Urbanisation is coming to you, faster than you expect

The Redwood Blog
Published:  26 March, 2014
Mike Redwood

Hidden on a remote part of the South coast of England there is a private island owned by a rather nice hotel where my family like to spend a few days each year. The author, Agatha Christie wrote "Evil Under the Sun” and “And Then There Were None” while staying on Burgh Island. The one thing you notice in this rural seaside setting is the total absence of people. 

It is easy for many of us in the leather industry to miss the acceleration of urbanisation going on in the world as we try and locate our tanneries and private lives away from the world’s huge conurbations. Certainly we do have to travel to and through major cities so this is not isolation but it is different from living with what is happening all over the world. For many of us an annual visit to APLF Hong Kong has been an important part of assessing how to respond to the speed and direction of change in Asia.

Arriving back there for the 30th edition next week we will all again be present in one of the most of most dynamic global cities. We are all acutely aware of the developments that have occurred just a short way into mainland China and lately far beyond. China has been a focal point for leather for more than two decades as a manufacturing centre and now increasingly as a top consumer, especially of expensive items. Yet in Hong Kong the feeling it gives of a dynamic Asian city gives us little appreciation of the unprecedented migrations that have been taking place in China.

Just thirty years ago China was clearly an agrarian society. Less than 20% of its huge population lived in cities. In what has been the fastest transformation ever, Chinese subsistence farmers and their families have rushed from their farms into cities taking China to its current position of being 54% urban. Just last week China announced that they want at least another 100 million people to make the same transition, and by 2030 this will be about 300 million - roughly the population of the USA.

We will all be living in cities soon

But this is not just happening in China. Urbanisation is a global trend of enormous magnitude. Studies suggest that it is a good thing: that it increases wealth, slows population growth and improves the health of citizens. This is why the OECD predicts we will have 1.7 billion middle class consumers in Asia by 2020 and 3.2 billion by 2030. Not as wealthy as those in the west who like to class themselves as middle class, but wealthy enough to have disposable income and chooses as to whether they buy items in leather or not.

Without question this move to cities and out of poverty is something, which will accelerate in all parts of the world. The author of "Ten Billion", Danny Dorlich, talks in terms of Megacities with populations of 32 million people. We have some successful enormous cities in the world today, such as Tokyo, but the example he uses is the Chinese city of Chongqing. When the semi-rural hinterland is included the population of Greater Chongqing is already over 30 million and by 2045 he expects the world to have 280 such cities with everyone on the planet living in one. That is as long as we accept a definition like Chongqing where a mega city is a collection of large cities with very large hinterlands. The sort of thing the Economist has been talking about for years when looking at parts of the Rhine Valley in Germany and the Greater Rotterdam/Amsterdam area of the Netherlands (although for the latter to get to 32 million you have to add in Belgium and parts of France and Germany).

These are fun calculations to do but they have big implications. These new consumers will have lost their links to the land and to agriculture. We are already seeing that lots of urban consumers do not link leather to cows. We have joked that they think milk comes from shops and cartons. Now it is serious. Often youngsters do not see real cattle until their teenage years. We cannot assume they will start off their lives as consumers with any knowledge of leather at all. Indeed we must plan for the reverse.

Education, education, education

These new young consumers will need help to make the correct choices. Leather is our lifeblood. If we want to ensure we can prosper in the future this is something tanners cannot delegate to our customers. This has becomes central to our job. Marketing communications are not about hard selling; they are about relentless education.

Mike Redwood

mike@internationalleathermaker.com

Follow Mike Redwood on twitter: @michaelredwood

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