As some areas of the globe become over-farmed, over-populated, or otherwise reach their maximum potential, others gain prominence for their unexploited potential.
This megatrend, known as ‘Shifting Market Frontiers’, will shape the future strategies of global companies across multiple industries. To ensure future growth, businesses will have to adapt to the changing demographic, economic and technological reality that brings new markets from frontier into the spotlight.
By 2030, emerging and developing countries will account for almost half of global GDP and 86% of the population.
With the rising importance of emerging markets, increasing interest in frontier markets, and fears over advanced economy stagnation, the global economy has witnessed a paradigm shift. The turning point was in 2008 when emerging markets overtook developed countries for the first time in their contribution to world GDP in PPP terms.
Euromonitor International predicts this trend will continue with emerging and developing countries accounting for two-thirds of global output by 2030. There will be six emerging markets in the 10 largest economies in the world in 2030.
Shifting economic power: Asia and Africa are at the centre
As western markets reach their maturity, interest is set to shift to areas offering more potential. Fast developing economies of Asian and African countries are at the centre of ‘Shifting Market Frontiers’. Asia is set to become the world’s largest economic region in the coming five years, with China leading the way. While Africa will be home to 13 out of 20 fastest-growing economies globally over 2017-2030. Multi-national companies will increasingly see their key revenue streams coming from Asia Pacific and the most lucrative opportunities arising in the underdeveloped African markets.
China is a case in point, with market saturation and competition intensifying in China’s major cities, businesses must shift their interest to fast growing mid-sized cities. Rising business investment, increasing disposable income, better infrastructure and the growing adoption of high-speed internet have laid the foundations for mid-sized city growth in China. For example, the city of Xiamen on China’s southeast coast will triple its consumer market size in real terms by 2030, making it larger than Rome, Munich or Barcelona.
However, a mid-sized city strategy is not without its challenges. The major hurdle for foreign companies will be establishing consumer recognition and distribution channels in areas that were previously underdeveloped.
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