The Business of City Competitiveness_Greg Clark

The Business of City Competitiveness

Greg Clark

ICCA

Antalya, November 2014

© The Business of Cities Ltd

Questions to delegates 1

Are we living in an age of cities? Yes No

Are businesses re-urbanising? Yes No

Is the visitor economy re-urbanising? Yes No

Do congresses and conventions help

cities to be competitive? Yes No

Is this well understood by City Govs? Yes No


Cities and Business – A Rapidly Evolving Relationship

Cities and commerce have always been inextricably linked …..

….. but rapid and continuing urbanisation and globalisation are changing the bonds between the two.


What are the big new trends between cities and business?



Trend 1 Cities are Emerging Markets for Businesses

Trend 2 Businesses are (Re)Urbanising

Trend 3 The rise of Tradable Urban Services

Trend 4 Businesses rebranding for city markets and consumers

Trend 5 Cities are Hubs of Business Innovation

trend 6 Businesses are restructuring to meet City goals

Cities are Emerging Markets for Businesses • Size of the global metropolitan market

• 70% of world population of 9 billion by 2050

• 70 million people per year added to developing world cities

• 2 billion strong ‘consumer class’ in emerging market cities by 2025

World’s Urban Population in 2050 Source: UNICEF


Cities are Emerging Markets for Businesses • Shift in nature of economies and products

• Technology is shifting which sectors globalise and how they do so

• Growth of service economies encourages commercialisation of urban space

• Cities are the natural habitat of innovation (Glaeser, Florida, Hollis, Katz)

• Customers of increasing importance • Expansion, upgrading, replacement of infrastructure = €27

trillion over next 25 years (Booz Allen Hamilton) • Smart Cities market = $400 billion by 2020 (UK government) • Building and retrofit – demand for advanced technology and

innovations in design, finance, and delivery of city systems • Purchasers of huge range of services from legal advice to

landscaping


Why are businesses

moving back to the city?

Demographics and lifestyle

Transport and safety and education

Improvements

Changing Working Practices

Sustainability Concerns

Policy-driven and market incentives

(eg trade)

Technological Advances

Opportunities to collaborate


Businesses are (Re)Urbanising

Rise of Tradable Urban Services

• Industries which support city building and growth have become important tradable economic clusters e.g. Planning, architecture, design, energy, water, infrastructure, engineering, waste management, housing development.

• Businesses emerged to meet the urbanisation needs of (now) mature cities.

• Now, rapidly internationalising to support the growth of emerging cities.

Sydney: Engineering and Construction to Dubai and Abu Dhabi

London: Architecture and Urban Design Worldwide

Paris: Water, Waste and Energy to African cities

Masdar City, Foster + Co Masterplan Zaha Hadid deisgn for Abu Dhabi Performing Arts Centre


Business Brands in City Markets

Sustainability / Eco-Cities

Siemens GE

Arup Bombardier

The ‘City of the

Future’ Audi

Deutsche Bank Microsoft

Atkins GDF Suez

Liveability Mercer

Monocle Grosvenor

Global Cities JP Morgan

Aecom AT Kearney

Smart Cities + Networks

Cisco Ericsson

IBM Cap Gemini Bird + Bird


Cities are Hubs of Business Innovation Urban Spaces Encourage Business Knowledge Networks to Form Why?

• Density – brings businesses together for idea exchange

• Assets – developed transport and comms networks enable increased business contact

• Institutions – (Universities, incubators, development agencies) overcome co-ordination problems and sustain networks

Examples

• Tech – Lisbon, London, Tel Aviv, Berlin, Amsterdam, Nairobi

• Fashion – New York, London, Amsterdam, Milan

• Life Sciences – Dundee, Dortmund, Boston

• Creative and Media – Seoul, Manchester, Shanghai, Lagos


Cities are Hubs of Business Innovation Cities as Test Markets

• The most cosmopolitan cities are microcosms of the global market – ideal locations for developing / trialling products

• Some cities promote their role as regional test markets - Invest in Brussels: city representative of the European Market

- Jakarta – densely populated, high consumer confidence, testing ground for emerging markets

• Others have become renowned as national test markets - Columbus, Ohio – US fast food

- Bangalore – product testing for Indian market

• Diverse labour forces develop content which translates across cultural barriers


Corporate Urbanising Structure: Internal Reorganisation

• Cities divisions e.g. Siemens ‘Infrastructure and Cities’ sector

• Representatives in target cities e.g. Bank of America ‘Market Presidents’

• Internal city advisory functions e.g. KMPG Cities Global Centre of excellence

• City strategies e.g. Air BnB

• CRM to manage interactions with cities

“Cities are a key growth market for the future. By establishing the Infrastructure & Cities Sector, we’re clearly gearing ourselves to the market. We have the portfolio, the know-how and the consulting expertise to make cities of all sizes greener and more competitive…..”

Roland Busch, Siemens Managing Board, Infrastructure & Cities Sector CEO


Associated trends

• Tourism is re-urbanising

• Housing is re-urbanising

• The Knowledge Economy is re-urbanising

• Dıplomacy ıs re-urbanısıng

• Retaıl ıs re-urbanısıng

• Urban Real Estate is now an Investment Asset


What part does being a city of conventions and congresses play in becoming a successful competitive city?


2010 metropolitan population:

© The Business of Cities Ltd 2014

2050 metropolitan population:


Waves of cities in globalization

Cities (re)entering a global path

1492-1650 Antwerp, Genoa, Istanbul, Venice

1650-1780 Amsterdam, Guangzhou, London, New York

1780-1850 Berlin, Paris, Birmingham

1850-1914 Bilbao, Liverpool Manchester, Rotterdam, Vienna

1945-1973 Munich, Seoul, Singapore, Tokyo, Toronto

1985-2007 Bangalore, Barcelona, Chicago, Sydney, Tel Aviv

2010- Colombo, Nanjing, Brisbane, Sao Paulo….

Leadership with a

Worldview

Enabling Government

History of Global Orientation

Distinct Specializations

Adaptability to Global Dynamics

Culture of Knowledge

and Innovation

Opportunity and Appeal

Connectivity

Securing Investment for

Priorities

Compelling Brand

Identity

Brookings Global Cities Initiative

10 Traits of Globally Fluent Cities


City Typologies

As categorised in the State of European Cities Report 2007

? ?

Openness

>$25bill

$10-25bill

$4-10bill

24

PARIS

NEW YORK TOKYO

LONDON

Seoul

Hong Kong

Singapore

San Francisco San Jose

Los Angeles Washington DC

Sydney

Melbourne

Shanghai

Beijing

Moscow Stockholm

Hamburg Berlin Frankfurt Munich

Calgary Toronto

Boston

Houston Taipei

Chicago

Where is the money going? Top 30 cities for direct commercial real estate investment 2010 – 2011

Source: Jones Lang LaSalle

Rio de Janeiro

San Diego

Oslo


Types of Globalising Cities i. Established world cities ii. Emerging world cities iii. New World Cities iv. High Quality of life Cites v. Specialised centres vi. Port and airport cities vii. Visitor destinations viii.Knowledge hubs ix. Re-emerging capital cities x. New gateway cities

Vote 2: Which one these most resembles your city? © The Business of Cities Ltd

What is a type? Origins Performance Aim Path Point in cycle

26

Growing gap between big six and the rest

Los Angeles is falling fastest

Washington DC and Vienna are very strong all-round

Established World Cites

Established World Cities ingredients of success? • At core of post-1945 global economic system – capital, law, rules and standards and

language

• Strategic locations in globalising economy: hubs and gateways

• Political stability - commercial interests rarely overridden for long.

• Long record of investment in key assets attractive to people + business

• education, research, safety. and telecommunications.

• large air/sea connectivity platforms

• Reputations as ‘safe havens’ for entrepreneurs, families, and capital.

• Record of tolerance and diversity.

• Range of skills, information and experience to constantly adjust

• World-class higher education institutions.

• Compelling brand: linked with vibrancy, professionalism, opportunity

Emerging World Cities

30+ large or fast-growing cities competing for:

• Investment

• Financial and business services

• Air and port gateway roles

• Mobile talent

• Inter-regional relationships

Where are they improving?

• business climate (Taipei, Jakarta, Santiago)

• talent retention/attraction (Shanghai)

• infrastructure overhaul (Moscow, Istanbul)

• Long-term strategic planning (Sao Paulo)

• Investment in and promotion of culture (Istanbul)

• Building international organisational presence

(Nairobi)

Top cities by GDP in 2030

Source: Oxford Economics

29

Emerging world cities hierarchy

Beijing and Shanghai lead the charge

Buenos Aires and Sao Paulo in close contention, Istanbul and Kuala Lumpur climbing rapidly

Indian cities have fallen behind others

Smaller secondary cities do well, large megacities struggle

Emerging World cities: a typology?

Nearly transformed

• Dramatically upgraded infrastructure • Fast growing average GDP • Improved services to low-income groups • Addressed most business climate issues

Beijing, Shanghai, Dubai

‘Big 8’ competitive heavyweights

• Regional commercial centres • High investment rates, project pipeline • Challenges of liveability, infrastructure supply

Moscow, Istanbul, Sao Paulo, Mexico City, Taipei, Istanbul, Buenos Aires, Bangkok

High potential, weakly governed megacities

• Large markets, local entrepreneurship • Governance fragmentation or low political

effectiveness • Major inequality and poverty challenges

Mumbai, Jakarta, Manila, Nairobi

Agile, specialised secondary centres

• Rising up value chain • High share of well-educated workers

Warsaw, Bangalore, Shenzhen, Santiago

Struggling megacities • Large governance and economic development problems

Kinshasa, Dhaka, Lagos, Karachi

25 High quality of life (HQoL) cities

• Adelaide

• Amsterdam

• Auckland

• Barcelona

• Berlin

• Boston

• Brisbane

• Calgary

• Cape Town

• Copenhagen

• Frankfurt

• Melbourne

• Munich

• Perth

• San Diego

• Seattle

• Singapore

• Stockholm

• Sydney

• Tel Aviv

• Toronto

• Vancouver

• Vienna

• Zurich

What unites high quality of life (HQoL) cities?

i. Attractive climate, scenic assets

ii. Comfortable commute

iii. Authentic culture with strong sense of belonging

iv. High quality of amenities

v. Walkable and inclusive communities - broad access to housing

vi. Multiple sectors of employment

vii. Liveability has become part of city identity and DNA

viii.They compete on specialisation and QUALITY

Not strict groupings Lots of crossovers



Benchmarking, Rankings and Indices

Urban performance management

through indexes

Diagnostic assessment

Comparative pegging

Pedagogy

Leverage and persuasion

Home truths

Produced by commercial outlets, but increasingly used by cities themselves:


Urban Benchmarks and the Convention/Congress Economy

Different kinds of city succeed in the conference economy

i. Established world cities ii. Emerging world cities iii. New World Cities iv. High Quality of life Cites v. Specialised centres vi. Port and airport cities vii. Visitor destinations viii. Knowledge hubs ix. Re-emerging capital cities x. New gateway cities Many others

ICCA Ranking Average

Benchmark Ranking

Cities of Opportu

nity

AT Kearney Global Cities Index

Globalisation and

World Cities Index

Mori Global Power

City Index

EIU Hotspots

Paris 1 4 6 3 4 3 4

London 7 1.4 1 2 1 1 2

Seoul 9 13 14 12 6 20

Beijing 18 17.6 19 8 8 14 39

Sydney 20 12 9 14 9 13 15

Stockholm 21 23.8 7 33 43 16 20

Shanghai 29 20.4 20 18 6 15 43

Kuala Lumpur 33 34.2 17 53 22 34 45

ICCA Ranking

Average Benchmark

Ranking

Cities of Opportu

nity

AT Kearney Global Cities Index

Globalisation and

World Cities Index

Mori Global Power

City Index

EIU Hotspots

Istanbul 8 35.4 25 28 29 21 74

Buenos Aires 14 32.5 24 20 26 60

Bangkok 20 42.5 42 38 29 61

Singapore 21 5 3 9 5 5 3

Hong Kong 23 5.8 8 5 3 9 4

Tokyo 26 6.8 13 4 7 4 6

Toronto 32 12.6 4 13 17 17 12

New York City 64 1.6 2 1 2 2 1

Chicago 65 13.6 10 7 11 31 9

San Francisco 65 20 5 22 28 32 13

Moscow 70 29 21 17 14 35 58

Strong correlation between ICCA and all-round benchmark performance

Low correlation between ICCA and all-round benchmark performance

Urban Benchmarks and the Convention/Congress Economy

The underperformers

ICCA Rank Average

Benchmark Rank

Difference between ICCA

and Benchmark

Average

Hong Kong 23 5.8 -17.2

Tokyo 26 6.8 -19.2

Toronto 32 12.6 -19.4

Moscow 70 29 -41

San Francisco 65 20 -45

Chicago 65 13.6 -51.4

New York City

64 1.6 -62.4

• Established world cities such as Hong Kong, Tokyo and New York punch well below their weight

• US cities under-represented • Why? Different explanations:

costs? visas? point in cycle? nearby competitors?

The over-achievers

• Capital cities in emerging nations

• Popularity of Latin American cities

• Unique historic and scenic destinations

• Why? Novelty value? Affordability? Facilities? City appetite?

ICCA Rank Average

Benchmark Rank

Difference between ICCA and

Benchmark Average

Buenos Aires 14 32.5 +18.5

Bangkok 20 42.5 +22.5

Istanbul 8 35.4 +27.4

Budapest 17

Rio de Janeiro 26

Warsaw 34

Panama City 36

Santiago 37

Lima 42

Athens 47

Bogota 50

Florence 51

Cape Town 52

Richer cities do not dominate conference market

• Middle-income cities perform above expectations

• High income US cities less attractive

• Paris and London vibrant conference economies despite high costs

Quality of life just one factor in the conference sector

• Remoteness a disadvantage for some HQoL cities (Vancouver, Melbourne)

• Climate assets boost Madrid and Lisbon despite lower quality of life.

• Large emerging cities succeed despite infrastructure/QoL challenges - Buenos Aires, Istanbul

Visitor destinations have an advantage

• Gateway cities (London, Hong Kong and Paris) and tourist hubs tend to do well

• Buenos Aires and Seoul buck the trend (continental magnets?)

Brands more decisive in European cities, less so in Asia

• The best city brands (eg London, Paris) tend to perform well

• Stockholm, Sydney, Toronto do not fully leverage their brands for conference economy

How do congresses and conventions fit with the different competitiveness strategies of different cities?


City Profile: London (Est…. World City)

ICCA Rank 7

Average Benchmark Rank 1.4

Real GDP /capita ($US 2012) 53,000

Euromonitor City Destinations 4

• London’s conference economy is crucial to its gateway functions

• It supports its numerous airports, and hospitality industry

• Reveals London’s new edges

City Profile: Barcelona New World City

ICCA Rank 4


2thinknow innovation cities index 56

• Barcelona’s conference economy helps anchor a new leading sector: mobile technologies

• As the city further develops its telecoms base, the conference economy will continue to thrive

• Adds technology to visitor brand

City Profile: Vienna New World City

ICCA Rank 3


AT Kearney International Political Engagement 7

Mercer Quality of Life 1

• Vienna’s density of international political institutions, especially UN offices, makes it a major conference destination – alongside its high quality of life

• Gives Vienna backs it global DNA

City Profile: Buenos Aires Emerging World City

ICCA Rank 20

Average Benchmark Rank 32


Cities of Opportunity Technology Readiness 20

• Buenos Aires’ strong conference economy is helping its regional ambitions in a more integrated Latin America.

• It also supports its growing digital economy, key to its ‘modern city’ strategy, which aims to improve urban management through digital solutions

• Positions BA as the Smart World City in Lat Am

City Profile: Bangkok Emerging World City

ICCA Rank 14



Euromonitor City Destinations 3

• Bangkok’s conference infrastructure helps the city diversify its economy beyond tourism

• Aim to build capacities in trade, science, R&D and innovation

City Profile: Dublin (knowledge hub)

ICCA Rank 13


EIU Hotspots ‘Human Capital’ 1

• Conventions reinforce Dublin’s start-up economy ambitions and its specialised knowledge in health and education sectors

• Improves business amenities

City Profile: Singapore (Est… World City)

ICCA Rank 21



EIU Hotspots ‘Global Appeal 4

• Singapore’s conference economy is crucial to its brand as a city that is ‘open for business’, thus helping it maintain its global appeal.

• Allows Singapore to be regional decision making centre

For different types of cities convention and congresses can contribute different things

Type of City Vale Added for City Competitiveness

London Est World City Reveals new edges for London. You think you know London?

Barcelona New World City Links Technology and Business to Tourism. From ‘post card to business card’.

Vienna New World City Gives Vienna back it global DNA Where decisions wee made before

Buenos Aires

Emerging World City The smart world city in Lat Am (not so much congestion as those Brazilians………..)

Bangkok Emerging World City Diversification of the economy Challenge perceptions

Dublin Knowledge Hub Excellence in medicine, technology, and education in a small city.

Singapore Est World City A regional decision making centre © The Business of Cities Ltd

What conventions and congresses contribute to city competitveness?

i. Infrastructure and connectivity

ii. Multi-lingual labour force

iii. Amenities and cultural investment

iv. Global recognition, visibility, and acceptability

v. Competitive instinct

vi. Service culture

vii. Identity and affinity

viii. Openness

These are all advantages to cities in other aspects of their competitive development. Cities need visitor economy ın order to develop well. It help all types of internationalising cities.

Think about London, New York, Paris: they are successful cities with strong tourism.

Remember Miami, Barcelona, Singapore: they are new leaders where tourism has been a catalyst.

Visitor Economy can be a great friend or a danger for city development. Optimise its value and avoid lock-in!

1st, 2nd, 3rd and 4th Cycle Dynamics

1st Cycle

Projects & Physical Renewal

Promote the city

Tourism

Events

FDI

2nd cycle

Assets

Strategic plans

Specialist Agencies

City brand

Larger Events

New funding tools.

Entrepreneurship

Economic development.

3rd cycle Managing growth and diversificataion

Internal governance reforms

Business Friendly City

Investment Ready City

Innovation

Universities

Shaping the future

PPPs

Metropolitan sphere

Broader leadership

Integrated brand

Summits

Internationalisation

4th Cycle


Managing success at the international scale Competitive benchmarking Eco-system management Business Leadership Dealing with growth and externalities External governance reforms. Global Summits Signature events

Recent city cycles, 1970s to 2014

• Eg. Barcelona

• Tourism --> Creativity and enterprise --> Exports, tech, students

• Eg. Singapore

• Low-end production --> High-value science --> wider services/creative

• Eg. Tel Aviv

• Technology cluster --> Finance/capital ecosystem --> Talent attraction

• Eg. Brisbane

• Commodities boom --> Infrastructure platform --> Diversification

Identity, Vision, and Metro Brands

Identity

Integration

Visitor Brand

Investor

Business Brand

Citizen

Resident Brand

Innovator / Leader

Brand


Are Cities Like Businesses?

• Compete in contested markets

• Innovative use of financial resources

• Clearly defined goals

• Networking

• R & D, Innovation and Investment

• Human Capital

• Brand

• Leadership


Are Cities Like Businesses?

• Risk taking is controlled

• Poor fit between institutional and market geography

• Complex governance arrangements

• Cannot choose ‘customers’

• Cannot choose products and services

• Citizens have wider range of interests than customers

• ‘Profit’ is retained by other tiers of Gov

• City leaders: • democratically elected and accountable • may have limited power.

• Identity and brand shaped by others

• Do not ‘fail’ to the point of extinction © The Business of Cities Ltd


i. Established world cities ii. Emerging world cities iii. New World Cities iv. High Quality of life Cites v. Specialised centres vi. Port and airport cities vii. Visitor destinations viii. Knowledge hubs ix. Re-emerging capital cities x. New gateway cities

Vote 3: Which one these most resembles your city?



Does your city have a competitiveness strategy that fits its cycle? Yes/No

Do conventions and congresses feature in that strategy? YES NO

Does your city have a convention and congress strategy that matches its type? YES / NO.

Is the role of conventions and congresses in building your city’s competitiveness clear and accepted by all? YES / NO

Is your city optimising the role of conventions ad congresses for its competitiveness? YES / NO


www.citiesandregions.com 61

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The Business of City Competitiveness_Greg Clark