The rise of Asian smart cities

Jonathan Woetzel, McKinsey global institute director, senior partner based in our Shanghai office and co-author of the Future of Asia, discusses the increasing importance of Asian cities on the world stage and how they drive Asia’s participation in global flows.

What are the top trends influencing Asia’s rising share of global flows and networks?

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Asia is becoming much more important globally as Asia cities become more important globally. Because cities are where we invest, it’s where we innovate, it’s where we trade.

So, it’s really a function of how fast that happens, where it happens, and how it happens.

So, whether we’re talking about a Hai Phong as an industrializing city, or Kunshan as a technology city, or Dhaka as a manufacturing and labor-intensive economy—those cities, in turn, drive whether and how Asia participates in its global flows. And so I see this as a great experimentation. As cities find themselves and Asia discovers who it is, it’s cities evolve, and that in turn creates a new perception and a reality of Asia in the world.

How should companies and governments prepare for this next phase of globalization?

Well, it’s going to be a lot more complex as we go forward. I think Asia as a context is becoming more dynamic, but it’s also becoming more granular. So, companies need to—if you will—get their fingers dirty. They have to get into the muck of Asia to understand each and every little cluster, how it’s growing, and what it will take to win.

That implies changing your sales force, changing your distribution approach, and investing in local talent, but also in local technologies. So, Asia is a patchwork: it’s united by the fabric of the region, but it’s still important to become local. And so being local, being relevant, rethinking the operating model is the number one priority for companies in Asia.

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