New Money In New PlacesNitin Sumangali |
The rise of the BRICS economies is an old story, cited in many places for many years. These days it’s become more important and more interesting to tighten our collective lenses down one level and look at the changing economic dynamics of cities. Across the BRICS markets, there are world-class economic and cultural cities— São Paulo, Moscow, Mumbai, Shanghai, and Johannesburg are among the world’s most vigorous metropolises. However, to judge the future strength of these countries by their alpha cities may be missing a critical step. Some new research shows that smaller cities in the BRICS are witnessing wealth accumulations that are changing the equation.
According to a report by WealthInsight cited by The Atlantic magazine’s business website Quartz, smaller cities in the BRICS economies are the site of a fast growing number of ultra high net worth individuals—$30 million and up. The examples cited make the case that these smaller cities are crucial for anyone who does business in these countries.
Chongqing, China, reports the most dramatic growth of multimillionaires of any city in the BRICS—an 80 percent increase to 96 from 2007 to 2011. More broadly, the city’s economy grew at 15.8 percent last year, outpacing China’s overall growth of 10.5 percent. Chongqing is tied with Tianjin as China’s fastest growing city. Chonqing is also an industrial city, the third largest auto producer in China.
The city of Pune, India is also a car town. Both domestic car makers like Tata Motors and foreign players like General Motors, Volkswagen, Mercedes Benz, and Fiat, all have manufacturing operations in the city, according to Quartz. Pune now is the sixth highest per capita income metro area in India, right behind Mumbai.
Belo Horizante in Brazil has benefited from the mining and auto industries, including global steel giant ArcelorMittal and car maker Fiat, both based in the city. Belo Horizonte has become the country’s fourth largest economy and the fastest growing population of ultra millionaires.
These three cities are also diversifying into more knowledge-based industries. The city of Chongqing is investing $236 billion over the next three years to develop industries like electronic communication and medical equipment. Google has established one of its Brazilian offices in Belo Horizonte. Pune has a thriving IT sector and is a hub for German companies who locate in India.
The increase in wealth outside of the major cities implies the power of consumers in these markets isn’t only in the capitals or business centers. Smaller cities are experiencing strong growth in markets around the world, and they are developing a mix of both industrial and knowledge-based economies they will be able to continue to improve the quality of life for residents. The more urbanization continues in developing markets, the prospects for commerce improve and the quality of life for residents gets better.