World Monitor Magazine June #3 - Page 132

additional content 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 126 world monitor 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