Future success: megacities of more than 10 million set to provide big business opportunities
THE BIG PICTURE
As much as 60pc of the world's population will live in urban areas by 2030, with so-called 'megacities' becoming increasingly important for businesses.
Understanding the make-up of these cities can help companies carry out appropriate strategies in order to achieve future success.
A megacity is one made up of more than 10 million inhabitants.
By way of contrast, the population of Dublin, Ireland's largest city, is just over one million, while Cork, the second-largest, has a population of around 190,300.
Two years ago, 26 of the world's 33 megacities were in developing countries, the majority of these found in China and India. This trend is set to continue with five of the next six megacities expected to be in the developing world, according to a paper from market research group Euromonitor.
While megacities in developing countries have grown rapidly, cities in developed countries will remain more affluent, continuing to be the key consumer markets of the future.
Taking disposable income as an example of this, in the South Korean capital of Seoul, which is the least well-off megacity in the developed world, disposable income stands at $53,000 (€46,860).
Meanwhile in Shanghai, the richest emerging megacity, household disposable income is lower at $50,600 (€44,735).
However, developing-country megacities will present other possibilities
Population ageing, which has traditionally been associated with the developed world, will become a feature in Asia Pacific countries, bringing opportunities with it.
One key growth industry among the older Chinese population is travel, where domestic and international tours specifically tailored to the elderly are rising in popularity.
Here, Tourism Ireland hopes that the number of people from this potentially lucrative market holidaying in Ireland will increase, helped by the launch of direct flights between China and Dublin announced last summer.
In Africa, a continent that is quickly becoming urbanised, the middle class that is emerging will be an important feature of future consumption growth.
This population growth will in turn increase demand for goods and services.
However, the paper warns that the African continent faces a number of challenges related to overcrowding, congestion and air pollution, all of which will need to be addressed to prevent counterproductive effects from urbanisation.
Other key challenges facing new megacities in developing countries include upgrading infrastructure, as well as providing housing and employment to people migrating to cities.
In order to combat this, the paper says that smart city initiatives will be needed.