China's Seniors Will Reshape the World
For decades, Nestle SA has tried to get its infant milk powder into the hands of China's new mothers with promises of brighter, healthier babies. Now it's trying to do the same for the elderly. Last week, the company launched "Nestle YIYANG Fuel for brainTM senior milk powder," a formula designed to help China's seniors "refuel their brains and start a new smart life."
The announcement didn't get quite the hype that products targeted to China's millennials do. But it may yet prove more consequential. With 222 million people over age 60, China is home to the world's largest population of seniors, and their economic clout is set to surge in the years ahead. By one estimate, the value of products and services geared toward them may reach 33 percent of gross domestic product by 2050.
If that trend holds, caring for seniors will be China's dominant industry by the middle of the century, and old folks will be its defining demographic. That presents plenty of challenges for the government -- but also some major opportunities for business.
Seniors are already playing a key role in shifting China's economy away from exports and toward consumption. Fan Min, president of China's biggest online travel site, predicts they'll be the primary drivers of the country's tourism market within a decade. About 5 million of them are traveling overseas annually, with that number expected to more than double by 2030. As they venture out, the travel industry is adjusting to their demands (by offering more group tours and cheaper accommodations, for example). And it's not just tourism: In recent years, businesses ranging from car companies to online marketplaces have built features marketed to China's elderly.
Health care is another industry that may be transformed. Unlike Japan and Western Europe, China is aging before it has grown rich enough to develop the institutions -- such as nursing homes -- needed to sustain a large senior population. Increasingly, the private sector is stepping in. For those who can't afford to travel overseas, private preventative care is becoming much more common. Elsewhere, companies are developing "smart care" products, in which internet-connected devices track the health of customers. Beijing is expanding a program that uses a discount shopping card to monitor seniors while applying data analytics to anticipate their needs.
Nestle clearly understands these trends. At the launch of its new senior milk powder, a company official told the press: "As an old Chinese saying goes, 'Diet cures more than the doctors.'" Long-term, that attitude -- combined with investments in health-focused artificial intelligence and big data by companies such as Alibaba Group Holding Ltd. and Baidu Inc. -- may well reshape the health-care industry, both in China and globally.
But the area where China will have the biggest influence on the market for senior services will likely be housing. As of 2015, China had an average of only 26 nursing beds for every 1,000 seniors. Over the coming decades, it's unlikely that the government will be able to build -- much less staff -- nearly enough facilities to meet the demands of its growing elderly population. As a result, it will need to develop new and more creative models for senior care.
That might mean more automation (there's at least one robotics pilot program in Hangzhou). It could mean home care that's supported by a network of internet-dispatched delivery services (especially for food). And it will surely mean an expansion of smart monitors and technology to interpret the data they collect. Given the size of the potential market, there's reason for optimism that China's entrepreneurs can figure out low-cost models that work at home -- and quite possibly overseas.
For China's current generation of seniors, having come of age at a time of global isolation and domestic hardship, that's a level of influence few could have imagined in their youth.
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