The recent report of Research on Development Strategy for Elderly Care Industry in China 2014 analyzed and pointed out that, the growth speed of Chinese population had been effectively controlled from the early 21st century to date, but under the momentum of the population growth, the number of people aged above 65 still reached 7% of the total population in 2000, which was the international redline of an ageing society. Although the aged people’s demand for elderly care is growing, the elderly supplies are still insufficient in the market. Thanks to the greater support from the government, the coming years will be the accelerated construction period of the silver industry. The development of the silver industry as an emerging industry of strategic significance has become one of the important and urgent strategic tasks in the socialist modernization construction in China. It is expected that the Chinese silver industry will reach a 10 trillion scale in the next 10 years.

Industry scale to be expanded for a promising future

The report has analyzed and showed that the present scale of the silver industry in China is still small. On one hand, the products and services for the elderly in China were amounted to only RMB 300 billion in 2010, and only 30% of the total consumption of the elderly was achieved in the elderly care industry, while the rest 70% was realized in general industries. On the other hand, rapid growth of the ageing population has generated a large number of job opportunities. From 2010 to 2030, the number of people engaged in the elderly care industry will increase sharply from 20 million to 78 million, which will make the employment rate higher by around 2%. If the ageing population and the nursing personnel are in the ratio of 3:1, then this job alone can contribute to employment of more than 10 million people.

Booming demand over inadequate supply

On the demand end, the aged people not only have a booming demand for elderly care services, but also have a rapidly growing consumption power. Chinese Academy of Social Sciences has pointed out in its research that the total amount of retirement pensions for the aged people in China will rise up to RMB 2814.5 billion by 2020 and RMB 7321 billion by 2030. On the supply end, at present there are only 20.5 beds available for every 1000 aged persons in the elderly care market, which is not only lower than the average level of 50% to 70% in the developed countries, but also lower than the level in some developing countries. In addition, a very big gap exists in the market between the increasing demand of the aged population for elderly care and the low annual output value of the products for the elderly as well as the limited number of service items from the elderly care institutions.

Underdeveloped industry with low degree of specialization and high level of product homogenization

At present, the silver industry in China as a whole is still underdeveloped. Without deep insights from market research and mature distribution channel, the overall industry is in an old, poor, small and loose condition, where scale economy has not yet formed. Meanwhile, there exist many problems such as high level of product homogenization, simple categorization, lacking in innovation, low level of technology, incomplete service items, and low degree of specialization, making it difficult to satisfy the aged people’s need for high-level and high-quality elderly care services.

Excessive undertaking by government departments and limited input by social forces

The development of silver industry benefits people’s livelihood and relates to social stability. The state has issued a series of preferential policies, including supply of land, provision of funds and reduction of taxes, in order to support the social forces to set up elderly care institutions or participate in the development of the silver industry. However, as the state policies are not yet put into practice and relevant supporting mechanisms for implementation of the policies are missing in some regions, the local governments still have to undertake excessive construction tasks, while the social and market forces are not able to give full play to their roles in promoting the development of the silver industry.  

From:ccidconsulting.com