madri

d

Sydney

San D

iego

Barc

elo

na

Barc

elo

na

Denver

Denver

Montr

eal

Milan

Tel A

viv

7




urbanization

88888888

Companies can benefit from the urbanization trend in emerging markets

through an ability to target many different market segments in a smaller

geographic area

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Top-15 Emerging-market Cities in GDP Per Capita (2010, USD in PPP)



Fact 4: Consumption in emerging-market cities

is on the rise.

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As consumers in these cities become more influential, multinationals will

benefit from understanding and addressing their needs with new products and

services.



Fact 5: Midsized emerging-market cities should

not be overlooked

101010

Popula

tion (

2010)

GDP Per-Capita (2010, USD in PPP)

<$10,000 $10,000-$15,000 $15,000+

> 1

0M

(Megacit

y) Kolkata (Calcutta)

Lagos

Dhaka

Karachi

Delhi

Mumbai (Bombay)

Cairo

Metro Manila

Beijing

Shanghai

Sao Paulo

Rio de Janeiro

5M

-10M

Chongqing

Ahmedabad

Hyderabad

Chennai (Madras)

Chittagong

Tianjin

Bangalore

Pune

Ho Chi Min City

Jakarta

Guangzhou

Bangkok

Tehran

Santiago

2M

-5M

Chengdu

Changchun

Xi’an

Lucknow

Surat

Jaipur

Kanpur

Bandung

Salvador

Kano

Faisalabad

Dar es Salaam

Addis Ababa

Fortaleza

Yangon

Recife

Luanda

Nairobi

Abidjan

Kabul

Pyongyang

Shenyang

Hanoi

Alexandria

Casablanca

Algiers

Curitiba

Caracas

St Petersburg

Guadalajara

Brasilia

Monterrey

Ankara

East Rand

Izmir

Johannesburg

Puebla

Cape Town

Porto Alegre

Medellin

Mexico City

Istanbul

Buenos Aires

Moscow

Baghdad

Lahore

Wuhan

Kinshasha

Lima

Bogota

Belo Horizonte

Top-25 city in GDP per-capita growth over next 15 years



Fact 5: Midsized emerging-market cities should

not be overlooked

1111111111111111

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.

Xi’an

Hanoi

Jakarta

Fortaleza



Fact 6: Passenger travel through airports in

emerging-market cities is skyrocketing

1212121212121212

Developed-market airports Emerging-market airports

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



Fact 6: Passenger travel through airports in

emerging-market cities is skyrocketing

1313131313131313

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



Fact 7: China dominates rankings of emerging-

market cities on IT connectivity

1414141414141414

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.

Beijing

ShanghaiWuhan

Guangzhou

Dalian

Nanjing

Xiamen

Chengdu

Hangzhoui

Harbin



Fact 8: Emerging-market cities are economically

diverse

1515151515151515

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.

Most Unequal: Gini Coefficient over 0.55

Unequal: Gini Coefficient between 0.51 and 0.55

Most Egalitarian: Gini Coefficient Less than 0.39

East London

Barranquilla

Brasilia

Belo Horizonte

Fortaleza

Goiana

East RandJohannesburg

BogotaCali

Lagos

ChiangmaiUdonthani

Catamarca

Buenos AiresSantiago

Chillan

Quito

Addis Ababa

Nairobi

Maseru

Mexico City

Ho Chi Minh City

Jerash & AjlounIrbid

ShanghaiZarqa & Mafrq

Fuzhou

Baoji

Balqa & Madaba

Xian

Shengyan

Wuhan

IpohJohor Bahru

Pointe-Noire

Cebu City

Wuxi

Hanoi

Amman

Caracas

BenxiBeijing



Fact 9: Emerging-market cities represent

market opportunities and risks

1616161616161616

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.

Beijing, Mexico City, Johannesburg, Moscow,

New Dehli and Sao Paulo have intense traffic

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

10.Abidjan, Côte d’Ivoir



Fact 10: Booming infrastructure investment in

emerging-market cities signals growth

Infrastructure is key to growth. Cities that are investing in different types of

infrastructure may represent more favorable growth environments for

multinational companies

161,221

107,275

35,550

5,506 2,395 2,252

Developed Countries

China Asia (Developing,

excludes China)

Middle East & North Africa (Developing)

Sub-Saharan Africa

Latin America

Location of Top-50 Cities for Container Traffic, by Sum of Container Traffic (in thousands TEU)

17



Summary

Emerging-market cities are diverse, but there are strategies that

companies can pursue to be successful

18

Strategies for addressing emerging-market cities should carefully weigh

purchasing power, growth, infrastructure, the ease of doing business, and

risks against company goals

Cities have large income disparities. Yet, with the right business

models companies can tap into both BOP and higher-income segments

There are both rewards and hazards to pursuing emerging market

cities. Managers should consider how local conditions will enhance or

impede the ability to do business.

Thank youJulie Pohlig

Chief Project Architect

[email protected]

1-949-484-4608

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