Strategy Note /
China

Revealing the hidden 'silver consumption' in China

  • The silver market will be the next blue ocean for the consumer goods market in China

  • The only country with an aged population of over 100 million, great opportunities are hidden in the 'grey-hair' market

  • We believe that the spending power of the silver group will reach CNY 20 trillion in 2030, from CNY 4 trillion in 2014

Skye Lan
EqualOcean
10 November 2021
Published by

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The silver market will be the next blue ocean for the consumer goods market in China.

Consumer shopping

'Grandpa Beihai' (Chinese: 北海爷爷) is a hotkey opinion leader (KOL) on Douyin – Chinese 'Tik Tok,' who defines himself as 'a 74-year-old young man who lives his life'. This elderly gentleman even uses more products than many young people – like essences, perfume, hair glue, and facial masks. His attitude to life has attracted 14 million followers on Douyin. On the Chinese Internet, we can find a clear trend that this older generation is getting mentally younger. 

In 2021, elders aged over 50 constituted over 25% of the total population. As the only country worldwide with an aged population of over 100 million, great opportunities are hidden in the 'grey-hair' market. 

We believe that the spending power of the silver group will reach CNY 20 trillion in 2030, from CNY 4 trillion in 2014.

The urban seniors show an 'olive-shaped' income structure, with over 71% of them reaching middle-to-high income, of which 41% comes from sources other than the pension and salary. However, markets and brands are focusing on the young generations, leaving the elder population neglected. 63% of the seniors' population is gathering in the middle, while the industrial supply is polarized, with the focus on either bottom-demand or the high-ends. 

Here we take a fresh look at this silver population and discuss what might be the investment opportunities hidden therein. 

Redefining the seniors 

Seniors in China are actually not yet 'old.' When Bismarck proposed 65 as the retirement age 140 years ago, the average life expectancy was less than 45 years old – now the average life span in China reaches 76 years old. We believe before 75 should be considered as 'post-middle-age,' as they are mostly healthy and energetic. 

The consumption upgrade is happening to those people as well. The saving habits they have are the bedrock of a  savings trove which they can consume now when they have plenty of flexible time. Many interests have been created with their abundant free time, with diversifying demands showing up. What is more, the internet has turned into an important shopping and news channel. 

Silver netizens

According to the China Internet Network Information Center (CINIC) that by end of June 2021, netizens over 50 years old accounted for 28% of the total number, reported 283 million. The percentage was only 9.4% five years ago in 2016, an absolute number increase of 220 million. 

In 2020, the elderly population over 60 years old spent 16.2 more minutes daily compared to 40+ people, reaching 64.8 minutes a day. Douyin, WeChat, Kuaishou were the main apps that catalyzed this trend. More silver netizens started sharing their lives and social networking online through social media and short video platforms. 

The Internet has tapped the potential of spending power among the elder population. More than 10 million users on Alipay come from a population over 55 years old, and over 30 million users on Taobao and T-mall platforms are people over 50 years old, with an average annual consumption of CNY 5000.

Affluent silvers – consumption upgrade 

The richest generation of the elder population in China has come. 

We believe the silver economy has two meanings. First, the elder population is treating themselves, and second is children supporting their old parents. Elder people, especially those between 65 to 75 years old, have been saving for their entire lives as a Chinese tradition, and are getting support from their only child, who is likely riding the wave of rapid development within the country and getting rich. For a population that just entered the 50+ years stage, who are mostly highly educated, we see higher standards of life and better jobs with higher salaries than the previous generation of seniors. 

The consumption upgrade has penetrated into the silver population as well. Though they still spend most of their money on food, they become extremely picky and care more about their health. They are willing to pay a premium for better food and health supplements.

Furthermore, the buying decisions seniors in China are highly...

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