China’s ‘Silver Economy’ is booming amid declining birthrate

Li Dongmei had successfully run kindergartens and schools for young children for over ten years, navigating the challenges posed by China’s low birth rate. However, by 2020, she felt the full impact of the country’s declining population, leading to a significant drop in the enrollment of babies and toddlers in her schools. The social and economic upheavals caused by the COVID-19 pandemic marked a turning point for her, prompting her to shift her focus to a different and more promising market: the Silver Economy.

The 30-year-old now teaches singing, dancing, music, and art to the elderly at her education center in Jinan, a city in eastern China. She attends to that and takes her students on various fun activities and educational trips. Unlike schoolchildren who are on summer and winter break, Li said the older people attend classes all year round, and the classes are fully booked. A 36-year-old Li said, “The biggest one is the silver economy. It is even larger than the children’s market.”

Business Opportunities in China’s Expanding Silver Economy

The authors argue that, over the decades, China’s aging population will drain the energy and vitality of the world’s second-largest economy. Nevertheless, the negative consequences of demographic changes have already manifested themselves for Chinese companies that are oriented to children. An increasing number of them are either downsizing or transforming their strategies.

Many companies that formulated formula for China’s infants are now in the process of coming up with powdered milks for our seniors. Owners of preschool and kindergarten are shutting down preschools and kindergartens to open senior citizen homes. A technology firm previously developed communication gadgets that would enable parents to monitor their young kids; the same firm is now developing gadgets to enable grown kids to monitor their aging mothers and fathers.

Although China’s birth rate has been rapidly declining for quite some time now, the country recorded the first negative population growth rate in 2022. For the first time again last year, more people died than were born, while the population of people aged 60 years and over surpassed 290 million, or 15% of China’s total population. According to China’s National Health Commission, this age bracket will reach well over 400 million around the year 2035. To counter this challenge, China said on Friday that it has agreed on a bill to increase the country’s statutory retirement age for the first time in the 1950s.

China has been attempting for decades to delay their demographic disaster. It abolished its one-child policy in 2016 and also provided several en-makes some people believe that it has one of the best policies on childbearing among the world’s countries. However, the recent economic crisis that the country has faced provides youth with more reasons to doubt the possibility of supporting more children in their families.

The first worry is that there will be fewer babies and, hence, a smaller labor force, which will reduce taxes and put pressure on health care as well as pensions. In a guideline issued in 2021, the State Council or the Chinese Cabinet encouraged the promotion of an aging consumption market and elderly-friendly industries.

Li, the education executive who has closed her schools for children, now provides classes to seniors; one of them is how to walk like fashion models on the ramp. Li said she educates her students on how to become popular social media personalities with lessons on short videos. Similarly targeting the older customers, Xinjiang Tianrun Dairy, the state-owned enterprise, bought a local competitor last year to develop powdered milk products for the middle-aged and elderly.

Nestlé, the Swiss food and baby food manufacturer, was quick to join this list when it attributed its decision to shutting its infant formula plant in Ireland to the dramatic reduction in the birth rates in China in the previous year. It and Chinese dairy firms have developed new heat-treated powdered milk products for elderly powders with health benefits such as the prevention of muscle waste, promoting sleep, and assisting in digestion.

Yili Group, a Chinese-based dairy company, is advertising its products via television ads on APPs targeted at seniors. In one, a young couple purchases special powdered milk, not containing cane sugar, to offer to their relatives during Chinese New Year celebration.

It’s not just milk. Since 2013, the Chinese cybersecurity firm 360 Security Technology has been producing smartwatches for children that can let the parents call their children and track their movements and their internet activities. In 2019, responding to the advent of an aging society,” the firm launched wrist watches with blood pressure and pulse oximetry, a seniors’ location tracker, as well as a single-button emergency call.

The size of the expanding seniors market is now compelling the strategic direction of the one-time child- and parent-focused Chinese firms, according to He-Ling Shi, an associate professor of economics at Monash University in Melbourne, Australia. He said, “They have no choice.”

China’s birth rate continues to drop, with this year’s figure hitting 9 million, 5.63% below that recorded in 2022. The enrollment of students declined, and the number of preschool children reduced by nearly 12%, says the Ministry of Education of China. Cai Hao began purchasing baby clothing, toys, and several other products through a maternity and baby goods store in 2018 in Shijiazhuang, the capital city of Hebei province in China. His store initially began stocking garments and hosiery for infants and toddlers.

A surge of newborns in the years after China adopted a two-child policy soon fizzled out, and the pandemic hurt foot traffic into the store. “There were no customers,” Cai said. “Without children, customers had no reason to shop here.” Then a few years ago, customers started to ask whether his store carried powdered milk for older people. Figuring he didn’t have much to lose, Cai began to stock it. Sales grew, so he added different varieties, including one for diabetics and another for people with hypertension.

Cai said that he never made a strategic decision to start targeting older customers, but that about 10% of his sales now come from dairy products for seniors. He added, “Who wouldn’t be willing to sell more if they could?”

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