According to a report by consulting firm McKinsey, annual consumption in emerging economies will rise to $30 trillion by 2025 – nearly half the global total. Yet today, the developed world’s largest companies get only 17 percent of their revenues from these new markets.
The report says that despite advantages in scale, technology, and access to capital, multinationals risk missing out on the century’s defining growth opportunity. In “Winning the $30 trillion decathlon,” McKinsey points out that many executives are in fact struggling to hold their own against local upstarts. That anxiety is reflected in their companies’ performance in emerging markets.
“In 2010, 100 of the world’s largest companies headquartered in developed economies derived just 17 percent of their total revenue from emerging markets — though those markets accounted for 36 per cent of global GDP and are likely to contribute more than 70 percent of global GDP growth between now and 2025
“In 15 years’ time, almost 60 percent of the roughly one billion households with earnings greater than $20,000 a year will live in the developing world. Even under the most pessimistic scenarios for global growth, emerging markets are likely to outperform developed economies significantly for decades,” the report says.