Silver haired economy will become a new driving force for economic development

"To cultivate the main bodies of the silver economy, strengthen innovation in elderly products, and enrich the development of pension financial products, as well as vigorously develop the rehabilitation auxiliary device industry, etc." At the beginning of this year, the General Office of the State Council issued the "Opinions on Developing the Silver Economy and Enhancing the Welfare of the Elderly" (Guobanfa [2024] No. 1) (hereinafter referred to as "Opinions"), which clearly proposed this. This is also the first special document issued by the State Council to support the development of the silver economy. With the support of policy, the silver economy is showing great market potential and broad development prospects.

A few days ago, the 2024 International Forum on Social Security and Pension Finance, hosted by China Europe International Business School and the China Europe International Business School Social Security and Pension Finance Research Institute, was held in Shanghai. Many experts and scholars expressed their opinions on the development of the silver economy and the construction of the "three pillars" of the social security system.

Wang Hong, Dean of China Europe International Business School, said that in the future, we should focus on empowering the elderly care industry with technology, further expand new tracks in the elderly consumer market, and support the high-quality development of elderly care services and industries with pension finance. At the same time, promote the coordination of multiple entities such as government, society, enterprises, and individuals to comprehensively promote the high-quality development of the elderly industry, so as to provide a healthier, happier, and happier old age life for Chinese elderly people.

Advertisement

What is the market potential of China's silver economy? How should we vigorously develop the silver economy and expand the elderly care service industry? The reporter of China Business News interviewed Rui Meng, a professor of finance and accounting at China Europe International Business School and director of the China Europe Wealth Management Research Center. In Rui Meng's view, the development of the silver economy will benefit multiple industries, from medical health to tourism and leisure, to smart homes and smart robots, as well as education and financial technology industries.

It may become a new economic growth point. According to the "2024 China Silver Economy Development Report" released by the consulting company Frost & Sullivan, in 2023, the market size of China's silver economy has reached 7.1 trillion yuan. With the continuous maturity of the industry and further optimization of policies, it is expected that by 2028, the market size of China's silver economy will reach 12.3 trillion yuan, with a compound annual growth rate of about 11.8%.

The silver economy has a broad market prospect and may become a new economic growth point. The aforementioned "Opinions" also pointed out that in the future, the silver economy will focus on diverse needs and cultivate potential industries. This includes improving the promotion catalog of smart health and elderly care products and services, promoting the integrated application of new generation information technology and smart devices such as mobile terminals, wearable devices, and service robots in home, community, and institutional elderly care scenarios, developing smart products such as health management, elderly care supervision, and psychological comfort, and promoting the application of smart nursing robots, home service robots, and smart anti-lost terminals.

The Jiangsu Provincial Government General Office recently issued the "Implementation Plan for Promoting the High-Quality Development of the Silver Economy", which also clearly proposed to accelerate the scale, standardization, clustering, and branding development of the silver economy, cultivate high-precision and high-quality products and service models, and strive to build a first-class silver economy development highland in China. According to the development goals, by 2027, the silver economy industry system in Jiangsu Province will be basically sound, with the construction of more than 10 silver economy characteristic parks and the addition of about 20 provincial-level specialized and new enterprises.

In Rui Meng's view, the development potential of the silver economy in China is huge, not only because of its astonishing market size estimates, but also because of the profound social needs and policy orientation behind it. "As China gradually enters a deeply aging society, the silver economy will become a new driving force for economic development. It can not only meet the growing diversified needs of the elderly group but also promote the upgrading and innovation of related industries, forming a new economic growth point."The rise of the silver economy is not only a strategic choice to cope with the aging population but also a new opportunity to promote high-quality economic development. Rui Meng told the reporter: "Under the impetus of policy, the silver economy is facing new opportunities for technological innovation and service upgrading. For example, the promotion of intelligent nursing robots, home service robots, the development of rehabilitation assistive device industry, and the cultivation of potential industries such as anti-aging and smart health care for the elderly will all inject new vitality into the silver economy."

It is worth noting that the Standing Committee of the National People's Congress recently reviewed and passed the "Decision on Implementing a Gradual Delay in the Legal Retirement Age," which will be implemented from January 1, 2025. This will have a certain impact on private pensions in the silver economy.

Relevant data shows that the pension replacement rate has become a key indicator to measure whether the standard of living after retirement can remain unchanged. At present, there is still a certain gap between China's pension replacement rate and the ideal replacement rate recommended by the World Bank.

In response, Rui Meng said that it is particularly urgent to further develop the private pension market to make up for the insufficiency of public pensions and to make public and private pension assets more abundant. In his view, considering the accelerating trend of China's population aging, the development of private pensions is not only an economic issue but also a social issue that requires the joint attention and efforts of the whole society.

"The increase in the scale of private pensions is a systematic project that requires the joint efforts of the government, market, and society. Through continuous policy support, market innovation, and public education, the development of the private pension market can be effectively promoted, providing workers with more abundant retirement security and ensuring that the standard of living after retirement remains basically unchanged." Rui Meng said.

Properly solving the supply and demand dilemma

In fact, the silver economy still faces certain development dilemmas on the supply and demand sides.

From the supply side, there is still a shortage of professional talents in the silver economy. According to the "Survey Report on the Participation of Social Service Organizations in Home and Community Elderly Care Supply" released on the official website of the China Research Center for Aging Sciences, social service organizations participating in home and community elderly care services face relatively prominent issues such as "low salary treatment," "shortage of service talents," "high labor intensity of employees," and "instability and high mobility of the employee team."

In response, Rui Meng said that to improve the current talent shortage problem, joint efforts are needed in policy guidance and incentives, construction of education and training systems, and enhancement of industry attractiveness.

"The government should introduce more encouraging policies, such as tax exemptions and subsidies, to attract social capital to invest in the silver economy, especially in talent training and introduction." Rui Meng told the reporter that in addition to policy support, it is also necessary to accelerate the formulation of industry standards, clarify the professional standards and training requirements for each position in the silver economy field, and enhance the attractiveness and professionalism of the industry."At the same time, it is necessary to strengthen cooperation with universities, establish majors related to the silver economy, provide opportunities for internships and practical training, and cultivate compound talents; establish a lifelong learning platform to provide continuous education and skill updating opportunities for working personnel to adapt to industry changes." Rui Meng further stated that in addition to professional education and training, it is also necessary to improve compensation and benefits to enhance the attractiveness of the silver economy industry and reduce talent loss.

From the perspective of demand, behaviors such as "low-price groups" and "high rebates" that induce the elderly group to consume and even commit fraud have also hindered the development of the silver economy to a certain extent.

Rui Meng told reporters that it is necessary to properly resolve fraud behaviors around the elderly group. On the one hand, it is necessary to strengthen education for the elderly consumer group, improve their ability to identify fraud behaviors and self-protection awareness, and avoid falling into traps such as "low-price groups" and "high rebates".

On the other hand, it is also necessary to introduce laws and regulations specifically aimed at the silver economy, strengthen market supervision of products and services related to the silver economy, crack down on illegal behaviors such as false propaganda and price fraud, and maintain a fair competitive market order." Rui Meng further stated that it is also necessary to establish and improve a consumer complaint mechanism for the elderly, ensuring that the elderly have channels to reflect problems when they encounter issues, and relevant departments can intervene in a timely manner.

Building a Silver Economy Ecosystem

Through the "trade-in" policy, stimulating consumption among the elderly group is becoming one of the new ways to tap into the growth potential of the silver economy.

The reporter noticed that in September this year, the consumption "trade-in" policy released by Shanghai proposed to subsidize products suitable for the elderly, including 15 types of products suitable for the elderly such as smart cameras, smart video door locks, smart call devices, anti-fall care equipment, and nursing function beds, which were included in the subsidy range for the first time, with a maximum reduction of 2,000 yuan per order.

In Rui Meng's view, this will have a positive impact on the silver economy. "A series of favorable policies not only help to activate the stock market and promote consumption upgrades but also accelerate innovation in products and services suitable for the elderly, promoting the comprehensive development of the silver economy."

"How the policy is implemented still needs to pay attention to the subsequent implementation strength and market feedback, ensuring that subsidies can accurately reach the target group, while encouraging enterprises to provide more high-quality products suitable for the elderly, and jointly building a healthy and sustainable silver economy ecosystem." Rui Meng said.

However, despite the huge development potential, there are still relatively few high-quality targets in the silver economy track, and the investment space for capital in the aging industry is limited.Expanding the investment space in the silver economy requires not only attention to the basic living needs of the elderly but also a focus on their spiritual and cultural, as well as health and sports, higher-level needs. In addition to traditional nursing and daily life products, the demand for culture, education, and healthy living among the elderly is also growing.

"It is necessary to build a complete ecosystem through innovative products and services, while strengthening brand building and market segmentation efforts, to achieve high-quality development of the silver economy and create a more colorful later life for the elderly," said Rui Meng.

Vigorously tapping into the potential of the silver economy also requires the support of capital investment. "As an important means to cope with population aging, the development potential of the silver economy cannot be ignored," Rui Meng believes that through policy guidance, market cultivation, product innovation, investment environment optimization, and strengthening attractiveness, capital's enthusiasm for investment in the silver economy can be effectively stimulated, promoting the healthy and rapid development of this field.

"Encouraging capital investment in the silver economy requires the joint efforts of the government, market, and enterprises. It is recommended to introduce a series of comprehensive measures to create a favorable investment environment, thereby attracting and guiding capital to the silver economy field, and jointly promoting the prosperous development of the silver economy," Rui Meng said.