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swaths of geography — IKEA, for
example, has had to keep its stores
close to urban public transportation
systems. But there is a growing market
for e-retailers that are able to innovate
by offering must-have products and
convenient service to customers far
away from major cities. The B2C online
retail market in the six largest growth
markets — China, India, Indonesia,
Brazil, Russia, and Mexico — is
predicted to more than triple from
2015 to 2025, topping $2.5 trillion,
according to a 2016 survey fromCredit
Suisse Research (pdf), and much of
that growth will come from rural and
semi-urban areas.
Transport and
Communication
In many growth markets, the scale
and quality of both transportation and
communication infrastructure is below
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what is needed to facilitate and sustain
high growth. The Asian Development
Bank (pdf) estimates that in Asian
economies, a 10 percent increase in
road density and paved roads would
result in a 1 percent increase in trade
flows and a 5 percent improvement in
economic growth.
From now until 2020, the Asia-Pacific
region is expected to spend $3.5 trillion
on transport infrastructure, or about
60 percent of all global spending
between 2016 and 2020, according to
PwC’s projections. Latin America and
Africa are coming on strong as well.
During this period, the investment
in infrastructure projects across
growth markets will offer innumerable
opportunities for engineering and
construction companies as well for
those that service these contractors.
The logistics sector is another area
where growth markets lag, and as a
result have not been able to keep up
with the surge in demand for trade,
especially in South Asia and Africa.
This imbalance, coupled with local
complexities, has helped spur the
growth of so-called third-party logistics
providers, or 3PLs. These third-party
services can provide companies with
the chance to expand their market
reach as well as lower costs in markets
where the logistics infrastructure
isn’t well developed. The growth of
e-commerce is expected to stimulate
these outsourced services, which
include domestic and international
transportation, warehousing, freight
forwarding, and customs brokerage,
as well as more advanced tasks such
as supply chain consultancy, inventory,
and fleet management and IT services.
Indonesia provides an example of how
3PL providers have stepped into the
breach, especially when it comes to
last-mile connectivity. The provider
JNE, for example, delivered on average
4 million e-commerce packages per
month in 2014–15, 40 percent of which
were delivered outside Jakarta. To
reach the remote corners of this nation
of 17,000-some-odd islands, JNE use
7,000 motorcycles and 2,000 vans, as
well as hired trucks and boats.
Likewise, telephone and Internet
connectivity improves GDP growth
in low-income and middle-income
markets. Opportunities for network
infrastructure companies will grow,
thanks in part to national governments’
greater focus on expanding digital
connectivity. The gap between
urban and rural penetration of
mobile telephones is dramatic. In
rural India, for example, there are
only 51 subscriptions for every 100
people, whereas in urban India, the
subscription rate was 148 per 100
people as of April 2016, according to
figures from the Telecom Regulatory