THE ECON­OMY OF AG­ING

不要害怕老之将至:养老产业的商机

The World of Chinese - - Editor's Letter - BY LIU JUE (刘珏)

In a rapidly ag­ing na­tion with a lessthan-sat­is­fac­tory so­cial se­cu­rity sys­tem, one com­pany sees the op­por­tu­nity to make a change. Along the way they are chang­ing so­ci­ety's at­ti­tude to­ward ag­ing.

Once the di­rec­tor of the Mar­tial Arts As­so­ci­a­tion in Jin­hua, Zhe­jiang prov­ince, and a Bei­jing Olympic torch­bearer, 66-year-old Miu Long­sheng ar­rives on set in a wheel­chair with the help of his 63-yearold wife, Zhao Linli. Hav­ing re­cently suf­fered a stroke, he no longer has the abil­ity to walk or speak. Wear­ing a black and white rac­ing suit and pos­ing in front of a race car with his wife in a match­ing out­fit, the years seem to fall away, and when the crew compliments them, Miu lifts his head back and laughs with joy.

Called the “The Mod­ern Grandpa and Granny Pho­tog­ra­phy Com­pe­ti­tion,” this event, or­ga­nized by Natali, a Shanghai health­care com­pany, was in­spired by a se­ries of im­ages cre­ated by pho­tog­ra­pher Xiaoye Jiexi. Xiaoye put his 85-year-old grand­fa­ther—a man who lived his en­tire life in the coun­try­side as a

farmer—in mod­ern out­fits and took pic­tures of him hang­ing out in the city. The shots went vi­ral in early 2016. This op­ti­mistic at­ti­tude to­ward ag­ing is an ex­pand­ing trend in to­day’s China, one that com­pa­nies like Natali are keen to in­dulge.

With the help of a group of stylists and Xiaoye him­self as the pho­tog­ra­pher, the com­pe­ti­tion at­tracted el­derly con­tes­tants through lo­cal news­pa­pers, giv­ing them a com­plete makeover. “Many older peo­ple are used to a sim­ple, ca­sual life, but we want to show them the pos­si­bil­i­ties of a col­or­ful life through the trans­for­ma­tion of their ap­pear­ance,” Wan Qin­jing, brand­mar­ket­ing di­rec­tor at Natali, ex­plains. “They can have all kinds of in­ter­ests and hob­bies and, most im­por­tantly, peo­ple should en­joy a cer­tain qual­ity of life whether they are young or old.”

A sim­i­lar event, held in June 2016, was the Sum­mer Sol­stice Mu­sic Fes­ti­val rock con­cert held at Shanghai’s MAO Live­house for a se­nior au­di­ence, fea­tur­ing a band with mem­bers all over the age of 50. “The au­di­ence was made up of grannies and grand­pas who had never heard rock mu­sic be­fore,” Wan said. “A doc­tor on our team thought the mu­sic was too loud and warned us that the se­niors in the au­di­ence might have a heart at­tack, so when they ar­rived, our staff tried to per­suade them to sit a lit­tle bit fur­ther from the stage and warned them that it might be too much for them. To our sur­prise, many re­fused and took front-row seats.” The con­cert was a roar­ing suc­cess.

As mar­ket­ing strate­gies go, th­ese tac­tics are cer­tainly dif­fer­ent. More of­ten than not, even in com­mer­cials and ads for prod­ucts de­signed for se­niors, they are de­picted as the

pas­sive re­cip­i­ents, smil­ing and nod­ding at their chil­dren, who make the money to buy them those prod­ucts. To­day, it seems that the only way an el­derly per­son can make head­lines is when tragedy strikes or empty nesters call for the fil­ial at­ten­tion of their way­ward off­spring. The el­derly are hardly hid­den away— seen ev­ery­where in the morn­ing, walk­ing and chat­ting with friends in ex­er­cise in parks—but from a mar­ket­ing stand­point, most don’t see the el­derly as in­di­vid­u­als, rather a de­mo­graphic.

With an ag­ing pop­u­la­tion, how­ever, changes are bound to hap­pen. By 2050, there will be 300 mil­lion peo­ple above the age of 60 in China, roughly equal to the en­tire pop­u­la­tion of the US. Though it is in­deed a chal­lenge to China’s fu­ture econ­omy and so­cial se­cu­rity sys­tem, the ag­ing pop­u­la­tion is

also a po­ten­tially prof­itable mar­ket for health­care-re­lated ser­vice providers and prod­uct man­u­fac­tures.

Among th­ese providers is Natali Health­care So­lu­tions, the largest pri­vate health­care ser­vice com­pany in Is­rael. It joined San­power Group, a con­glom­er­ate based in Nan­jing, through a 70 mil­lion USD pur­chas­ing deal in 2014. With 30 years of ex­per­tise in pro­vid­ing tele­care, telemedicine, and emer­gency med­i­cal ser­vices, Natali has since ex­panded to China with the hope of adapt­ing its es­tab­lished busi­ness model in the grow­ing Chi­nese mar­ket. From the ba­sic panic but­ton to the more com­pre­hen­sive home­care and dig­i­tal “smart care,” the com­pany of­fers a range of so­lu­tions pre­vi­ously un­avail­able to Chi­nese con­sumers, most no­tably the abil­ity to build a per­sonal health data­base through de­vices at home to mon­i­tor health and con­sult med­i­cal ex­perts re­motely.

As one of many Chi­nese com­pa­nies ac­quir­ing over­seas brands and as­sets, San­power is cer­tainly bold in its ac­tions. In the same year it pur­chased Natali, the group also brought Bri­tish depart­ment store group House of Fraser and US fancy gadget re­tailer Brook­stone. When asked about th­ese moves, Yuan Yafei, founder and chair­man of San­power told China Daily: “The Chi­nese mar­ket is huge enough. But we don’t have enough ex­pe­ri­ence. With the help of money, I can buy Western brands and tech­nolo­gies, which are ex­actly what Chi­nese com­pa­nies lack.” On the other hand, San­power’s ex­pe­ri­ence through its own brand in the health­care sec­tor, Ankang­tong, can of­fer more in­sights to the lo­cal mar­ket as a part­ner com­pany of Natali.

Natali’s thou­sands of users, gained since it started op­er­a­tions in 2016,

THE MAR­KET IS CUR­RENTLY LIMITED BY THE PUR­CHAS­ING POWER OF THEIR EL­DERLY CON­SUMERS, AND STRENGTH­EN­ING THAT POWER SEEMS DIF­FI­CULT, TO SAY THE LEAST.

is a drop in the bucket com­pared to Ankang­tong’s 2.8 mil­lion users across the coun­try. Orig­i­nally started as a call cen­ter in 1998, the com­pany has since spread to Shanghai, Jiangsu, Zhe­jiang, and eight other prov­inces, mainly in the form of gov­ern­ment pro­cure­ment and pro­vid­ing ac­cess to ser­vices such as panic but­tons, emer­gency ser­vices, house-keep­ing, and trans­porta­tion.

The cur­rent model for el­derly care pro­moted by the Chi­nese gov­ern­ment is la­beled “9073,” which means 90 per­cent of the el­derly are en­cour­aged to rely on their own fam­ily to pro­vide care, seven per­cent on pur­chas­ing ser­vices pro­vided by com­mu­ni­ties, or shequ (res­i­den­tial ar­eas gov­erned by the ba­sic-level city gov­ern­ment agen­cies), and three per­cent on re­tire­ment homes, ac­cord­ing to guide­lines from the Min­istry of Civic Af­fairs in 2011. Cost­ing only few hun­dred RMB per year, se­niors can sub­scribe Ankang­tong’s ser­vices through their shequ.

Con­sid­er­ing that 44 per­cent of Ankang­tong’s cur­rent users have a monthly in­come of less than 1,000 RMB, there’s not much room for profit. At the mo­ment the com­pany set­tles for cred­i­bil­ity and rep­u­ta­tion and hopes to grow the mar­ket in or­der to cut back on the per-user cost. “In­ter­net Plus” is an­other op­por­tu­nity for the com­pany to add value and at­tract more mid­dle class users.

The mar­ket is cur­rently limited by the pur­chas­ing power of their el­derly con­sumers, and strength­en­ing that power seems dif­fi­cult, to say the least. For decades China has strug­gled to build a healthy pen­sion sys­tem; the so­cial se­cu­rity tax on em­ploy­ees in the pri­vate sec­tor has in­creased ev­ery year, adding up to a stag­ger­ing 28 per­cent of an em­ployee’s in­come, 20 per­cent of which is paid by the com­pany and eight per­cent paid by the in­di­vid­ual. To­day’s pen­sion­ers are funded by the cur­rent work­force, and the fall­ing ra­tio of ac­tive-to-re­tired work­ers and limited channels of pen­sion in­vest­ment are plagu­ing China’s ail­ing so­cial se­cu­rity sys­tem.

The gov­ern­ment is more than happy to let the pri­vate sec­tor take over. Most re­cently, on De­cem­ber 23, 2016, the State Coun­cil an­nounced its plan for “fully open the el­derly care ser­vice mar­ket by 2020,” and en­cour­ages en­ter­prises to pro­vide di­ver­si­fied ser­vices.

Al­ready an in­dus­try leader, there’s still one prob­lem for Natali. “The big­gest ob­sta­cle we have now is con­ven­tional mind­sets,” Wan says. “[The cus­tomers we tar­get] like to say, ‘I’m fine, I don’t need this,’ even though many of them have the pur­chas­ing power. So through th­ese brand­ing events, we are also fil­ter­ing po­ten­tial cus­tomers who are openminded about changes and who are will­ing to pay for a qual­ity-of-life up­grade. We are a busi­ness af­ter all, but then, the best sit­u­a­tion is to pro­mote public wel­fare in the process of do­ing busi­ness.”

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