I posted last week about the City 600 and a new report by McKinsey Global Institute on the world’s 600 largest cities and their vital importance for international marketing. Today I would like to look at what those 600 cities are going to look like in the year 2025. McKinsey distinguishes between the whole City 600 group and a subset of the 100 largest, the City 100. Fifteen years from now, the City 100 will account for about 35% of the world’s GDP growth – while the City 600, as a whole, will boast 60%, leaving only 40% of GDP growth for the rest of us in “smaller” cities and rural areas. The next 400 cities after the City 600 will add about 6% of GDP growth, so it is pretty clear which city markets to focus on for most goods and services.
230 cities that are in the City 600 today will drop out by 2025, replaced by a burgeoning group of cities all from today’s emerging markets. No new developed market cities will make it to the City 600 and many from the developed world will drop out. This means the entire center of gravity of global trade is about to shift to a greater extent than ever before seen in history. China will dominate the list, with 216 cities that will soak up 30% of world GDP growth. The developed world certainly won’t disappear (98 North American cities will account for close to 10% of GDP growth), but the world’s focus will be on developing markets.
The McKinsey report provides a fascinating table that shows the top 25 world cities in 2025 in various categories. Let me give you a taste. The top cities in raw population are not too surprising, led by Tokyo, Mumbai and Shanghai. New York, Tokyo and Shanghai will lead in GDP. But then it starts to get interesting. The table for the top cities in GDP growth is led by Shanghai, Beijing and New York, and contains sixteen Chinese cities in the top 25 (greater Chinese actually, since these include Taipei and Hong Kong).
The table for the top cities in per capita GDP is where you will find the cities you would never have guessed would be there. Norway takes three out of the top five (Oslo, Bergen and Trondheim)! Doha is #2 and Macau is #4. Three South Korean cities (Hwasŏng, Asan and Yŏsu will be in the top ten for per capita GDP.
The implications of these changes for marketing and investment strategies are staggering. McKinsey points out that the present strategy of most multinationals to focus on developed countries and the megacities of the emerging markets will have to change to a global city-by-city approach, with more and more of their effort going to the emerging market cities where the highest growth will take place. That implies concentrating on today’s middlewieght cities that are growing faster than today’s megacities. McKinsey defines megacity as a metropolis with more than ten million people, and today there are only 23 of these behemoths. There will be 13 more by 2025, seven of them in China. The only new developed world city that will achieve megacity status by then will be Chicago. The action is in the emerging markets.
Next we will take a look at some marketing trends likely to appear in the cities of the future.