[Senior Trend] Observing Senior Industry Innovation in China ①

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Last month, I visited Shanghai, China, along with the ‘China Senior Business Insight Delegation.’ Having worked in China until 2020, the first year of the COVID-19 pandemic, I had occasionally kept up with changes in the senior industry. Nevertheless, seeing and hearing firsthand about the development of China’s ‘Yanglao Industry’ (elderly care industry) was astonishing. First of all, not only the government but all stakeholders in the industry agreed that it is difficult to address issues arising from super-aging solely through welfare approaches. The problem was not just the demographic structure but the absolute number of elderly people. On August 30 last year, China’s Ministry of Civil Affairs (Minzhengbu) released the ‘2023 Civil Affairs Development Statistical Bulletin.’ In 2023, the population aged 60 and above in China reached 296.97 million, accounting for 21.1% of the total population. It also stated that from 2022 onwards, the population aged 60 and above would increase annually by about 16 million or more for over ten years. The UN projects that China’s population aged 60 and above will exceed 350 million by 2030. Currently, China is the only country in the world with an elderly population numbering in the hundreds of millions. Without economies of scale, cost reduction, and bold initiatives in silver services, the situation looks bleak.

According to China Daily Economic Network, recently 24 government departments in China announced the ‘Measures to Activate Silver Service Consumption and Improve Quality of Life.’ These include 19 measures across five major areas: improving supply and demand of silver services, introducing new forms of silver services, strengthening guarantees for silver service consumption, enhancing development of silver service facilities and products, and creating a safe consumption environment for silver services. In China’s one-party system, government announcements are absolute, so stakeholders will focus on this direction. In January 2020, China’s Ministry of Industry and Information Technology also issued ‘Guidelines to Promote the Development of the Aging Products Industry.’ It instructed the production of senior services for 42 of the most widely used applications by the people, including WeChat, Taobao, Douyin, and Tencent Maps. This was not just about enlarging fonts or changing colors but reducing unnecessary advertisements to shorten loading times and developing ‘senior-exclusive programs.’ It was reported that promoting the development of the elderly product industry is an important measure to actively respond to the new era of population aging.

In 2024, I was able to witness the results on site. Upon arriving at Pudong International Airport from Incheon, I met experts at the China Europe International Business School. I had heard about school closures due to declining child populations in China, and in Shanghai alone, nine elementary and middle schools were closed or merged with others in early 2024. They said the birth rate cannot escape a negative trend. Even in the grandmother’s generation, there were 12 children, but now in large cities like Shanghai, families often have fewer than one child per household. Therefore, it has become difficult for children to collectively support their parents. Moreover, parents live in rural areas while their children live in big cities and are busy, making it difficult to receive family help when actual care is needed due to distance. Regarding this, there is fundamental interest and effort in how to resolve the situation in both public and private sectors going forward. Especially, services and products for the middle class are needed. Very wealthy seniors will find their own solutions anyway, and low-income groups can be cared for from a welfare perspective, but a sustainable business model for the largest population?the middle class?is essential.

According to various definitions in Korea, the ‘age-friendly industry’ is an industry that mainly supplies products and services suitable for the economically capable elderly population and the pre-elderly preparing for retirement through private companies, based on free market economy principles. In China, a similar concept is the ‘Smart Yanglao (智慧養老) Industry.’ In planning services for the elderly, China utilizes advanced technologies such as IoT (Internet of Things), AI (Artificial Intelligence), and 5G (5th Generation Mobile Communication System) based on digital platforms and infrastructure. Service providers believe that cost reduction and efficiency through technology are essential for healthy sustainability. The scope is expanding to premium silver towns, telemedicine, and various financial services. According to China’s Industry Information Network, this market size was 4.7 trillion yuan (approximately 884 trillion won) in 2023 and is rapidly growing every year. Experts I spoke with said that the real estate, insurance, and investment sectors are showing very high interest and are actively involved. The main facility tours and silver industry meetings start the next day, and I am curious about China’s situation, which is moving toward finding a sustainable industrial model rather than the welfare-oriented perspective emphasized in Korea. Recently, ‘Yinfaliang (銀髮力量, Power of Silver Hair),’ emphasizing the importance of silver industry development in China, became a buzzword. In the next column, I will share detailed and surprising accounts of company visits.

Lee Boram, CEO of Third Age

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