The year 2020 has begun in an unexpected way. The rapid spread of the new coronary pneumonia (NCP), which originated from Wuhan, has had a great impact on the life, health and social economic development of the people in Hubei and Wuhan in particular.
As the elderly population is susceptible to the epidemic, the impact on the elderly industry has been particularly strong. Ageclub recently interviewed front-line companies and found that some elderly tourism companies had their operations paused in an instant. Some elderly universities had their offline operations temporarily shut down and switched to online, and some consumer goods enterprises were unable to start their factories.
Although the impact of the epidemic will last for a period of time, it will eventually be overcome. This industry will gradually adjust and the general trend of China’s economic transformation and upgrading will continue to be positive.
After years of nurturing and development of the elderly industry, the Internet, consumer goods, media, health care and other fields of outstanding talent began to enter the elderly industry. Therefore, we position 2019 as the real starting point of innovation and entrepreneurship for the elderly industry. Overall, we see the following 9 innovation trends in the senior care industry in China.
1. The elderly population is growing faster than expected.
First, let’s look at a set of Statistics: looking at the age group of over 50, the elderly population increased by 15 million to 16 million in 2019, to 441 million. Start with the year of birth: there are 16.35 million born in 1959; 14.02 million born in 1960, and 9.49 million born in 1961: a significant decline because 1959-1961 coincided with the Great Chinese Famine.
Since then, 24.51 million people were born in 1962, and more than 25 million were born between 1963 and the 1970s. That means that the number of people over 60 starting from the year after next will rise to more than 20 million a year. Let’s look at the number of babies born: 15.23 million were born in 2018 and more than 14 million were born in 2019. So there will be a crossover when the increase in older adults exceeds the increase in infants.
At the present, many entrepreneurs are concentrated in the market for mothers, babies and children. We believe that with the precipitous decline of newborn babies, the silver hair market will receive more attention, more capital will enter the elderly industry, and the market will enjoy faster growth.
2. The middle-aged and the elderly are huge in size deserving attention to niche segments.
Currently in China, 17.8% of the population are over 60 years old and 30.2% of the population are over 50 years old. But on a more nuanced scale, Shanghai is ageing faster, with 34.4% of its population aged 60 and over, that is more than Japan.
This means China’s elderly industry is very complex. There are different types of seniors, for example in first-tier cities, there are quite a number of senior citizens with high income levels. Their cultural taste and consumption habit are different. We should further break down the population based on the great diversity in age distribution, educational background, occupation, income level, city classification, interest classification, etc.
3. The core business model of the elderly industry is "change".
What we have been emphasizing for China’s elderly industry is "change". It is not divided according to the age, but by the change of the old man’s idea and consumption behavior. In our in-depth interviews with "new" senior population, it is obvious that these changes are taking place. They are changing from paying attention to their children to paying attention to themselves; from low-cost consumption to quality consumption. They prefer to shop on platforms such as Netease and JD.com, as they feel the quality is better. They like to dress themselves from drab clothing to more colorful and fashionable choices; from rejecting new technology to embracing it; from going out alone to becoming social.
This change will lead to more consumption of products, such as plaza dancing shoes and sports shoes; from simple material pursuit to spiritual and cultural pursuit; from fear of being deceived to slowly daring to try new things.
After entering the age of the Internet, TV shopping companies have been hit with great losses. Some companies in recent years witnessed steep revenue declines at the rate of 30%-40%. Once senior users get used to the Internet, they find that there are far more choices on the Internet than on any other platform.
Seniors are spending less time on TV to plaza dancing, senior college and travel. In addition, media channels, consumer psychology has changed, values have changed.
4. The year of 2019 is the beginning of innovation and entrepreneurship
We think that 2019 is the first year of entrepreneurship in China’s elderly industry, in large part because of the two analyses we did. The first we did in 2015 that found tools and companies focused on plaza dance received financing from investors. The second was based on Wechat and its ecosystem. The elderly began demanding for a large number of tool-based products.
Starting in 2019, as opportunities in the senior industry have been reconfirmed, there are quite a number of entrepreneurial talents in a variety of fields, including executives from Internet giants Alibaba, Tencent, Baiud and Bytedance,
We are seeing talents from e-commerce, retail department stores, entertainment media, health care, online education, Internet/IT, traditional consumer goods entering the senior industry. It is a clear trend that there will be a lot of good projects coming out soon.
Overall, many elderly people in China now live alone in empty homes as their children are away from home or abroad. They have a strong need for emotional companionship. For example, pet consumption among Japanese elderly people is very large, while in China, more and more elderly people are also seen walking their dogs. They spend RMB1,000-2,000 yuan a month on their pets as an emotional sustenance.
Elderly companion robot is another potential growth engine. Japan has a lot of this product. They are not the kind of large robots sold for tens of thousands of dollars, but hundreds of dollars, such as robot cats, robot dogs and small companion robots. You can buy it or rent it. It could be a potentially big opportunity down the road.