GLOBAL CITIES PROVIDE A VIABLE CITY-CENTRIC EXPORT OPPORTUNITY THAT WILL HAVE A MAJOR IMPACT ON EXPORTS IN THE NEXT 20 YEARS
1. Statistics show that 20 mega cities in the world account for 75% of the carbon emissions of all cities.
2. Mega cities will become increasingly larger in the future because the world is becoming more heavily urbanized.
3. A recent projection in Australia alone shows how urbanized cities will be. The NSW Govt has announced that Sydney will have approx. 9.2 million people by 2036. This is half of today’s population in Australia, and it will happen in the next 28 years.
4. The world population is moving from rural areas to urban areas. The rate is 30,000 people a day. In the next short term, 500 million people will move into cities in the world, and many of these will be into mega cities.
5. In the past, we used to talk about populations in countries, populations in provinces, states or regions. This will change because the major consumer demand will be in cities.
The implication to exporters is obvious. Over the last 30 years of working with exporters, they tend to concentrate on country populations to carry out their estimates and viability estimates. They tend to look at growth in terms of country growth, and they tend to look at large populations as major draw cards for launching products or expanding their local domestic product or even their international or export products.
This type of thinking has always been a problem for consultants because we always have to “hose down” how people think about markets in order to reduce the target market to a manageable size, and one that can be attacked in terms of traditional and online marketing strategies.
A typical example is America. Many Australians see the market as the USA. Another is China. When they think about going to emerging markets, they will nominate China. Only in some cases will they nominate Beijing, Shanghai, Fujian, Szechwan or Kumming. Even then, they tend to group 2-3 cities together, without realizing the total demand that will be created if they are successful in that market, and the large costs associated with building a marketing channel, and targeting the market in an efficient and cost effective way.
Obviously large markets take up a great deal of marketing funding, and they have to be well thought out if they are to be harnessed correctly, and if they are to be opportunistic for the exporter.
The new figures on urbanization are therefore sobering and welcome.
1. What they suggest is, that while in the past many exporters have been lucky in terms of going to “countries” or large “regions”, this will no longer be viable or practicable. The large cities themselves represent huge target markets, and they provide a huge challenge in terms of distribution, market reach, communication strategies, consumer adaptation etc. They, themselves, will pose a huge challenge for emerging exporters.
2. On the other hand, it is great news for those who want to plan and execute a proper Export Plan. These individuals or companies will be able to nominate 2-3 large cities in what was an unwieldy and often daunting marketing task, such as “going to the USA”.
They can now concentrate their thoughts, processes, funding, strategies and effort around a more controllable, and more defined market built around a major metropolitan city center. Once they get to understand the distribution, the role of middlemen, the supply chain, how logistics and transport work to and from ports or airports, and how online and information systems work, they are in an excellent position to be able to penetrate these markets without huge costs, with concentrated marketing activities, and with the ability to track and monitor their success or failure more accurately.
From an export point of view, it means that more and more of the teaching and thinking about exports for emerging new technologies, elaborately transformed manufactures, and consumer products, as well as value added agribusiness based products such as wine, dairy etc., can be more properly channeled into these markets.
This represents a great opportunity for the smarter exporters. Taking the US for example, they can choose 2-3 cities that are very close in proximity, and they can choose a region where there is high population growth and movement to the urban cities. They can also isolate those metropolitan cities that have re-defined the bottom line in terms of sustainability, product usage, air quality etc., and they can identify those areas where not only will the product be consumed and be a viable export, but they can identify those where there is truly a contribution to the reduction in carbon emissions, air quality etc. – something which will favour Australia as a country that has always been able to be on the “clean and green” list.
In addition, the economies of having more concentrated distribution systems, direct flights to the major cities so there is not huge costs in meeting distributors and agents over long periods of time, etc. etc., creates greater economies, and with it great opportunities through concentrated consumers in a small areas that reduce distribution, handling costs etc.
Together with the ability to reach the world, markets and individual contacts via Google and other search engines, the cost of planning and executing export development for SMEs is realizable. With the concentration of large export markets in major cities, the vision of exporting is becoming more manageable, and attractive to the more entrepreneurial SME managers.
Web based strategies and platforms, apart from being necessary in today’s world, are a great investment because you are targeting major urban areas with fast broadband capabilities and educated/online focused customers at all levels in the supply chain.