About two-thirds of the population of the 10-member Association of Southeast Asian Nations (Asean) will reside in small cities and urban centers by 2025 —a phenomenon that may shift the balance of economic power away from the region’s mega cities.
According to a new report by international market research firm Nielsen, increasing business activity, cross border trading and demographic shifts will drive population growth in some of Asean’s smaller cities—defined as those with population of 500,000 or less.
The Nielsen report—The Age of Asean Cities: From Migrant Consumers to Megacities—dubbed these growth areas as the “sleeping giants” of the next decade.
“New consumption hotspots are emerging across Southeast Asia, such as clusters of industrial estates where manufacturers are leveraging cheaper land and labor,” said Regan Leggett, Nielsen director for Southeast Asia client services. “This in turn is having a knock-on effect of attracting migrants and stimulating local economies.”
The study noted that many consumers would continue to gravitate to mega and super cities, which would experience a 32-percent growth rate in population over the next 10 years. But the biggest population growth will occur in cities with population of between 1 million and 5 million.
Across Asean, the combined population of these cities will increase by 51 percent between now and 2025, from 34.9 million to 52.6 million people.
In the meantime, the population in large towns and small cities of less than 500,000 will increase by 18 percent to 231.8 million which, when combined with the estimated 324.3 million rural population, will account for some 80 percent of total Asean population.
Leggett said looking beyond Asean’s megacities to understand future consumer hotspots was the most powerful starting point in identifying emerging economic opportunities and the strategic approaches and segmentations needed to approach new markets.
He cited Johor Bahru and Kota Kinabalu in Malaysia and Cebu in the Philippines as examples of regional cities with burgeoning potential.
For marketers and brand managers, the smaller population centers throughout the region are important growth markets, with healthy demographics and an emergent middle class.
The Nielsen report also noted that the conditions prevalent in local areas— such as infrastructure and transport, and access to technology and education— have significant influence on consumer behavior and patterns.