Investments  

Sex and the city – the rise of urban populations

It will not surprise many people that the growth rates of the world’s major cities significantly outstrip the countries in which they sit.

What may surprise is the extent of the difference. In the 15 years up to 2014 the population of Shenzhen rose from being a fishing village of 30,000, to a city of more than 15m – making it the most crowded in China. Visit Shenzhen today and posters grandly proclaim the “15th history of Shenzhen” much as New York might celebrate its 390th anniversary or Shiraz in Iran its 2,000th.

Even more startling is that, while everyone expects China’s gross domestic product to catch up with the US sometime in the mid-2020s, looked at from the perspective of the biggest cities, the race is almost over: Shenzhen already has more middle-class households than Chicago. Indeed, Los Angeles is likely to be the only US city ranking in the top 25 cities by growth in 2025.

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For the first time in history we live in an urban society where more than 50 per cent of the world’s population live in cities and generate more than 80 per cent of GDP. In developing markets that trend still has a long way to go before reaching the same levels as the developed world (80 per cent). In the 21st century, while heavily indebted national governments have virtually no room for fiscal manoeuvre, the power of cities is only going to increase. In the Kotlers’ words: “City building, not nation building, has been the key to the rise of emerging markets”. The key point about all of this for marketeers is that multi-national companies will play a critical and powerful role in this.

The book makes no pretence at raciness and in this it succeeds. In fact, it is a pretty dry read, though one that can be consumed in only a few hours. One of the best passages in the book highlights the extent of the challenge facing corporations: “Global marketeers have to become geographers, anthropologists, sociologists and economists, as well as business managers”. In recent years several books have been published on the topic of cultural sensitivity and adaptation in this new 21st-century world. If there were ever any doubt, it is now clear that Western corporations and employees will need a much broader range of skills than they have grown used to – possibly at any time since the building of the New World itself.

The book goes on to attempt an explanation of the opportunities and challenges for MNCs (as well as municipalities and national governments on the other side) to promote themselves and benefit from the massive growth opportunities, and combines this with action plans. In this it succeeds.

Julian Ide is chief executive of Old Mutual Global Investors