A McKinsey Quarterly report in August 2012 "Winning the $30 trillion decathlon: Going for gold in emerging markets" highlights a looming seismic change of the global consumption landscape in the coming decades with an economic force perhaps 1,000 times bigger than the Industrial Revolution in the eighteenth century. Many global companies may well be missing the trick.
Download McKinsey Quarterly - Winning the $30 trillion decathlon in Emerging Markets - August 2012
According to the report, "By 2025, annual consumption in emerging markets will reach $30 trillion—the biggest growth opportunity in the history of capitalism. To compete for the prize, companies must master ten key disciplines" - to hone country-and-region-specific insights, strategic focus, flexibility and talents - necessary to get on top of the scale, global diversity, rapidity, and complexity presented by this coming transformational change.
To have a grasp of the changing tides, it may be useful to appreciate the following powerful under-currents.
First, according to the McKinsey Global Institute's report "Urban World: Cities and the rise of the consuming Class", June, 2012, from 2010 – 2025 the GDP of the world’s top 600 cities will account for 65% of global growth, or by $30 trillion, of which the emerging 400 cities will account for $23 trillion, or 47% of global growth. This will creating one billion new consumers by 2025. 60% of those will be in the Emerging 400 whose annual consumption is expected to rise by $10 trillion by 2025. Click here
Second, according to a presentation of Brookings Institution (June XX, 2011), by 2030, the size of the middle class in Asia Pacific is expected to grow from 525 million (28% of global total) to 3.2 billion (66% of total) or from 23% of global consumption to 59% (2005 PPP$ terms). The key two drivers are China and India. The global consumption share of the top ten countries by 2020 would change to - China (13%), US (12%), India (11%), Japan (6%), Germany (4%), Russia (3%), France (3%), Indonesia (3%), Mexico (3%) and the UK (3%). By 2030, the share will be dominated by India and China - India (23%), China (18%), US (7%), Indonesia (4%), Japan (4%), Russia (3%), Germany (3%), Mexico (3%), Brazil (3%) and France (3%).
Third, to appreciate the scale and speed of China’s urban transformation, read McKinsey Global Institute Report of February 2009 “Preparing for China's Urban Billion' and take a look at how fast cities are spring up all over the country. Click here
Fourth, to understand how this is spawning the birth of China’s consumer society, visit my research note expounding on China’s changing consumer patterns and trends, the rising consumer class, unique cultural behaviour, spending amongst savers, inflexion points, the Chinese wealthy and some reality checks. Click here
Fifth, a McKinsey Quarterly study of March 2012, "Meet the Chinese consumer of 2020", shows how the Chinese consumer profile is changing rapidly in the coming years in different city, age, and income groups. Click here
Sixth, according to World Luxury Association's 2010-2011 annual report, China now accounts for 27 % of the global luxury market, ahead of US at 14 % and right behind Japan at 29 %. The report says China is poised to be leading the world's luxury market in 2012.This seems to tally with a Bain & Company 2011 China Luxury Market Study here (Download the handy Bain China Luxury Market chart here
Download China's Luxury Market Chart - 2011 Bain Survey) A KPMG study (April 2011) captures the changing characteristics of China's rising luxury buyers. Click here
Seventh, to complete the picture, visit my overview “The soaring of the EAGLES” to see how while the West continues to be embroiled in sovereign debt crisis and economic malaise, the world's gravitas has been quietly shifting towards the Emerging And Growth Leading Economies. Click here
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