Silver lining: Tuition centres bet on elderly market in rapidly ageing China
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Women attend a singing class at Mama Sunset, a learning centre for middle-aged and senior people in Beijing, on Jan 17.
PHOTO: REUTERS
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BEIJING - China’s rapidly ageing population is fuelling a promising and fast-growing market for companies providing recreational classes and activities for the elderly middle class, from yoga to African drumming to smartphone photography.
The growth potential of the industry contrasts sharply with the decline of the after-school private tutoring sector, following a government crackdown in 2021 aimed at boosting record-low birth rates by lowering education costs.
“Education industries are transitioning to the silver economy,” said Mama Sunset’s Beijing head Qiu Peilin. The firm is an elderly learning business which has opened five centres in the Chinese capital since it was launched in April 2023.
Consulting firm Frost & Sullivan expects China’s senior learning market to grow at a compound annual growth rate of 34 per cent by 2027 to 120.9 billion yuan (S$22.8 billion), up from 28 billion yuan in 2022.
It is a numbers game.
Over the next decade, roughly 300 million Chinese will enter retirement. This is the equivalent of almost the entire population of the United States. One in every two people aged over 65 in the Asia-Pacific region will live in China by 2040, Euromonitor estimates.
While China’s demographic crisis is threatening its industrial base, government finances and poverty alleviation efforts, some investors see the growing pool of elderly folk as a sure bet.
Mama Sunset, which offers 20 different classes to thousands of Chinese aged 50 and above, is in talks with domestic investors to expand to 200 franchised centres across the country in the next three years, when it wants to list on the Hong Kong exchange.
Nasdaq-listed Quantasing – the largest online elderly learning provider in China, according to Frost & Sullivan – plans to hire more taiji and traditional medicine tutors to add to existing classes ranging from memory training to video editing.
It also plans to leverage its customer base to sell products such as moxa sticks, used in traditional medicine, and baijiu, a Chinese liquor.
Quantasing’s revenues grew 24.7 per cent year on year for the final quarter of 2023 to 980.5 million yuan, while its total registered users shot up 44.6 per cent year on year to 112.4 million at the end of 2023.
The firm’s chief executive Matt Peng said: “It’s a real sunrise industry.”
Mama Sunset offers 20 different classes to thousands of Chinese aged 50 and above.
PHOTO: REUTERS
China’s government is also getting involved, announcing in January 2024 tax incentives and financial support for products and services for the elderly. Chinese Premier Li Qiang pledged in March further efforts to develop “the silver economy”, without elaborating.
The provincial government of Hebei provided the land and space for Mama Sunset’s Cangzhou branch as part of a poverty alleviation programme.
Big base, low income
Some analysts warn, however, that a flood of investment into industries targeting the elderly may get ahead of itself if China cannot make the leap that other ageing societies have made – escaping the middle-income trap first.
Low retirement incomes and insecurities related to basic needs including healthcare, in a society where many of the elderly are reliant on their children for financial support, will limit the industry’s potential, analysts said.
Ms Rachel He, research manager at Euromonitor, said China’s elderly population was a promising consumer base, but it was questionable whether it would match the significance of the market in Japan and South Korea in the near term.
She cited “deep income inequality” and more conservative attitudes among Chinese elderly folk, who are less inclined to spend money on themselves.
A teacher coaches an elderly person during a yoga class at Mama Sunset in Beijing.
PHOTO: REUTERS
Average monthly urban pensions range from around 3,000 yuan in less-developed provinces to about 6,000 yuan in Beijing. Financial company Nomura estimates that 160 million Chinese receive rural pensions of only around 100 yuan a month.
One class at Mama Sunset costs 50 yuan to 60 yuan, while a 36-class package costs 1,980 yuan. At Quantasing, one- to three-month packages range between 1,980 yuan and 3,699 yuan.
Ms Cui Chunyun, a 60-year-old retired accountant in Beijing, takes Mama Sunset’s dance classes to stay fit so she can keep pace with her five grandchildren and delay having to go to a nursing home.
“I want to be able to move, even people older than 70 can still dance; we have to move to live.” REUTERS
