China’s Silver Consumers: Growing Opportunities

for UK Companies

1 Key Findings 3

2 OverviewofTheCause&SizeofChina’sAgeingPopulation 4

2.1 Workforce Demographics 4

2.2 Life Expectancy & Birth Rates 5

2.3 Rapidly Increasing Numbers 7

3 China’s Silver Consumers 9

3.1Attitudes,Behaviours&Values 9

3.2 Emerging Trends 11

4 OpportunitiesinKeyMarketSegments 12

4.1ElderlyCareProducts&Services 12

4.2 Consumer Products 15

4.3Travel,Leisure&Entertainment 17

4.4FinancialServices&Products 20

Contacts 24

References 25

Contents

Foreword from the CEO

This report is one of a series of CBBC consumer-focused reports, which have so far also included China’s MiddleIncome Consumers and E-commerce in China.

Todaytherearealreadyaround220millionpeopleinChinaovertheageof60,andthiswillriseto480millionby2050,representingathirdofChina’stotalpopulation.

The report looks at this rapidly growing and increasingly importantconsumersegmentthatmorethaneverbeforehasgreater spending power,more leisure time, improving life-stylesandhigherexpectations. It considers theirdemands,influencesandaspirations,andchangingconsumerbehaviour,to highlight some developing business opportunities andpotentialmarketgapsacrossdifferentsectors.

There are many opportunities for British companies, andmany of our world-class companies are well placed to meet this growing consumer demand in medicine, healthcare,financial products, health food, fashion, beauty products,travelandentertainment.

CBBCwillcontinuetoundertakeresearchintothissegment,as well as other increasingly important Chinese consumer segments, to help British companies to identify potentialopportunitiesandofferpracticaladviceonhowtosucceedin China.

I hope this report provides useful insights and stimulatesthinking. Please do get in touch with the team at CBBC: we stand ready to support your business success in China.

Stephen Phillips Chief Executive China-Britain Business Council

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In addition to taking up a traditional role caring for grandchildren, the over 60 age group is starting to embrace consumerism and independence.

Background to The ReportThisreportisintendedtogiveUKcompaniesadeeperunderstandingofoneofthelargestandfastest-growingconsumersegmentsinChina–theover60agegroup.Itdiscusseswhotheyare,andwhattheydoandbuy,andexplainshowtheydifferintermsoftheirvaluesandlife-stagesoflife.

Theover60agegrouphasincreasedlifeexpectancyandhigherlivingstandards,yetretainsatraditionalearlyretirementexpectation.Inadditiontotakingupatraditionalrolecaringforgrandchildren,theyarestartingtoembraceconsumerismandindependence,oftenmakingupfortheirpooreryoungerlives.

Asyet,fewcompanieshaveattemptedtoservethegrowingneedsandaspirationsofthesematureChineseconsumersandhavenotmarketedtheirproductsandservicesdirectlytothem.

Thisreportfocusesonmarketsectorsfortheelderlyandmaturingconsumers,including:

• Productsandservicesfortheelderly–medicines,disabilitydevices,careservicesandhousing;

• Consumerproducts–electronicdevices,fashionandcosmetics,healthfoodsandsupplements;

• Education,tourism,leisureandentertainment;

• Financialservices–pensions,insuranceand wealth management.

Thereportisbasedonanalysisofmarketdataandindustryforecasts,andin-depthreviewsandinterviewswithotherexpertsandorganisations.Itisdividedintofoursections:

• Section1:Summaryofkeyfindings

• Section2:OverviewofthecauseandsizeofChina’sageingpopulation

• Section3:‘Silverconsumer’profilesandtrends

• Section4:Consumptionpatternsandopportunitiesinkeymarketsegments

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1.Key Findings

China’spopulationisageingrapidly.By2050,Chinawillbehometoaquarteroftheworld’selderlypopulation.OneineverythreeChinesepeoplewillbeolderthan60andamongthisoneinfivewillbeatleast80yearsold.In2015,thenumberofChinesepeopleolderthan60willexceed220million,morethanthepopulationsofUK,FranceandGermanycombined.

Thesamedemographictrendsaffectingtheworld,areaffectingChina’srapidlyageingpopulation:lowerfertilityrates,increasinglongevity,andtheageingofthebabyboomgenerations.DespitenotingtheimportanceofChina’sburgeoningconsumermarket,fewcompanieshavepaidenoughattentiontothematureconsumer,thusopportunitiesaboundacrossallsectors.

ThematuringconsumerwillbecomeasignificantpartofChina’sconsumptiongrowthoverthenextfewdecades,withtheirspendingpowerestimatedatathirdoftheeconomy,makingChinatheworld’slargest‘silvermarket’.Thismeanstherearetremendousopportunitiesforbusinessesthatshifttheirfocusandactfirstinfillingtheexistingmarketgapsbyadaptingand/ordevelopingproductsandservicestailoredtotheneedsofolderChineseconsumers.

Companies should note that it is not one homogenous market, but rather diverse andhighly fragmented. Consumer values and attitudes vary greatly across different generations.Understandingthosedifferenceswillhelpcompaniestoforeseethedirectionsinwhichconsumersareevolving,andidentifythetimetoenterthemarketandthesub-segmentstotarget.

Withincreasingincomesandawiderrangeofglobalexposureandconnections,China’ssilverconsumers are becomingmore financially secure, open-minded and adventurous. They arefoundtobemorepositiveforembracingnewtechnology,willingtolearnnewskillsandtotrynewthingsastheyhaveastrongerdesiretoimprovetheirqualityandenjoymentoflife.

Theyaredemandingandpursuingawidervarietyofproductsandservices,whichcanfittheirmodernlifestyles,rangingfromtheessentialssuchasmedicalproductsandhealthfoodtodiscretionaryitemsincludingfashion,consumerelectronics,travelandfurthereducation.

Whereasfiveworkerssupporteachretireetoday, in2050therewillbemorethanoneretireeforeverytwoworkers.Arapidlyageingpopulationandashrinkingtax-payinglabourforceareputtingmorestrainonChina’swelfareandsocialsecuritysystems,whichrequiresthefinancialsectortoactmorevigorouslytoprovidesufficientfinancialsecurityforChineseretireesnowandin the future.

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2.OverviewoftheCause&SizeofChina’sAgeingPopulation

2.1|Workforce DemographicsIn2012Chinarecordedanabsolutedecreaseinitsworking-agepopulation(aged15-59)forthefirsttimesincethecountry’sopeningupinthelate1970s.1 China’sworking-agepopulationasshareoftotalpopulationwillfallto52%by2050fromitspeakatnearly70%in2010.

TheUNestimatesthatChina’sworkforcewillshrinkfrom938millionin2015to726millionby2050.The“demographicdividend”ofmassmobilisationofChina’spopulationintotheworkforce,whichhasdrivenitsrapidgrowthinrecentdecades,isdwindlingandissoontodisappear.

Furthermore,China’spopulationisageingevenfasterthantheworkforceisdeclining.By2050,every100potentialChineseworkers(aged15-64)willhavetosupport39peopleaged65+,morethanthreetimestheratiosreportfor2010.

China’sPopulation:AgeDistribution(millions)

Source:UnitedNations(UN)

Old-ageDependencyRatios(aged65+per100peopleaged15-64)

The UN estimates that China’s workforce will shrink from 938 million in 2015 to 726 million by 2050.

80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80

80-100+

60-79

15-59

0-14

Male Female Male Female Male Female

Age 1950 2010 2050

0Japan

10

20

30

40

50

60

70

80

Germany France UK China Brazil US Russia India

Source:UnitedNations(UN)

2010 2050

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2.OverviewoftheCause&SizeofChina’sAgeingPopulation

2.2| Life Expectancy & Birth Rates

Aselsewhere,peopleinChinaarelivinglongerandhavingfewerchildren–butthespeedofchangehasbeendramatic.

LifeExpectancy

• Increasedfromunder45yearsoldin1950to75yearsoldin2010.• Currentlylifeexpectancystandsat76yearsold,andisexpectedtoreacharound80by2050.• LevelsapproachingthatofdevelopedcountriesandishigherthanBrazil,IndiaandRussia.

FertilityRates

• Fellfrom6permotherintheearly1950sto4.8in1970inChina.• Aftertheone-childpolicy1 cameintoeffect,fertilityratesdropbelow2.1(thereplacementlevel

neededtokeepthepopulationsteady)bytheearly1990s.• It has now dropped and settled at a rate of 1.7 (lower than the UK, France and the US).

0

20

40

60

80

100

0 1 2 3 4 5 6 7

Source:UnitedNations(UN)

Fertility(numberofchildrenperfemale,1950)

Germany

UK France US

JapanRussia

S Korea

Brazil

CHINAIndia

Replacement rate0

20

40

60

80

100

0 1 2 3 4 5 6 7

Fertility(numberofchildrenperfemale,2010)

Replacement rate

Japan

Russia

S KoreaCHINA

India

UKFranceUS

BrazilGermany

LifeExpectancy(in1950) LifeExpectancy(in2010)

China’s population is ageing, due to a combination of rising life expectancy, declining fertility rates, and the ageing of historical baby boom generations.

1 One-childpolicy–couplesinurbanChinacouldhaveonlyonechild,orinruralareastwoifthefirstchildwasagirl.

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Birthrate(per1,000people)

01949

10

20

30

40

50

Source:ChinaCompendiumofStatistics,CBBCestimates

1953 1957 1961 1965 1969 1973 1977 1981 1985 1990 2010 2030 2050

FirstBoom SecondBoom Third Boom

EnterRetirement

Firstgenerationofbabyboomers–AsinEurope,thepost-warperiod led to a surge in birth rates.Thisgenerationisretiredorretiring(60+yearsold).

Secondbabyboomcameafter‘TheGreatFamine’(1958-61)during which families postponed havingchildrenorhadlostyoungchildren. 2Thisgenerationisnowaround50yearsold.

The third smaller boom came withnewmarriagelaws,allowingChinese residents to marry younger(20yearsoldforwomenand22yearsoldformen).2 This generationisalsoknownasthe“One-childgeneration”duetotheone-child policies in place at the time,andtheyarecurrently25-35years old.

1949–1957 1962–1970 1981–1990

Chinahasexperiencedthreebabyboomssincethe1950s,whicharefurthercontributingtoitsageingpopulation.

2 Latemarriagerequirementsofthe1970sinChinastipulated23and25yearsforwomenandmenintheruralareas,and25and28yearsforwomenandmenintheurbanareas.

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By2030,the60+populationisestimatedtoreach370million(accountingfor24%ofthepopulation)andisforecasttorisefurtherto480millionby2050;thereforeaccountingfornearlyonequarteroftheworld’stotal60+population.The80+agegroupwillalsoreacharound120millionby2050.

TheUNdefinesacountryasageingif7%ofitspopulationis65+.In2010,26outof31provincesinChinareachedthislevel.Sixprovinceshadmorethan10%oftheirpopulationaged65+in2010,includingChongqing,Sichuan,Jiangsu,Liaoning,AnhuiandShanghai.

By2030,it isestimatedthatmorethantenprovinceswillhave20%oftheirpopulationaged65+.By2050,theproportionofthe65+agegroupisexpectedtoriseto30%ofthepopulationinsevenprovinces,concentratedontheeastcoastandnorthernpartofChina.

In 2013, the number of people aged 60+ reached 200 million, accounting for approximately 15% of the total population.

2.3| Rapidly Increasing NumbersIn2013,thenumberofpeopleaged60+reached200million,accountingforapproximately15%ofthetotalpopulation.Asthosefromthefirstbabyboomapproach60+,thiswillreach255millionby2020(18%ofthetotalpopulation).

PopulationAged60+(million)

02000

100

200

300

400

500

Source:ChinaNationalCommiteeonAgeing(CNCA)

2005 2010 2011 2012 2013 2014 2015 2020 2030 2040 2050

600

130170

221

371

483

18% 24% 30%

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AgeingProvincesinChina>11%

10.5%

9.8%

9.1%

8.5%

7.8%

7.1%

6.5%

<6%

By 2030, more than ten provinces will have 20% of their population aged 65+, and over half of the 60+ group will be living in urban areas. Source:ChinaNationalCommittee

onAging(CNCA),ChinaResearchCenteronAgeing(CRCA)

2050203020202014

44%

49%

55%

71%

29%

45%

51%

56%

Urban

Rural

China’srapidurbanisationinrecentdecadeshasenabledthe60+populationinurbanareastomaintainsteadygrowth.Urbanareasarepredictedtoaccountformorethan50%ofthetotalnumberinthenexttenyears,andislikelytosurpass70%by2050.

PopulationOver60LivinginCities

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3.China’sSilverConsumers

Pre-1945

TraditionalGenerationAge:70+

LifeEvents ConsumerTraits Core Values

Influenced by war time turbulence in early life.

Predominantly poor, uneducated and rural.

Witnessed the founding of the PRC and strongly supported the rise of communism.

Part of Mao’s big push to industrialise China.

Conservativeattitudesandfrugal,mostinformedoftraditionalvalues.

Price-sensitiveandtendtosticktowhattheyknowratherthan trying new things.

Few are likely to embrace Western brands.

• Patriotism• Collectivism• Sacrifice• Frugality• Dutybeforepleasure

TheMaoGenerationAge:55-69

LifeEvents ConsumerTraits Core Values

Also known as the “Lost Generation.” Experienced famine in childhood (1958-61) and education interrupted by the Cultural Revolution (1966-76).

Many suffered unemployment caused by large-scale reforms of State-Owned Enterprises (SOEs) in the late 1990s.

Thrifty,buttypicallyhavemore children to support them.Somedesiretolivetheir remaining life to the full andhavestartedtoconsumeto compensate for years of deprivation.

ManyofChina’seliteoldleaders,whobuilttoday’smodernChina.Notnecessarily well educated or sophisticated,butsufficientlyopen-minded and demanding innovativeproductsandservicestailoredtotheirneeds.

• Adaptability• Socialism• Hardwork• Survival• Familyharmony

Today’s Silver Consumers

1946-1960 Today’s Silver Consumers

3.1|Attitudes,BehavioursandValuesChina’sdramaticchanges inthepast30yearshavegreatlychangedconsumerattitudesandbehaviours. However, the different generations still largely differ in consumption patterns,valuesandattitudes,oftenshapedbyearlylifeanddefiningeventsandexperiences.

CBBCinterviewedProfessorFlorianKohlbacherofInternationalBusinessSchoolSuzhou(IBSS)atXi’anJiaotong-LiverpoolUniversity(XJTLU),anexpertonageingandbusiness,andheexplainedthat “The silver segment is broadly defined as those people aged 50 and older. You cannot target the whole silver market in China; it is by no means one homogenous market segment. There are many segments that divide people into different generations with different values and attitudes. These values and attitudes determine the future trend of the silver market.”

Thefollowingtablerepresentsagenerationalcomparisonamongthekeyconsumercohorts.

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1961-1970

TransitionalGenerationAge:45-54

LifeEvents ConsumerTraits Core Values

Young children during the Cultural Revolution.

First generation of a growing consumer market, with exposure to many Western brands in late 1980’s.

Some were fortunate to enter universities; some even studied abroad at government cost.

Affected by “one-child policy” during childbearing age.

RelativelyopentoWesternbrands and aspire to explore the outside world.

Stronglyinvestintheir“onlychild”–educationandmarriage.

Elitegroupsarewell-educated,sophisticatedandhavethepurchasing power to become higher-end consumers.

• Stability• Security• Humanism• Diversity• Child-focused

Post-MaoismGenerationAge:35-44

LifeEvents ConsumerTraits Core Values

Caught between the old and new China. Grew up with more personal freedoms than previous generations.

Many received a modern education. Part of China’s transitional development and new middle income group.

Last generation to grow up in extended families.

Adaptive,highlypragmaticandfacts-based. Family oriented and work hard to create financialsecurity.

NotnaturallyWesternised,but more familiar with foreign brands and products than their predecessors.

Lessconservative,morediversifiedandcomfortablebuying luxury goods.

• Pragmatic• Self-reliance• Conformity• Familycommitment• Practical

Tomorrow’s Silver Consumers

1971-1980 Tomorrow’s Silver Consumers

One-ChildGenerationAge:25-34

LifeEvents ConsumerTraits Core Values

Single focus of two parents and often four grandparents (“little emperors”).

Grew up entirely within the reformist era, global exposure and connections.

Part of China’s first wave of far-reaching economic change and growing pride.

Many obtained overseas study experience; greatly helped speed up China’s urbanisation trend.

Highself-esteem,selfishanddemanding.

Shiftinvaluesfromtraditionalcollectivismtoindividualismanduniqueness.

Modern,Westernisedlifestyle,andparticularlytechnology-savvy.

Valuework-lifebalanceandincreasingly focus on a wider varietyofleisureactivities.

• Individuality• Materialism• Optimism• Self-Confidence

1981-1990 Tomorrow’s Silver Consumers

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3.2Emerging TrendsAsidefromthedifferencesamongkeygenerations,thereareotheremergingconsumertrendsin the ‘silvermarket’whicharebelievedtobemoreprevalent in thenext fewdecadesandparticularlyrelevanttoaddressformarketers.

Olderconsumersarenotnecessarilyconservativeandpurelyprice-sensitive,theyoftenpursuevalueandqualityratherthanlowpricesastheyunderstandthatqualitycosts.Theyaremostlikelytospendmoreonhealth-relatedproductssuchasfoodandpharmaceuticals.However,thereisagrowingtrendinpurchasesofhigher-endgoodssuchaspremiumcarsandpersonalluxuryitems.

Willingnesstopayextrafor

quality

Althoughtheytendtosticktoproductsorstorestheyarefamiliarwith,theyarenotclosedtonewideas.Theyhaveastrongdesiretoimprovetheirqualityandenjoymentoflifeinretirementandtheyarelikelytomakechoicesbasedonexperienceandaconfidenceinknowingwhattheylike,andhavingthepatienceandself-confidencetolearnandtotrynewthings.

Opennesstonew ideas and

things

Changinglifestylesandtheincreasingprevalenceofchronicconditionshavemadeconsumersmoreconcernedabouttheirhealthandwell-being.Theyareincreasingtheirpurchasesofhealthfoodsandnutritionalsupplements.Whilealsopayingmoreattentiontotheiremotionalhealthbyparticipatingintravelandleisureactivities.

Healthandwellbeingoriented

China’s“Silversurfers”areembracingthedigitalagebydrivinggrowthinonlineshopping,onlinepaymentandsocialnetworking.Alibaba-China’slargeste-commercecompanyreportedithadtwomilliononlineshoppersovertheageof50in2013.Thetrendofdigitalconnectivitywillcontinueamongthesilversegmentasconsumersincreasinglyperceivethebenefitsandconvenienceofonlineactivities.

Digitalconnectivity

Somekey sectorspresentpotentialopportunities forUKbusinesses, ranging frommedicinetoelderlycaredevices,careservicesandhousing,healthfoodsandsupplements,consumerproductssuchaselectronicdevices,fashionandcosmetics,travel,leisureandentertainment,educationandfinancialservices.

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ThemarketforChina’solderagegroupsisstilllargelyunderdevelopedintermsofbothproductandserviceofferingscomparedtocountriessuchasJapan.Somemarketsarestillinthenascentstageofdevelopment,whileothersdonotevenexistinChina.

“Because many markets do not exist in China, you need to create them and that takes long-term investment and effort. But it is worthwhile and whoever acts first can be a pioneer and have market advantages,” said Prof Kohlbacher.

Hearguesthatself-perceivedagehassignificant impactsonconsumerbehaviour.Generally,mostfeeltenyearsyoungerthantheyactuallyare.Therefore,itisnotsuitabletoindicate“oldage”whenadvertisingproductstargetedtowardstheolderconsumers.

Headded“Demographics require companies to abandon the concept of solely targeting young customers. In the end, all managers will have to find ways to market to the old without either offending them or putting off younger consumers.”

Hehighlightsimportantconsiderationsformarketingtoolderconsumers:3

• Developingandmarketingproductsandservicesespeciallyforolderconsumers.

• Adaptingproductsandservicesespeciallyforolderagegroups.

• Age-neutralproductsandservicesthatoffervaluetotheolderagegroupswhilealsoattractingyoungerconsumers,suchasluxurygoodsandpremiumcars.

• Trans-generational products that can be consumed by all consumers regardless of age andparticularlybridgethegenerations.AsuccessfulexampleisNintendo’sgameconsolethe“Wii”.

4.1ElderlyCareProducts&ServicesMedicines

Chinaistheworld’sthirdlargestmarketformedicine,andsalesin2014were£65billion(up14%yearonyear).4 Drugconsumptionbythe60+agegroupistypicallytwoorthreetimeshigher than thatofanyothergroup; in2014,olderChineseconsumedmedicinesvaluedatnearly£45billion.Ifthemarketcontinuestogrowataround15%ayear,CBBCestimatesthatby2020medicinesalestoolderconsumerswillreach£90billion.

Foreignmanufacturers are still heavily reliant onoff-patentmedicines to increase revenuesinChina;roughly80%oftheirsalesin2014werederivedfromsuchproducts.Brandeddrugsenjoy hefty premiums, partly because locally made generics are of poor quality. However,China’sgovernmenthascommittedtomakinghealthcaremoreaffordablefor itsvastageingpopulation, and reforms that are underway aim to keep a tight rein on drug priceswhilepushinghigherqualityandinnovation.

Although foreign companies will face stiffer competition and upward pressure on prices,growingdemand fornewpatenteddrugs inChinawillhelp limit their lossofmarket share,believeBain&Company. And the sheer numbers of older age groupswill give rise to newpockets of demand for drugs.

In 2014, the over 60s consumed medicines valued at nearly £45 billion. And it is expected to double to £90 billion by 2020.

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4|OpportunitiesinKeyMarketSegments

Foreignplayersarelikelytocontinuetoleadininnovativemedicationtreatmentsforissuessuchashighbloodpressure,hyperlipidemia,diabetes,thrombosispreventionandasthma,aswellasissues suchasdepression.Opportunitiesalso lie inpreventive treatment forolderChinese insuchareasasvaccinationsforinfluenzaandpneumonia.ThetablebelowforecaststhenumberofChina’sageingpopulationwithcommonchronicdiseasesfrom2015-2050.

Mobility&Impairments

Chinacurrentlyhasnearly30millionpeopleaged60+withmobilityissues,70millionwithimpairedvisionand45millionwithimpairedhearing.Thesefiguresareestimatedtogrowdramaticallyintheyearstocome.Demandforassistivedevices–largelyconsistingofrehabilitation,mobilityaidproducts,hearingandvisualauxiliaryequipmentwillrise.

Arapidlyageingpopulation,especiallytheincreasing80+agegroup,willdrivedemandforelderlycarehospitals,rehabilitationcentresandnursingfacilities,whichareparticularlyunderdevelopedinChinaatpresent.Astheseinstitutions/facilitiesfurtherdevelop,demandformedicaldevicesisalsolikelytogrowsubstantially.

Chinese consumers have a strong preference for foreign-made medical devices due to theperception they are of higher quality and aremore reliable. Foreign companieswill find themostpotentialinthehigh-endsegment;however,evenprivateinstitutionsinChinahavelimitedexperienceinworkingwithadvancedmedicalequipment. It isthereforeimportanttoeducatethemarketaboutproductsandsolutionsandtoprovidecontinuoustrainingaswellassupport.

Numberof60+PopulationwithImpairment(millions)

Numberof60+PopulationwithChronicIllness(millions)

1

2

3

4

5

6

7

8

9

10

Hypertension

CerebrovascularDisease

Diabetes

ChronicObstructivePulmonaryDisease(COPD)

RheumatoidArthritis

IschaemicHeartDisease

Gastroenteritis

IntervertebralDiscDisorders

CholelithandCholecystitis

Cataract

19.7

3.9

3.7

3.4

3.1

3.1

2.0

1.9

1.1

0.9

Rank Diseases MorbidityRate*(%) 2015 2020 2030 2040 2050

44

9

8

8

7

7

4

4

2

2

50

10

9

9

8

8

5

5

3

2

73

14

14

13

11

11

7

7

4

3

83

16

16

14

13

13

8

8

5

4

95

19

18

17

15

15

9

9

5

4

Source:*CenterforHealthStatisticsandInformation,MinistryofHealth(2008),CNCA

Walking

Vision

Hearing

13.1

31.9

20.0

TypeofImpairment Incidence*(%) 2015 2020 2030 2040 2050

29

71

44

33

81

51

49

118

74

55

135

85

63

154

97

Source:*CRCA,CNCA

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ElderlyCareServicesandHousing

Changingfamilystructurescausedbytheone-childpolicyandrapidurbanisationtrends,meanthathalfofChina’sover60s(110+million)arecurrentlylivingalonewithnochildrenandthisisexpectedtoincreaseto70%by2050(when79millionofthemcouldbechildless).5

Thetraditionalfamilyhomecareapproachfortheelderlyisbeingchallenged,creatingavoidtobefilledbythegovernmentandofferingsignificantopportunitiesforprivatecompanies.Bothlong-term care beds and elderly care professionals are in great shortage.

Currently,only2%ofChina’selderlyopt for institution-based care, althoughat least10%arewilling to. Barriers remain as traditional values that elderly homes are built for childless orabandonedparentsandperceptionsofthembeinguncleanandlonelyplaces.Althoughthereareover94,000elderlycarehomesinChina,6thequalityofcarehasneverbeenproperlyregulated,oftenresultinginsubstandardconditions.

Overtime,China’selderlywillneedtobecomemoreopentoelderlycarecentres.Theywillpreferhousingwithcloseproximitytotheirfamilyandfriends,andtheywillattachhighvaluetogoodmedicalcareserviceregardlessofwhetherthereisanimmediateneed.Agrowingnumberofwealthy families are already embracing high-end nursing homes.

Forexample,CherishYearninShanghaiisanupmarketretirementcommunity,withmembershipfeesof£100,000andannualchargesof£3,000-£7,000. Ithashadnotrouble infinding1,300memberssinceopeningin2008.Itisplanningtoexpanditsbusinesstobuildresidentialpropertiesfor the elderly across China.

Themajoritywillstilloptforhome-basedelderlycare,butexistingresourcesarefairlylimitedinmeetingdemand.InfactmanyChinesepeopleareoftennotawareoftheavailabilityofmanyin-homeorresidential-basedcare,rehabilitationandcounselingservices.

Traininganewgenerationofcaregiversisgoingtobeaveryimportantandpotentiallylucrativesector,toprovideforthehigh-endin-homecareserviceneedsoftheemergingmiddleincomefamilies providing customised care, including housekeeping and companionship, safetysupervisionandphysicalassistance.

AnumberofinvestorsandforeigncompanieshavealreadyenteredintothebusinessofcaringforChina’selderly.ManyChinesefirms,asnewcomerstothesector,lackexperienceinoperatingelderlyhomesandprovidingqualitynursing careandare therefore seeking cooperationwithestablishedforeignplayers.Thisprovidesopportunitiesinrelevantsectors,rangingfromdesignand planning, training and education to operations, management, medical and healthcareequipment,aswellasdigitalsystems.

Foreigncompaniescanandhavealsosetupindependentelderlycareinstitutions,withoutajointventurepartner,andtheyarealsowelcomeparticipantsinimprovingstate-ownedelderlycareorganisations,andtodevelophigh-qualitychaininstitutes.7FormoredetailedanalysisonChina’selderlycaresector,pleaseseeCBBC’sreport“EnablingbusinessopportunitiesforUKcompaniesinChina’selderlycaremarkets”.

SupplyGapinNursingBedsandElderlyCarers

GovernmentTargetby2020

ExistingSupply2015

TotalSupplyGap

NursingBeds ElderlyCarers

Source:MinistryofCivilAffairs(MCA)

10.2million(35-40bedsper1,000elderly)

5.8million(27.5bedsper1,000elderly)

4.4 million

6million

<1millionOnly50,000arecertified

5 million

A growing number of wealthy families are embracing high-end nursing homes, while the emerging middle income families are looking for customised in-home care services.

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4.2Consumer ProductsHealthFoods&NutritionalSupplements

China is seeing a rapidly growing number of diet-related chronic diseases such as high blood pressure,diabetesandobesity.Chineseconsumers,especiallytheolderagegroups,arebecomingmore health conscious. Despite an aspiration for maintaining healthier eating habits as a topaspiration,accordingtoMintel(amarketresearchcompany),theyareturningtoself-medicationsuchashealthsupplements;vitaminsandmineralstostrengthentheirimmunesystemsandboosttheirenergylevels.8

InChina’s12thFive-YearDevelopmentPlan(2011-2015)forthefoodIndustry,nutritionandhealthfoodswereincludedasapriorityforthefirsttime.TheplanestimatedthattheoutputvalueofChina’snutritionandhealthfoodindustrywouldreach£100billionby2015(annualgrowthrateof20%),ofwhichhalfoftheproductsinthiscategorytargetmiddle-agedandolderconsumers.Thiswouldmeanthatthemarketforelderlynutritionandhealthfoodproductsispredictedtobeworth£125billionby2020.

OlderChinesetendtofollowtraditionalChinesemedicineandfoodtherapy.Howeverthedomesticmarket cannotmeet the demands for quality health food products such as organic food. Themajorityofthemarewillingtopayhigherpremiumsforfoodproductsdeemedtobehealthier,andtheyoftenassociatewell-knownbrandswithagreaterlevelofqualityandfoodsafety.

Consumersareskepticalofcertaingoodsdomesticallyproducedduetoaseriesoffoodscandals.Importedproducts suchasdairy, cereals andhotbeveragesaregainingpopularitydue to theirperceivedsafetyandqualityguarantees.TomeettheupgradingdemandofolderChineseconsumerswhohavehigherpurchasingpower,thereareopportunitiesforforeigncompaniesinregionalcitiesaswellasinthepre-existingpremiumproductmarket.

Holland&BarrettstartedinChinain2012andhavearangeofover700products.Theyseethe‘silvermarket’asaveryattractivegrowthsegment.Basedonthecompany’ssalesdata,productscontainingfishoil,lecithin,milkthistle,maca,proteinpower,calcium,multi-vitaminandglucosaminearetopofitssaleslist.Productswiththeseingredientscanhelpimprovecardiovascularhealth,liverfunction,boneandjointhealth,providinganti-fatigueeffects,aswellasboostingandfortifyingtheimmunesystem,whicharecommonlyrelatedtohealthdemandsofthemiddle-agedandolderpopulation.

“It has been estimated that China’s ageing population will push the country’s health industry growing at 20% over the next 10 years. This is a real opportunity for manufacturers of health and wellness products to prosper in China. Holland & Barrett will accelerate expansion in the Chinese market” AbeRan,SeniorMarketingManagerofHolland&Barrett.

For nutritional supplements, there is still a lack of knowledge, and strong beliefs in traditionalChinesemedicineaswellasconcernsaboutthesideeffectsofWesternproducts.Nevertheless,opportunitiesexistandaregrowingtotargetthe50-60agegroupandthechildrenofolderparents,who are more educated, open-minded and have greater trust in Western products. It is alsoimportanttoeducatemoreconsumersaboutproductqualityandvalue,especiallywhenitcomestosupplementsandothermoreadvancedproducts.

The market for elderly nutrition and health food products is predicted to grow at 20% annually to £125 billion by 2020.

www.cbbc.org 15 |

DigitalTechnology

Thenumberof Internetusersaged50+hasmore thandoubled in thepastfiveyears to52million.9Overa thirdof50-59yearold internetusers inChina identify themselvesasbeingfrequenttechnologyusersandthisrisesto41%forthe60+(comparedtoAsia-Pacificaveragesof19%and15%).10

CBBC found two key factors affecting older consumers’ adoption and eventual use of newelectronic devices are the cost of access and ease of use, but quality or durability alsoimportantconsiderationsastheyare less likelytoswitchtonewgadgetsonaregularbasis.Olderconsumersrequiremoretechnicalsupportinadoptinganewgadget;technologysuchasscreen-sharingforremotecontrolstoprovideliveassistancewillbeattractivetothesilverconsumer segment.

Agoodexampleisthegrowingpopularityofsmartphonesamongolderconsumers,thankstoChina’spioneeringsmartphonemakerXiaomi,whichtargetedtheolderagegroupswitheasytoreadtextandbigbuttonsonitsentry-levelHongMismartphone,withincreasingaffordability,greateruser-friendlinessandvariousconvenientappsforsocialisingorentertainment.

Increasingsocialmobilityandurbanisationisstimulatingdemandforinnovativegadgets,whichcanhelpalleviatefearsoflonelinessandisolation.Inaddition,olderconsumerswillincreasinglypursuedigitalhealthdevicessuchasbloodpressuremonitoring,wearablemedicalalertsystemsandvariouselectronicaidstoassistwithdailyliving.

Fashion&BeautyProducts

ManyofChina’snewgenerationofretireesareredefiningthetraditionalChineseconceptofoldage,instyle.Theyarenotallresistanttopersonalindulgence,theycontinuetotakeprideintheirappearanceandwantstyle,relevantfashionandbetterservices,astheyhaveastrongdesiretoenjoytheirsociallivesmore,regardlessoftheirage.

Althoughthereareeffortsbeingmadebysomeretailerstoprovideclothingandaccessoriesdedicatedtoolderwomen,mostlyinspecialistfashiondepartments,fewhaveyetsuccessfullymanagedtomarketappropriatelytotheirtargetconsumers.AccordingtotheChinaNationalCommitteeonAgeing(CNCA),thespendingpowerofChina’solderconsumersonclothingwillbeatleast£10billionby2020,yetlessthan10%ofproductsaretargetedatoldershoppers.

Whileinthebeautyindustry,suchasmake-up,skincareandhaircareproducts,companiesorbrandshavemadelittleornoattemptstoaddresstheneedsofolderChineseormarkettheirproductsorservicesdirectlytothem.Thereforealthoughwithmoneyinhand,olderChineseconsumers are not necessarily spending it on fashion and beauty items.

Mature consumers are more value-driven. They buy what they need and they are oftenpreparedtopaymoreforproductsofhighquality,goodmaterialsandtherelevantstyle/designthat will last them a bit longer.

AsChinesepeoplecontinuetoembraceconsumerism,thefutureover60sfashionmarket isalsogoingtomatureandbemorecompetitive.InterestedUKbrandshavearealopportunitytore-positiontheirproductsandservicestomeetthisunderservedsegmentandtoreapbenefitsbothintermsofprofitandinfluenceongenerationstocome.

Mature consumers are more value-driven and they are often prepared to pay more for products of high quality, good materials and relevant style/design.

|16www.cbbc.org

4.3Travel,Leisure&EntertainmentTravel

China’s travel and tourism industryhas expandedat abreathtaking speed, seeingdomestictourism growing at 12% annually while outbound tourism has grown at 15% annually, onaverage,overthepastdecade.1AccordingtotheBostonConsultingGroup,by2030Chinawilllikelybetheworld’slargestdomestictravelmarketandtouristsfromChinawillmakeupabout40%ofalloutboundAsiantravelers.

Olderconsumers, thatoftenhavemoremoney intheirpocketsand leisuretime,havebeenthemaindriverforChineseleisuretourism,bothathomeandabroad.China’slargesttouristinformation-sharingwebsite,MaFengWofound40%ofChineseretireesarewillingandabletogoonholiday.Italsofoundthattheywouldliketosetaside15%oftheirannualincomefortravel.Forexample,takingthecurrentaverageannual incomeofurbanseniorcitizenstobe£2,100,theirtotalspendingontravelisestimatedat£27billion.

CBBCfoundthreekeymotivatingfactors for theover60s’ travels: helping to improvewell-being,socialisingandrelaxation.

OlderChineseconsumersparticularlyprefertotravelwithcompanions,eitherinsmallgroupsoffamilies,andwithformercolleaguesorfriends.Theycommonly indicatethatprice is lessimportantthanwhotheyaretravellingwithandthedestination.11 Consumer preferences are alsoshiftingtowardslong-haultravel(mostlyincities),higher-costaccommodationandmorecustomisedtravelpackages.

Companiesshouldfocusoninnovativeanddifferentiatedproducts,offeringtravelexperiencesthataddresstheemotionalandintellectualneedsofolderChineseconsumers(suchasrelaxeditineraries, healthy meals, baggage delivery and essential medical services), but withouthighlightingthemasage-relatedneeds.

Marketers should also leverage online channels for product promotion and informationsharing,astheyoungerendofthe‘silvermarket’areincreasinglyoptingforindependenttravelandhavestartedtorelyononline travelsites/socialmediaplatforms for recommendations,informationandreservations.

Opportunitiesarenotonlyemerging for travelserviceproviders, suchas travelagents, touroperators, transport companies and hoteliers. Themarket is also growing in travel-relatedproducts,suchashigh-enddigitalcameras,travelinsuranceproducts,sportswear,shoesandtravelaccessories.Fewproductshowever,havebeencreatedspecificallytoservetheneedsandaspirationsofolderChineseconsumers.

Ma Feng Wo found 40% of Chinese retirees are willing and able to go on holiday. It also found that they would like to set aside 15% of their annual income for travel.

www.cbbc.org 17 |

Leisure&Entertainment

Higher incomes and rapid urbanisation are generating a growing demand for leisure andentertainmentinChina.Apartfromthetravelindustry,China’sperformancemarket,filmandTVsectors,aswellasartandpublishingindustrieshaveallexperiencedtremendousgrowthinrecent years.

OlderChinesearelookingforamoresophisticatedlifestylewithgreaterpersonalenjoymentandleisuretime.However,thismarketisstillrelativelyunder-servedinChina.

China’surbanyoutharemarryingandhavingchildrenlaterthanpreviousgenerations,eitherduetocareeraspirations,financialreasonsorlifestylechoices.Thismeansthatmanyelderlyparentsdonotimmediatelyfallintotheirtraditionalrolesasfulltimecaregiverstograndchildrenwhentheyretire.Manythereforehaveplentyoftimeontheirhandstoenjoythemselves–diningoutmore,goingtothecinema/library/park,takingupnewhobbiesandsports.

Retailers,hotelsandrestaurants,cinemas,theatres,museums,KTV(karaoke)clubs,entertainmentvenues, health and fitness clubs have the opportunity to offer special deals/events to olderconsumers by making them feel their age is being respected and rewarded.

InJapan,one-thirdofthevisitorstoamusementparksandotherentertainmentfacilitiesareagedfrom50to70.Themeparksandamusementparkshavebeencreatingmoreareasforolderagegroups,andfacilitiesaredesignedforthosevisitingasfamiliesofthreegenerations.Chinahasalsoseenan increasingnumberofentertainmentvenues,butdevelopershavenot rampedup theirattempts toappeal toolderconsumers,whoparticularly like toentertain ingroups,eitherwithfamily or friends.

A growing group ofmiddle income householdswill drive demand for family-friendly locations,where threegenerationscanhaveadaylongouting.Morepublic facilitiesareneeded forolderChinesecitizenstoenjoytheirentertainmentandleisurepursuitssuchasdancing,drama,musicandperformance,aswellastraditionalChinesegamessuchasMahjong.

There is alsoapotentialmarket forhomeentertainmentproducts for those thathavemobilitydifficultiesorprefertostayathome,suchaseBooksandtablets,digitalgames,homedecoratingand gardening products.

More public facilities are needed for older Chinese citizens to enjoy their entertainment and leisure pursuits.

|18www.cbbc.org

FurtherEducation

TraditionalChinesecultureadvocatesthatoneshouldkeeplearningtilltheendoftheirlife.Learningis seen as an important means of maintaining mental agility while helping people to contribute to societyratherthanbeingafinancialburden.AsChinesepeopleretireatayoungage(averageageis54)andmostremainfitandhealthyforoneortwodecades,theyneedmoreopportunitiestolearn.

Therearedifferentneedsandobjectives,whichrequirecarefulmarketresearchandsegmentation.Somewanttomaintainsocialengagementandwell-beinginretirement.Othersneedtoupdatetheirskillsandknowledgetoextendtheirworking livesorevenstartnewcareers.Somesimplywanttodevelopanewinterestwhileotherspursueacoursethattheydidnothavethechancetodo earlier in life.

ExistinginstitutionsthatcatertoolderagestudentsinChinaarepredominantlygovernment-funded,withtheirmainfocusonculturalandleisureeducation.AtShanghaiUniversityfortheElderly,classesaregenerallyofferedataround£20perterm,attractingmanyChineseretirees.However,thereisalimitednumberofplacesonthesecourses,resultinginthehighdemandbeingunmet.Nationwidethereareabout60,000elderlyeducationinstitutionsand7millionseniorstudents–lessthan5%oftheover60spopulation.12

Inrecentyears,ShanghaiUniversityfortheElderlyhasco-operatedwithcompaniessuchasCherishYearn(anupscaleseniorlivingcommunity)andGreenlandGroup(aleadingrealestatedeveloper)tosetuplearningprogrammesandtoprovideculturalservicestothecommunity.CooperationbetweeneducationinstitutionsandelderlycarefacilitieswillbeanewtrendandmaycreatepotentialopportunitiesforUKbusinesstoengageinfacilityconstruction,includingdesign&planning,furnishings,equipment,materialsandothersupplies.

“I am willing to pay for private classes, which I believe enable me to learn more efficiently, but I don’t know where to find qualified teachers”,saysMsTong,a50year-oldstudenttakinganEnglishclassatShanghaiUniversityfortheElderly.

Training courses, such as those for language skills, computer skills, the Internet and familyhealth will become increasingly popular among older Chinese.13 Meanwhile,growinginterestinoverseastraveldrivesdemandforshort-termstudytours.CBBCalsofoundthattherewillbemoreseniorswhodemandprofessionaltrainingforemployment,eithertosupportdependentsorsatisfytheirownfinancial/careerneeds.

ForeigncompanieshavebeenallowedtosetupSino-foreigncooperativejointventureeducationandtraininginstitutionsinsideChina’sFreeTradeZones.Inthelongrun,UKcompanieswillfindopportunitiestoentertheeducation/trainingsectorfortheolderagegroups,especiallyinthehigh-end segment. “In fact, more than half of the students at Shanghai University for the Elderly have a higher education qualification, and most of them held senior management roles before retirement”,saysMrLu,DeanforAcademicAffairs at the school. Those older age groups are mostlikelytopursueandbeabletoaffordhigh-endeducationalservices.

Nationwide there are about 60,000 elderly education institutions and 7 million senior students – less than 5% of the over 60s population.

www.cbbc.org 19|

4.4|FinancialServices&Products

This growing silver consumer segment is not only openinguppotentially lucrativebusinessopportunitiesformanufacturersandcareproviders,butalsoforthefinancialservicesindustry–whereChina,unlikemostdevelopednations,haspreviouslynotfocusedon.

Withdecentpersonalsavings inhandbuta lackof investmentoptions,theyhaveturnedtoparticipate invarious typesof investments, suchas ingoldandmostcommonly small scaletrading in thestockmarket.CBBC foundmanyolderChinesehavebecomeenthusiasticandrelativelysavvyinvestors,buttheyareleftlargelytorelyontheirownexpertisewhenengagingin financial trading due to a lack of financial services and investment products to aid theirdecision making.

Highsavingshabitsespeciallyamongolderconsumers

Chineseconsumershavestrongtendenciestosave,asthesocialsecuritysystemisimperfectandtheaverageretirementpensionremainslow,atpresent.Year-endhouseholdsavingsdepositsinChinareached£4trillionin2012,equivalentto77%ofGDP,butpensionassetstoGDP ratiowasmerely2.5%. In contrast,UShousehold savingsdepositsandpensionassetsrespectivelyaccountedfor3.5%and108%ofGDPin2012.WhileAmericanretireesare able to liveoff their pensionsor interest from investments, olderChinese typicallyspendsavingstofinancetheirconsumptionduringretirement.

Traditionalfamilysupportnetworkisbreakingdown

“Raisingchildrenforone’soldage”:Theideaoffamilyduty,obedienceandcareforone’sparents and elder family members are deeply ingrained in Chinese society. However,as urbanisation and economic development speed up, alongwith the influence of theone childpolicy, it hasbecome increasinglydifficult for adult children toperform theirperceived duty. Senior citizens are becomingmore economically independent; they donotwanttobeafinancialburdenontheirfamilies,soplanningfortheirfuturefinancialsituationisbecomingessential.

Chineseparentsare“haizinu”–slavestothe“Onlychild”

Atpresent,one-thirdofChineseadults, especially those from theone-child generationremaininsomewayfinanciallydependentontheirparents,mostcommonlyinpropertypurchases.14 This largely restricts older consumers’ spending on themselves. However,asnewgenerationsofolderconsumersaregoingtobemoreself-focused,thissituationwillgraduallychange.Companiesshouldfocusonprovidingbetterfinancialplanningandinvestment services to help grow,manage and preserve householdwealth.While alsosteppingupmarketingeffortstoconvinceolderChinesethattheydeservemore.

Shifting“fromcashtocashless”

ManyChineseare losingoldhabitsofpaying foreverythingwithcashandnotoncredit,partiallybecauseofthemeteoricriseofonlineretail.Nielsenfound45%ofover-55shaveat least one credit card.15Afurtherstudyfoundthat20%hadadoptedonlinebanking.9 The InternetwillreshapeChina’sfinancialindustry,asconsumersaregivenmorechoicestopayandtomanagetheirbankaccounts.Olderconsumers, inthefuture ifnotnow,willdrivegreaterdemandinonlinefinancialservicesincludingpaymentandsettlementservices,peer-to-peerlending,andpurchasesofinvestmentproductssuchasfundsandinsurance.

With decent personal savings in hand but a lack of investment options, they have turned to participate in various types of risky investments.

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Pensions

The financial services sector has huge potential, providing products and services for the 200millionChinese retirees.16 More importantly, China currentlyhas400millionpeople aged40-59and600millionaged30-59,sothereisanenormouspotentialcustomerbaseforfinancial/retirementplanningservices.

China’s ageing population along with its shrinking workforce put extreme pressure on thecountry’spensionsystemtoprovidesufficientfinancialsecurityforretirees.ThepensionfundshortfallinurbanChinabetween2012and2050isestimatedat£3.9trillion–equalto60%ofChina’scurrentGDP.17

The government has put continuous effort into reforming the pension system, includingencouraging pension funds to invest in capital markets, pushing to expand their investmentscope,diversifyriskandimprovereturns.WithanestimatedAssetsUnderManagement(AUM)of£2.8trillion,predictedbyZ-BeninChina’spensionsystemby2020,Z-Benforeseesforeignfundmanagerswillseehugegrowthinopportunitiesforbothonshoreandoffshoreinvolvement.

“Opportunities are two-fold. From the domestic stand point, foreign firms that have an entity on the ground are well-placed to take advantage of the growth in the domestic pension market, where reforms are expected to go with the creation of a holistic Public Pension Fund (PPF) to manage all the pension assets in China and greater taxation incentives are likely to be brought into play. And the other side will be in terms of getting mandates”,saysStephenBaron,DeputyDirectorfromZ-Ben.

TheNationalSocialSecurityFund(NSSF),whichhasbeenthemostlucrativesourceofpensionbusinessforforeignmanagers,islikelytobringmoreoffshoremandatesopportunitiesastheStateCouncilrelaxedrulestoallowonshoreassetsheldbythepensionfundtobeusedforoffshoreinvestments.Offshoremandatesarealsoexpectedintheothertwopillars,pensioninsuranceandEnterpriseAnnuities(EA)asAUMcontinuestoshootup.

“Foreign fund managers, with experience of managing pension assets, have a lot of advice and support to provide that will be highly regarded by Chinese counterparts”,saysMrBaron.Despiteitslargesize,China’spensionmarketisalmostcompletelyuntapped,asseeninthePPFwheremost assets remain in cash deposits. “When reforms happen, the international pension experience of foreign firms would be really critical and valuable to the domestic entities that are managing those pension assets.”

With an estimated Assets Under Management (AUM) of £2.8 trillion in China’s pension system by 2020, Z-Ben foresees foreign fund managers will see huge growth in opportunities for both onshore and offshore involvement.

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Insurance

Withrapidlyageingpopulationandincreasedlifeexpectancy,China’ssocialsecuritysystemwillstruggletocopewiththe largenumberof retireeswhodemand long-termpensionpayoutsandqualityhealthcareinthecomingdecades.Privateinsurers,bothdomesticandforeign,areexpectedtoplayabiggerroleinprovidingprotectionforseniorcitizens,rangingfromlifeandpension insurance to healthcare and long-term care insurance.

Premium income from the life-insurance sector increasedexponentially from£9.8billion in2000 to £140billion in 2013,18 makingChina theworld’s fifth largest life insurancemarket.However, lifeinsurancepenetration(premiumsasashareofGDP)andlifeinsurancedensity(premiumspercapita)remainlow,1.6%and£75respectively inChinacompareto8.3%and£2,300intheUKasof2013.19

Privatehealthinsurancerepresentsmerely8%ofthewholeinsurancemarket,despitethefactthatithasbeengrowingataround25%annuallyoverthepastdecade.20In2010,lessthan1%ofthepopulationwascoveredbyprivatehealthinsurers.21 Existingproducts,thoughtherearemorethan2,300types,lacktruedifferentiationintheabsenceofstandardisedmedicaldata.

Foreigninsurerscanexpectbetterperformanceinthemedium-andlong-termunderongoinghealthcareandfinancialreform,includingtaxincentivestostimulatethepurchaseofprivatehealthinsurance,priceliberalisation,andeasingofforeignshareholdingrestrictionsinlifeandhealthinsurancecompaniesinPilotFreeTradeZoneswhichhavebeenlaunchedinShanghai,Guangdong,FujianandTianjin.Therewillbe increasingpartnershipsbetweendomesticandforeign insurers to accelerate product innovation and development, and also to achievetechnologyandplatformsynergy.

China has become the world’s fifth largest life insurance market. However, life insurance premiums remain low on a per capita basis.

LifeInsuranceSector(2013)

0.00

2.0

4.0

6.0

8.0

10.0

12.0

14.0

500 1000 1500 2000 2500 3000 3500

Source:WorldBank,SwissResigmaNo3/2014

Thailand

Malaysia

RussiaCHINA

India

SouthKorea

Germany USA

Australia

France

Singapore

Japan

UK

Hong Kong

Penetration(%ofGDP)

Density-premiumspercapita(GBP)

| 22 www.cbbc.org

In 2013, 2.5 million Chinese people had an annual income of more than £99,000, 51% were aged 40-49, and 21% were aged 50+.

WealthManagement

Inthefirsthalfof2014,China’sbankingsystemreportedarecord£1.3trillionofoutstandingwealth-managementproducts–up24%fromthebeginningof theyear.Nielsen found70%of the over-55s have already purchased investment orwealthmanagement products. Afterexperiencing the drop in gold prices and volatility in the stock market, risk adverse olderconsumers have turned to bankwealthmanagement products that offer lower risk, stablereturns and ease of purchase.

In2013,2.5millionChinesepeoplehadanannual incomeofmorethan£99,000,51%wereaged40-49,and21%wereolder.22 Chinanowhasthesecondlargestpopulationofmillionaires(measuredinUSD)intheworld,withaffluentandmiddleincomegroupsalsogrowingintermsof both their numbers and their wealth.23

Foreign banks have been successful in high-end wealth management, particularly aroundoffshore investment offerings. This is forecasted to remain a high growth area as demandfor investmentmigration,children’seducationanddiversifiedassetallocationkeepgrowing.It ismoredifficult for foreignpartiestocompeteonshoreduetoregulatoryconstraints,butthereisstillanopportunityinthelong-termbysupportingotherbusinessunitsandbuildingcomprehensiveofferings.

Foreignbanksshouldcontinuetodifferentiatethemselveswithgreaterprofessionalism,widerproductknowledge,internationalexpertiseandresourcesinmobilebanking,onlinebanking,andhighqualitycustomerservicetocatertotheemergingaffluentinChina.

www.cbbc.org 23 |

Contacts

CBBCoffersawiderangeofservicesandbenefitsforUKcompanies.Pleasecontactustofindoutmore, including CBBCmembership, UK-China delegations, conferences, events, seminars,briefings and networking opportunities. CBBC has specific programmes around the ChineseConsumer,ChinaOutbound,EducationandLiveableCities.

CBBCworkshand-in-handwithUKTrade&Investmenttoprovidebusinessservices(inChinaandtheUK)includingmarketresearchandconsultancyservices,businessmatch-making,andfindingandpromotingbusinessopportunitiesforUKcompanies.CBBC’sownservicelineincludestheLaunchpadofficeincubationservice,eventsandconferences,businessadvisoryservices,trainingandtranslationservices.

WehavesectorexpertsbothintheUKandChinainthefollowingsectors:

CBBChasofficesandrepresentativesacrosstheUK:London,Scotland,Wales,NorthernIreland,EastofEngland,EastMidlands,NorthWest,SouthWest,WestMidlands,Yorkshire&Humberside

CBBC also has 13 offices in China: Beijing, Shanghai, Shenzhen, Wuhan, Chengdu, Qingdao,Nanjing,Hangzhou,Shenyang,Chongqing,Guangzhou,ChangshaandXi’an

CBBCUKHeadOffice3rdFloor,PortlandHouse,BressendenPlace,London,SW1E5BHTel:+44(0)2078022000

Author:TianjieHe,CBBCResearchAnalysttianjie.he@cbbc.org.cn

Contribution:Xiaoman Kang

CBBC works hand-in-hand with UK Trade & Investment to provide business services (in China and the UK) including market research and consultancy services, business match-making, and finding and promoting business opportunities for UK companies.

| 24 www.cbbc.org

Creative&Culture

Education&Skills

Retail

Food&Drink

Engineering,Manufacturing&Transport

LifeScience&Healthcare

Financial&Professional

ICT

Energy,Infrastructure&Environment

CBBCChinaHeadOfficeTheBritishCentre,Rm1001,ChinaLifeTower,16ChaoyangmenwaiAvenue,Beijing100020Tel:+86(0)1085251111

References

1 NationalBureauofStatistics

2 Coxhead,etal“DoSchoolsCauseStudents?EvidencefromChina’sPost-FamineBaby

Boom”,2014

3 Kohlbacher&Herstatt,“TheSilverMarketPhenomenon:Marketing&Innovation

intheAgeingSociety”,2011

4 McKinsey

5 NationalHealth&FamilyPlanningCommission(NHFPC),“ReportonChineseFamily

Development(2015)”

6 MinistryofCivilAffairs

7 MinistryofCommerceandMinistryofCivilAffairs–AnnouncementonMattersRelatingto

ForeignInvestors’EstablishmentofFor-profitElderlyCareInstitutions

8 BostonConsultingGroup“CapturingaShareofChina’sConsumerHealthMarket,From

InsightstoAction”,2014

9 ChinaInternetNetworkInformationCenter(CNNIC)

10 GFK,“Chinaleadingthewayinembracingnewtechnology”,Jun2014

11 Mintel,“MarketingtoOver55sinChina”,Feb2015

12 ChinaAssociationoftheUniversitiesForTheAged(CAUA)

13 Zhang,He&Kohlbacher“Op-ed:China’selderlyposenewchallengesfore-commerceand

e-learning”,Aug2015

14 The Chinese Research Center on Aging

15 Neilsen“ThreekeytrendsinChina’sFinancialIndustry”,Jan2015

16 DeputyHeadofChineseResearchCenteronAgeing,JunwuDang,ChinaDaily,Sep2014

17 MaJun&XiaoMingzhi,“ResearchintoChina’sstatebalancesheet”,2012

18 TowersWatson,“ThedaysofChina’sOldLifeInsuranceGrowthModelareNumbered”,

Feb2015

19 SwissRe,SigmaNo3/2014–WorldInsurancein2013:steeringtowardsrecovery

20 ChinaInsuranceRegulatoryCommission

21 InsuranceAssociationofChina

22 EuromonitorInternational

23 BostonConsultingGroup,“GlobalWealth2014Report”

Note:ExchangerateusedRMB10=£1.00

www.cbbc.org 25 |

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