China’s aging population is driving the silver economy boom, but profits may prove elusive

Home services are a cheaper alternative to nursing homes and reduce accommodation costs, Du said. Most elderly Chinese are relatively healthy, and these able-bodied people may need a richer cultural life rather than care for the disabled, he said.

Cai Guixia, 60, said she found fulfillment in African drumming and modeling classes. She thinks she would feel “abandoned” in a traditional nursing home and would rather hire a home helper.

Liu Xiuqin, owner of two nursing homes, saw business opportunities in meeting these needs.

She invested more than 800,000 yuan (about $112,000) to open a school in Beijing. Cai and Zhang are among 150 students who take classes in dance, singing, yoga and modeling training for about 1,000 yuan ($140) per class each semester. Outside the classroom, her team organizes meetings where students can socialize.

Liu expects to break even in another year and is prepared for the wait. She believes in the future of the market because the generation born in the 1960s and later places more value on quality of life and health than their parents.

“It’s not about making quick money,” she said. “It takes persistence.”

Turning a profit is proving difficult for some silver economy companies.

In the southern city of Guangzhou, Wu Tang co-founded a school last year after his geotechnical survey and surveying company was hit by the downturn in China’s real estate market. His school offers courses to help people realize some of their childhood dreams, but he can’t cover the costs yet. He also faces competition from cheaper state courses.

And there’s Cui Yang, who runs a grooming center in Beijing and sends helpers zigzagging around the district to provide 30 yuan ($4.20) haircuts at home; Accompanying people on hospital visits for 50 yuan (US$7) per hour and other services. Despite government subsidies including free rent, Cui is losing money. Without the subsidies, the business would fail, she said.

The struggles are not just limited to small operators.

Wu Wenjing heads the home care department of a healthcare subsidiary of state-owned financial group China Everbright Group in Chongqing, southwest China. The company has been in the red for 13 years in a row, spending 5 million yuan (about $702,000) a year and still losing 1 million yuan (about $140,000) a year, she said.

Wu’s company employs 70 people who visit the homes as caregivers, rehabilitation therapists and psychotherapists. The industry is competitive and has a high turnover rate due to the difficulty of working alone in clients’ homes. Wu hopes to break even in five years and welcomes the government’s efforts to grow the silver economy.

“The spring of China’s elderly care business has finally arrived,” she said.

Various companies are trying to capture part of this government-sponsored market. Real estate developers such as Vanke Co. and Sino-Ocean Group, as well as insurance companies such as Taikang Insurance Group, have built high-end condominiums for older adults with amenities such as movie screenings, mahjong rooms and dining options.

China is also working to address the problem of dementia by offering cognitive screening tests and training staff to work in memory clinics or as social workers. Several Chinese pharmaceutical and biotechnology companies are working on drugs against Alzheimer’s disease and other forms of dementia.

Some empty schools and kindergartens – victims of the country’s declining birth rate – are now being converted into care facilities for older people.

The government’s efforts to support the silver economy are paying off: official data showed the country had 410,000 nursing homes in June, double the number in 2019.

Still, questions remain about the purchasing power of many older Chinese people.

A 2021 nationwide survey conducted jointly with China’s Ministry of Civil Affairs found that older adults have an average annual income of 11,400 yuan ($1,574). In rural areas it was less than half that. More than one in 10 elderly Chinese live in poverty, with living standards much lower in rural areas and western China, according to survey data from Peking University.

China’s silver economy is still in its infancy, said Gary Ng, senior economist at Natixis Corporate and Investment Banking.

Without enough insurance to cover medical and other costs, many older Chinese people have to set aside funds for those costs, limiting their spending capacity, he said, and it takes time to build industries that produce senior-friendly products and people who will are trained to provide such services. Tax incentives and investments in training skilled workers would help, he said.

“There are prospects here, but it seems that a lot still needs to be done,” he said.

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Associated Press researcher Yu Bing and video producers Caroline Chen and Wayne Zhang in Beijing contributed to this report.