Topics >  Running a Business >  Growth Strategies > 

New Global Hot Spots

Look beyond Shanghai for the next big thing.

You may never have heard of Chengdu, a city of 4.1 million people in central China. But you will soon. The Chinese government has invested billions of dollars to entice U.S. companies to start doing business in Chengdu and in a dozen other second-tier cities. As commercial capitals like Moscow, Mumbai, and São Paolo become increasingly saturated and costly, governments in developing countries are investing in cities they previously ignored, upgrading infrastructure and establishing free trade zones. Many large companies have already moved their factories, R&D, or back offices into these locales to bask in tax holidays and pull from less competitive labor markets. These smaller spots also tend to boast better urban planning and less polluted environments. So brush up on your geography--here are nine up-and-comers vying to be the global economy's next big thing.

Russia

Yekaterinburg

Population: 1.3 million

Hot industries: Financial services, construction

What's new: For decades, Yekaterinburg's economy has been fueled by oil, natural gas, and metals--Boeing (NYSE:BA), for example, sources titanium from the region. In recent years, income levels have tripled, and the economy has diversified as a result of the new wealth. Now Yekaterinburg is home to a financial services industry and construction, as well as companies manufacturing forestry products like furniture. Spending to upgrade roads and railways is growing in tandem with the city's construction spurt.

Who's doing business here: The Aston Group has been constructing residential buildings in Yekaterinburg since 2004. The company was founded by Andy Welch, an American who bypassed Moscow for Yekaterinburg on the advice of his lawyer, a Russian immigrant.

Poland

Poznan

Population: 568,000

Hot industries: Technology, pharmaceuticals, manufacturing

What's new: Since Poland joined the European Union in 2004, Poznan has emerged as competition for cities like Kraków and Wroclaw, which foreign companies have traditionally preferred. Located midway between Berlin and Warsaw, Poznan will be a central stop on Poland's new east-west highway once construction is finished in 2010. Poznan offers tax breaks and subsidies in its special economic zones. Recent upgrades to the city's international airport are also attracting new companies to the area.

Who's doing business here: Microsoft (NASDAQ:MSFT) and GlaxoSmithKline (NYSE:GSK) both have R&D centers in Poznan; they recruit from the city's 42 science and research institutions and 25 colleges.

India

Ahmadabad

Population: 5.1 million

Hot industries: Information technology, construction

What's new: India's western state of Gujarat prides itself on being a state of entrepreneurs, many of whom gravitate to Ahmadabad, its commercial capital. Although the first wave of India's IT boom passed Gujarat by, the state and its capital have become more aggressive about recruiting businesses. Ahmadabad isn't plagued by frequent blackouts like Hyderabad or traffic jams like Mumbai. And the city has room to grow, as well as several special economic zones.

Who's doing business here: Software developers and IT firms, as well as suppliers for the growing construction industry. "Ahmadabad has a good supply of fresh talent who prefer to stay close to family," which keeps attrition low, says Lakshmikant Goenka, co-founder of Dolcera, a research and consulting start-up. The company is based in San Mateo, California, and has an Ahmadabad office.

Kolkata

Population: 14.3 million

Hot industries: Information technology, construction

What's new: Until the mid-1990s, Kolkata (formerly Calcutta) was synonymous with militant trade unions, strikes, and lockouts. In recent years, however, city officials have become staunchly pro-business. Kolkata, capital of the Communist-led state of West Bengal, is cutting red tape and investing in infrastructure, including a deep sea port modeled after Shanghai's. Kolkata's IT sector is growing 70 percent a year, twice the national average. And Rajarat, a veritable IT township in the city's suburbs, is emerging as a computer-engineering hub similar to Bangalore.

Who's doing business here: IBM (NYSE:IBM) has four offices here. Quaker Chemicals (NYSE:KWR), based in Conshohocken, Pennsylvania, has a Kolkata office as well.