What Trends Will Ensure Growth For 3M From Developing Markets In The Future?

3M‘s (NYSE:MMM) international sales have declined over the past five years, and consequently, their share of the total net sales of the company have also been trending downwards. However, the company is focusing on both the developed and developing markets internationally to fuel growth in the future. A number of opportunities need to be identified by the company that can help the company to grow. For example, the transportation market in China is increasing at double-digit rates, and with the company supplying numerous products in this field, the company can take advantage of this sector.

The developing markets constitute approximately 47% of the international sales for the company. 3M wants to grow this to ~50% by 2020, with international sales rising to between $21 billion and $23 billion, from the $18 billion in 2015. Some developing market trends that can help the company have been listed below.

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1. Poor Air And Water Quality

Among the main problems facing developing countries are air and water pollution, which have been the side effect of rapid industrialization and construction growth. Furthermore, environmental factors are a root cause of numerous diseases, disabilities, and deaths in developing nations. According to WHO, these are estimated to cause 25% of death and disease globally, which can rise to as high as 35% in regions such as sub-Saharan Africa. This is one key growth area for the company, as it provides a wide range of solutions to address water quality concerns, including improving drinking water. Its portfolio also includes air quality monitors and air filters, to address such problems.

2. Increasing Food Safety Concerns

Developing countries bear the brunt of food-borne diseases, with a high level of hazards reported in the food available there. A number of studies have shown a higher prevalence of such diseases in developing economies, as compared to high-income countries. 3M can be considered to be a leader in developing innovative solutions to help the food and beverage industry to optimize the quality of their products. The company manufactures food and beverage testing products to ensure the achievement of the highest food safety and quality standards. It also develops environmental monitoring programs to identify and eliminate sources of potential contamination. The company’s Health Care segment is strong and growing at a high pace. It is expected to grow at a CAGR of 5% to 8%, driven by growth in the developing economies.

3. Demand For Infrastructure

In many developing economies, infrastructure needs remain large, and the expected annual investment requirements for such countries in the future is far larger than that for developed countries. Asian countries such as China and India are expected to drive growth in the infrastructure spending in the future. China, India, and Japan together account for 39% global infrastructure investment needs by 2040. China alone is expected to need $28 trillion in infrastructure investment, which is more than half of Asia’s total needs and 30% of global needs. Rising infrastructure demands  also provides significant opportunities for the Safety and Security segment of 3M, wherein products are provided for worker safety, public safety, traffic safety, and public security.

4. Growing Middle Class

The developing world’s emerging middle class is a critical factor as an engine of growth, particularly in developing countries such as China and India, and in sub-Saharan Africa. The global middle class to increase from 3.2 billion by 2016 to 4.2 billion in 2022, and 5.2 billion by 2028, with the bulk of it coming from Asia. Asia is expected to represent 88% of the next billion people in the middle class. Globally, the middle class is already spending $35 trillion (2011 PPP) annually, and could be spending $29 trillion more by 2030, accounting for roughly a third of projected GDP growth (in PPP terms). The Consumer retail business growth of 3M will be driven by this expanding middle class, through its brands such as Scotch Brite, Command, Nexcare, and Futuro.

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Have more questions on 3M? Have a look at these links below:

• What Trends Will Ensure Growth For 3M In Western Europe In The Future?
• 3M Teams Up With Alphabet’s Verily For Population Health Management Tools
• What Trends Will Ensure Growth For 3M From Developing Markets In The Future

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