Emerging markets in Asia and South America will be the key drivers of global GDP growth in the next 15 years, outlaying trillions of dollars in consumer and business spending. But U.S. manufacturers looking to take advantage of the massive opportunities in these markets will need to exercise innovative thinking and develop new competitive strategies.
According to a recent report from McKinsey Global Institute, annual consumption in emerging markets will reach $30 trillion by 2025, a trend that will offer "the biggest growth opportunity in the history of capitalism." Moreover, the two leading emerging economies - China and India - are "experiencing roughly 10 times the economic acceleration of the Industrial Revolution, on 100 times the scale - resulting in an economic force that is over 1,000 times as big.
Seizing this opportunity will be complex, but not impossible. What can industrial firms, particularly U.S. manufacturers, do to compete successfully in emerging markets?
Emerging markets are characterized by a large and growing class of middle-class consumers. Those with newly built wealth are ready to spend it on major purchases, like automobiles, luxury goods, and electronics.
This opportunity requires that companies rethink their business strategies. "The value consciousness of emerging-market consumers, the diversity of their preferences, and their sheer numbers mean companies must rethink every aspect of operations, including product portfolios, research and development, marketing, supply chain management, and talent development," McKinsey notes.
Making analytical comparisons between key regions is a necessary step, and McKinsey recommends surgically targeting "urban growth clusters." Brute-force tactics might lead to a focus on major markets like Beijing, Mumbai, and Sao Paulo. But over the next 15 years, nearly half of world GDP growth will come from 440 emerging-market cities, many of them lesser-known midsize metropolitan areas.
Read the full article online at the Industry Market Trends website.
