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No, the question is not whether some of the world’s fastest-growing economies will somehow become less consequential this year. The issue is whether the current lexicon around emerging markets — a term coined 37 years ago by an economist at the International Finance Corporation of the World ngân hàng — will finally be retired in favor of language that better reflects the reality of these economies today.
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Surely it"s time for the term "emerging markets" to be replaced by a descriptor that better reflects these economies today.
Let’s face it: the term emerging markets is out-dated relative to many of the biggest countries it’s trying to describe. It is too gradualist, perhaps even colonial. It’s time to lớn adopt more useful descriptors of the nature of these markets. Updated terminology will help better frame how people think about these fast-moving societies and their role in the world. We must dispel the notion that these markets are largely followers, simply aiming to catch-up with more “developed” nations. Indeed, in many areas these markets are now leaders. We’ll come lớn those shortly. But let’s start with some simple facts:
A Significant cốt truyện of Global Trade. Emerging markets accounted for only 10% of global trade in 1970; today they hold a 30% share, & that number is expected lớn grow to lớn over 40% by 2050. In fact, using Purchasing nguồn Parity (PPP), a measure that compares & reconciles economies on a more relevant basis, nearly half of the world’s đứng top GDPs come from 12 markets that the world still calls “emerging”.
Emerging Markets Feature in the World’s đứng top 10 Economies. On an individual market basis, china is now the world’s second largest economy, behind only the US. India is projected to lớn be a US$2.87 trillion economy this year – bigger than the UK, France, and others. This should come as no surprise; china and India alone tài khoản for 40% of the world’s labour force and population. And Brazil, while publicly hobbled in recent years, is still the world’s 8th largest economy at US$2.1 trillion. Other major economies such as Korea và Indonesia feature on the menu of $1 trillion economies.
Imagine the English Premiere League calling the number 2, 5, & 8 teams in their ranking anything other than First Division sides. It’s a bit silly, really.
Velocity Markets – A More Appropriate Descriptor of Change
What’s needed now is terminology that recognizes the defining character of change in these markets – velocity. As we argued in Ogilvy’s Velocity 12 Report, the term describes more than GDP growth; it reflects the rapid social, lifestyle, và economic changes that result from, & help further create, the conditions for growth in these markets. It also reflects the fact that many of these markets will continue to lớn change faster than people expect, as they transform into majority middle-class markets over the next decade.
As you begin khổng lồ think velocity markets instead of emerging markets, there are several facets of these markets khổng lồ consider & factor into your plans:
Velocity Markets Will Define the Future in More Areas of Business và Society.
In a number of areas, velocity markets are creating the future:
Smart Cities. Experts suggest that Asia could become the world’s leading region for smart city development. High demand for smart cities is expected khổng lồ increase largely due to increasing environmental challenges, energy unpredictability, và the strain on infrastructures. Singapore is the world’s no. 2 smart city, while Tokyo is number 6. China announced that 500 of its cities would be smart, or would at least be undergoing smart đô thị transformations, within 2017.
Biomedicine. According lớn Reuters, eight of the World’s Most Innovative Research Institutions in 2017 were in Asia, six in North America. Trung quốc has invested vast amounts of money in science over the past two decades. In 2015, China’s biomedical research teams ranked no. 4 on the vị trí cao nhất 10 danh sách (versus no. 14 in 2000) for the total number of new discoveries published in six top-tier journals.
Mega Urbanisation. Of 28 mega-cities (10 million + inhabitants), 16 are located in Asia, four in Latin America, three each in Africa and Europe, & two in Northern America. The largest are in Asia; Tokyo remains the world’s largest thành phố with 38 million inhabitants, followed by Delhi with 25 million, & Shanghai with 23 million. This is followed by Mexico City, Mumbai & São Paulo, each with around 21 million inhabitants.
Digital Commerce và Cashless Societies. China is now recognized as leading the world in the drive to lớn e-commerce & a cashless society. Thanks to the tremendous growth of China’s “BAT” companies – Baidu, Alibaba, and Tencent – Chinese consumers have their lives fully integrated with digital platforms. Alibaba is the largest online và mobile commerce company in the world, with half a billion consumers buying more than $547 billion in goods & services, và 100,000 brands and 10 million small businesses currently using its platforms. As Alibaba expands through acquisition, it will be a powerful mã sản phẩm for development in other parts of the world, such as South East Asia.
Velocity Market Policy Makers Are Taking the Lead with a Vision of Global Growth.
Change is increasingly driven by leaders in the biggest velocity markets, who have an expanded sense of their role in the world. At a time when North America is seen khổng lồ have turned inward, key leaders are stepping forward to fill the void as champions of greater integration & globalization.
China’s One Belt, One Road initiative is an economic and diplomatic program that is projected to transform global trade và become the world’s largest platform for regional collaboration. It impacts nearly 65% of the world’s population, about a third of the world’s GDP, and around 25% of all the goods & services the world moves.
In Davos, Chinese President Xi Jinping’s right-hand man, Liu He, took to the stage to outline China’s plans to lớn shape the world economy. He said china had tried to open its financial markets over the past year, và spread globalisation through its Belt và Road Initiative. Alibaba founder Jack Ma also spoke at length about some of the key challenges facing the world.
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They weren’t the only ones. Indian Prime Minister Narendra Modi also made a center-stage speech at Davos, warning against climate change, terrorism and the backlash against globalization as the three most significant challenges facing civilisation as we know it. His presence – a first in trăng tròn years for an Indian Prime Minister – is a sign of India’s increased presence on the world stage.
Modi’s appearance was immediately followed by the annual India-ASEAN meeting, hosted in India. This provided him with the opportunity to press on with India’s Look East policy, designed khổng lồ cultivate economic & strategic relations with ASEAN và bolster its standing as a regional power. This approach is welcomed by countries such as Thailand, which has its own xứ sở của những nụ cười thân thiện 4.0 policy, aimed at providing a new growth engine for the country.
These points simply illustrate the macro trend; velocity markets are creating growth with và amongst each other, in addition to trade with “developed” markets. The US, Europe, and nhật bản will increasingly have khổng lồ find their role amongst these increased ties between the velocity markets.
Velocity Market Societies in Transformation.
Economic growth — particularly the emergence of more middle-class consumers — sets the basis for greater social participation và change. This is resulting in a generational shift in interests, lifestyle, & outlooks, and giving velocity lớn important segments within these countries’ populations.
Empowering More Women. The increase in education for girls, along with a substantial drop of birth rates in countries such as India, has optimised conditions for on-going social và lifestyle changes. This is increasingly empowering women as consumers, social commentators, and activists.
East and Southeast Asia have an adult literacy rate of 96%, while trung quốc has more college students than any other country in the world. Further, generations of Chinese women và men have grown up in a society which fully recognises gender balance; 64% of women in trung quốc work, compared with 54% of women in the UK & US. While there are still pronounced gender gaps in many countries, women are growing as the agents of change.
Going forward, women will act as the key social instigators and entrepreneurs, with purchasing power nguồn bridging cultural, religious & demographic divides. According to lớn velocity market research, 85% of women across 12 velocity countries believe there are more career opportunities than before, và 83% believe more women have opportunities to lớn start their own business. Look khổng lồ women as a key audience of growing influence và direct purchasing power.
Muslim Futurists. There is a continued rise of the Muslim middle-class consumer in a variety of segments of the economy. The Muslim beauty market is expected to lớn reach $21.4 billion in Asia-Pacific by 2024, & $52 billion globally by 2025. Halal cosmetics trương mục for more than 10% of the global halal market, with Asia-Pacific responsible for the lion’s share of Halal beauty’s overall revenue. There is also a rise in Halal tourism và Muslim travellers. In 2016, according to the data of the Global Muslim Travel Index (GMTI) about $155 billion was spent by Muslim travellers representing 13% of total global travel expenses. There were 121 million Muslim tourists in 2016, with 168 million expected by 2020.
Yet research also shows that many Muslim consumers bởi vì not feel that companies sufficiently recognize them in their communications or hàng hóa offers. They represent a huge growth potential in the future.
Socially Connected Consumers. Asia has the world’s highest number of internet và social-media users, far surpassing other regions, according to We Are Social and Hootsuite’s Digital in 2018 report. Eastern Asia alone has 947 million internet users, almost triple the number of internet users from North America. As a whole, Asia-Pacific has 2 billion internet users (slightly less than half of its 4.2 billion population), 1.8 billion active social-media users, và 1.7 billion active sản phẩm điện thoại social users. As important as the overall scale of usage is the penetration of use; Thais & Filipinos average more than 9 hours a day online (the global average is six hours).
Velocity market consumers enjoy the nguồn of connectivity to lớn a global grid of commerce, influence, and social interaction, which means that many velocity market consumers have the same access to lớn information, utility, & competitive options as higher income markets. So, while they are diverse, they live in a world that has levelled the global sale playing field. As a result, middle-class consumers of the coming decade will have a more accelerated understanding of their options than prior generations of middle-class consumers, plus a megaphone for expressing their tastes & opinions. Marketers need lớn be ready to interact with these socially connected consumers, who are far from “emerging market” newbies when it comes to brands.
Velocity Markets Will Demand More of Companies.
The middle-class & emerging middle-class in these velocity markets represent a social tapestry of greater ethnic, linguistic, cultural và religious diversity than previous generations of middle-class consumers in the West. This will place new demands on companies to navigate less familiar markets. Rather than seeing them as emerging markets and emulating a development pattern of other countries, companies need to understand the uniqueness và diversity of these markets, which will continue as a central facet of their national characters.
The over of the emerging market mentality signals the start of truly capturing the velocity market opportunities of the future. It’s time to lớn recognize and embrace the degree to lớn which velocity markets will increasingly lead the world, not follow it.
1 https://easyparkgroup.com/smart-cities-index/ 2 đài loan trung quốc Internet Network Information Center. Statistical Report on internet Development in China. June 2017 3 đài loan trung quốc Academy of Information & Communications Technology, Ministry of Industry and Information Technology. July 2017 4 Nielsen – What’s Next for China’s Connected Consumers – A Roadmap for Driving Digital Demand
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