Going Global, Part 8: Second-Tier Cities, First Rate Growth

Ever thought of doing business in Wuhan? Kunming? Zhuhai? Maybe you should. According to China's National Bureau of Statistics, they're among 14 second-tier cities currently boasting 2 percent higher GDP growth than China's national average. What's more, while these cities comprise only 8 percent of the country's total population, they account for 19 percent of its total GDP.

Yesterday Barry I. Friedman, Minister-Counselor from the U.S. Embassy in Beijing, hosted a round table discussion at the Business Council for International Understanding in New York City, urging entrepreneurs and investors to consider these emerging markets.

Where the Chinese government's development efforts previously focused on coastal megacities like Shanghai and Beijing, Friedman explained, they're now turning their eye inland. Officials have budgeted $125 billion in highways and $160-$200 billion in railways, he estimated, impelled by the mass migration of Chinese from the rural countryside to burgeoning cities. With that growth comes opportunity, both for companies that can help China fulfill its infrastructural needs and for retailers who can meet the rising demand for consumer goods as the spending potential in these cities increases.

China may have downscaled its number of economic development zones, narrowing their attention to 50-60 areas, said Friedman, but many of the zones are located in second-tier cities. Entrepreneurs can benefit from preferential rates on government utilities and land usage, not to mention decreased competition. Big players like Wal-Mart, Wyndham Worldwide, and diesel-engine maker Cummins have already staked their claim.

Unsure if your business is prepared to take the plunge? Take Are You China Ready?, the U.S. Commercial Service's self-diagnostic tool. If this is the first time you're dipping the company toe in global commerce, second-tier Chinese cities might not be the place to start, says Friedman, "They're still very traditional and a little . . . funky."

Looking for other unexpected opportunities around the world? Check out the 21st century treasure map in our global issue. Vintage clothes in Ghana. Tourism in the Marshall Islands. Who knew?

Reporter Nitasha Tiku covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff’s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York. @nitashatiku