Let’s face it: the term emerging markets is out-dated relative to many of the biggest countries it’s trying to describe. It is too gradualist, perhaps even colonial. It’s time to adopt more useful descriptors of the nature of these markets. Updated terminology will help better frame how people think about these fast-moving societies and their role in the world. We must dispel the notion that these markets are largely followers, simply aiming to catch-up with more “developed” nations. Indeed, in many areas these markets are now leaders. We’ll come to those shortly. But let’s start with some simple facts:

A Significant Share of Global Trade. Emerging markets accounted for only 10% of global trade in 1970; today they hold a 30% share, and that number is expected to grow to over 40% by 2050. In fact, using Purchasing Power Parity (PPP), a measure that compares and reconciles economies on a more relevant basis, nearly half of the world’s top GDPs come from 12 markets that the world still calls “emerging”.

Emerging Markets Feature in the World’s Top 10 Economies. On an individual market basis, China is now the world’s second largest economy, behind only the US. India is projected to be a US$2.87 trillion economy this year – bigger than the UK, France, and others.  This should come as no surprise; China and India alone account for 40% of the world’s labour force and population. And Brazil, while publicly hobbled in recent years, is still the world’s 8^th largest economy at US$2.1 trillion. Other major economies such as Korea and Indonesia feature on the list of $1 trillion economies. [i]

Imagine the English Premiere League calling the number 2, 5, and 8 teams in their ranking anything other than First Division sides. It’s a bit silly, really.

Velocity Markets – A More Appropriate Descriptor of Change

What’s needed now is terminology that recognizes the defining character of change in these markets –velocity. As we argued in Ogilvy’s Velocity 12 Report, the term describes more than GDP growth; it reflects the rapid social, lifestyle, and economic changes that result from, and help further create, the conditions for growth in these markets. It also reflects the fact that many of these markets will continue to change faster than people expect, as they transform into majority middle-class markets over the next decade.

As you begin to think velocity markets instead of emerging markets, there are several facets of these markets to consider and factor into your plans:

Velocity Markets Will Define the Future in More Areasof Business and Society.

In a number of areas, velocity markets are creating the future:

Smart Cities. Experts suggest that Asia could become the world’s leading region for smart city development. High demand for smart cities is expected to increase largely due to increasing environmental challenges, energy unpredictability, and the strain on infrastructures. Singapore is the world’s no. 2 smart city, while Tokyo is number 6. China announced that 500 of its cities would be smart, or would at least be undergoing smart city transformations, within 2017.

Biomedicine. According to Reuters, eight of the World’s Most Innovative Research Institutions in 2017 were in Asia, six in North America. China has invested vast amounts of money in science over the past two decades. In 2015, China’s biomedical research teams ranked no. 4 on the top 10 list (versus no. 14 in 2000) for the total number of new discoveries published in six top-tier journals.

Mega Urbanisation. Of 28 mega-cities (10 million + inhabitants), 16 are located in Asia, four in Latin America, three each in Africa and Europe, and two in Northern America. The largest are in Asia; Tokyo remains the world’s largest city with 38 million inhabitants, followed by Delhi with 25 million, and Shanghai with 23 million. This is followed by Mexico City, Mumbai and São Paulo, each with around 21 million inhabitants.

Digital Commerce and Cashless Societies. China is now recognized as leading the world in the drive to e-commerce and a cashless society. Thanks to the tremendous growth of China’s “BAT” companies – Baidu, Alibaba, and Tencent – Chinese consumers have their lives fully integrated with digital platforms. Alibaba is the largest online and mobile commerce company in the world, with half a billion consumers buying more than $547 billion in goods and services, and 100,000 brands and 10 million small businesses currently using its platforms. As Alibaba expands through acquisition, it will be a powerful model for development in other parts of the world, such as South East Asia.

Velocity Market Policy Makers Are Taking the Lead with a Vision of Global Growth.

Change is increasingly driven by leaders in the biggest velocity markets, who have an expanded sense of their role in the world. At a time when North America is seen to have turned inward, key leaders are stepping forward to fill the void as champions of greater integration and globalization.

China’s One Belt, One Road initiative is an economic and diplomatic program that is projected to transform global trade and become the world’s largest platform for regional collaboration. It impacts nearly 65% of the world’s population, about a third of the world’s GDP, and around 25% of all the goods and services the world moves.

In Davos, Chinese President Xi Jinping’s right-hand man, Liu He, took to the stage to outline China’s plans to shape the world economy. He said China had tried to open its financial markets over the past year, and spread globalisation through its Belt and Road Initiative. Alibaba founder Jack Ma also spoke at length about some of the key challenges facing the world.

They weren’t the only ones. Indian Prime Minister Narendra Modi also made a center-stage speech at Davos, warning against climate change, terrorism and the backlash against globalization as the three most significant challenges facing civilisation as we know it.  His presence – a first in 20 years for an Indian Prime Minister – is a sign of India’s increased presence on the world stage.

Modi’s appearance was immediately followed by the annual India-ASEAN meeting, hosted in India. This provided him with the opportunity to press on with India’s Look East policy, designed to cultivate economic and strategic relations with ASEAN and bolster its standing as a regional power. This approach is welcomed by countries such as Thailand, which has its own Thailand 4.0 policy, aimed at providing a new growth engine for the country.

These points simply illustrate the macro trend; velocity markets are creating growth with and amongst each other, in addition to trade with “developed” markets. The US, Europe, and Japan will increasingly have to find their role amongst these increased ties between the velocity markets.

Velocity Market Societies in Transformation.

Economic growth — particularly the emergence of more middle-class consumers — sets the basis for greater social participation and change. This is resulting in a generational shift in interests, lifestyle, and outlooks, and giving velocity to important segments within these countries’ populations.

Empowering More Women. The increase in education for girls, along with a substantial drop of birth rates in countries such as India, has optimised conditions for on-going social and lifestyle changes. This is increasingly empowering women as consumers, social commentators, and activists.

East and Southeast Asia have an adult literacy rate of 96%, while China has more college students than any other country in the world. Further, generations of Chinese women and men have grown up in a society which fully recognises gender balance; 64% of women in China work, compared with 54% of women in the UK and US. While there are still pronounced gender gaps in many countries, women are growing as the agents of change.

Going forward, women will act as the key social instigators and entrepreneurs, with purchasing power bridging cultural, religious and demographic divides. According to velocity market research, 85% of women across 12 velocity countries believe there are more career opportunities than before, and 83% believe more women have opportunities to start their own business. Look to women as a key audience of growing influence and direct purchasing power.

Muslim Futurists. There is a continued rise of the Muslim middle-class consumer in a variety of segments of the economy. The Muslim beauty market is expected to reach $21.4 billion in Asia-Pacific by 2024, and $52 billion globally by 2025. Halal cosmetics account for more than 10% of the global halal market, with Asia-Pacific responsible for the lion’s share of Halal beauty’s overall revenue. There is also a rise in Halal tourism and Muslim travellers. In 2016, according to the data of the Global Muslim Travel Index (GMTI) about $155 billion was spent by Muslim travellers representing 13% of total global travel expenses. There were 121 million Muslim tourists in 2016, with 168 million expected by 2020.

Yet research also shows that many Muslim consumers do not feel that companies sufficiently recognize them in their communications or product offers.  They represent a huge growth potential in the future.

Socially Connected Consumers. Asia has the world’s highest number of internet and social-media users, far surpassing other regions, according to We Are Social and Hootsuite’s Digital in 2018 report. Eastern Asia alone has 947 million internet users, almost triple the number of internet users from North America. As a whole, Asia-Pacific has 2 billion internet users (slightly less than half of its 4.2 billion population), 1.8 billion active social-media users, and 1.7 billion active mobile social users. As important as the overall scale of usage is the penetration of use; Thais and Filipinos average more than 9 hours a day online (the global average is six hours).[ii]  People in velocity markets are embracing technology as a tool to accelerate further change in their lives.

Velocity market consumers enjoy the power of connectivity to a global grid of commerce, influence, and social interaction, which means that many velocity market consumers have the same access to information, utility, and competitive options as higher income markets.  So, while they are diverse, they live in a world that has levelled the global marketing playing field. As a result, middle-class consumers of the coming decade will have a more accelerated understanding of their options than prior generations of middle-class consumers, plus a megaphone for expressing their tastes and opinions. Marketers need to be ready to interact with these socially connected consumers, who are far from “emerging market” newbies when it comes to brands.

Velocity Markets Will Demand More of Companies.

The middle-class and emerging middle-class in these velocity markets represent a social tapestry of greater ethnic, linguistic, cultural and religious diversity than previous generations of middle-class consumers in the West. This will place new demands on companies to navigate less familiar markets. Rather than seeing them as emerging markets and emulating a development pattern of other countries, companies need to understand the uniqueness and diversity of these markets, which will continue as a central facet of their national characters.

The end of the emerging market mentality signals the start of truly capturing the velocity marketopportunities of the future. It’s time to recognize and embrace the degree to which velocity markets will increasingly lead the world, not follow it.

¹ https://easyparkgroup.com/smart-cities-index/

²China Internet Network Information Center. Statistical Report on Internet Development in China. June 2017

³ China Academy of Information and Communications Technology, Ministry of Industry and Information Technology. July 2017

⁴ Nielsen – What’s Next for China’s Connected Consumers – A Roadmap for Driving Digital Demand