The Silver Generation: The New Force to Propel Digital Economic Development

According to data from the National Bureau of Statistics, by the end of 2018, China's population aged 60 and above was 249.49 million, accounting for 17.9% of the total population, including 166.58 million above the age of 65, or 11.9% of the total population.

According to the Report on the Development of China's Old Age Industry published by the National Committee on Aging, between 2014 and 2025 the consumption potential of China's old-aged population will increase from 4,000 billion to 106,000 billion RMB and its percentage of GDP will increase to 33%. China's old-age industry has the greatest potential globally.

Armed with the use and the power of the internet, this silver economy is turning into the newest hardcore spending force.

Huge Potential Market

With the popularization of the mobile internet, social networks, online shopping and mobile payments are no longer exclusively the reserved of only the young and middle-aged. More and more middle-aged and elderly people are getting online.

According to a report published by market research institute QuestMobile that sheds some insights on the silver generation, the average length of mobile internet usage per person in the silver generation increased from 98 hours in December 2017 to 118 hours in December 2018, a YOY increase of 20.7%. Furthermore, on average, members of the silver generation spend nearly four hours per day online.

During these four hours, most of this silver generation are using apps made for social networking, entertainment, news and information. Of note, the active penetration rate of real-time communication apps has reached 84.5% while, on average, members of the silver generation spend 42.6 hours every month communicating via apps.

This is all understandable, considering the special characteristics of the time in which China's middle and old-aged population grew up, and the education they received. In their earlier years, consumer products, not to mention most forms of mental stimulus, were in short supply, making social relationships extremely important for the now middle-aged and elderly in China, who rely heavily on their children for mental support.

However, in the current situation, realistically, children have little time to spend with their parents, contributing to a stronger feeling of separation with the parents, needing its own social platform, such as WeChat, as a venue for emotional release.

Middle-aged and elderly people mainly use WeChat to keep in daily touch with their families, reading news and articles and so on. Their postings on WeChat Moments fit into strongly characterized categories that are delivering positive messages, for instance small tips for health and well-being, and life hacks.

WeChat has become an important platform for the silver generation to express their feelings as well as maintain social relationships. The numbers of this demographic who use WeChat is increasing by the day. In 2016, the number of active users aged 55 and above was only 7.68 million, but by 2018 this number had shot up to 63 million.

The number of those in the silver generation who use the internet is increasing daily. The demand for entertainment is also getting stronger, with the popularity of short video clips in recent years having emerged as a new found land for the silver generation.

On short video sharing apps such as Douyin (international version Tik Tok) or Kuaishou (international version Kwai), a group of middle-aged and elderly online celebrities have emerged. The strong characters and constantly witty remarks of stars such as You Benchang, Grandpa Jigong, Aunty Luo and Second Brother of Erlong Lake are a fun and fresh change from the younger online icons. Many members of the silver generation can feel a strong sense of belonging on these apps.

Short video clip of a mahjong game by Aunty Luo, who has 6 million fans on Douyin

From all the above, we can see that the demand for social networks and entertainment from within the silver generation may have by far exceeded our imaginations.

Data shows that in 2018, the scale of the Chinese market of social networks and entertainment in the silver generation economy reached 480 billion RMB, a YOY increase of 21.8%. It is predicted that in 2021, China's market of social networks and entertainment in the silver generation economy will reach 882 billion RMB.

Diversified Demand

Since taking into account the hobbies and interests of the silver generation, more and more business opportunities are emerging.

Square dancing is a very popular offline activity among middle-aged and elderly Chinese, incorporating mingling in a social environment together with physical exercise. According to the estimate by square dance startup Darfoo in its Industry Report of China's Square Dance Industry, in 2015, nationally, the number of square dancers was approximately 80 to 100 million. The huge numbers of square dancers drew the intense attention of the market.

Middle-aged and elderly participants in fan and square dances

It has come to TMTPOST's attention that, due to the huge market demand, many companies which provide more segmented services are emerging, such as short video clip sharing community Tangdu, which caters for the middle-aged and elderly population's demand for square dance content, and IFUN, a company that began with square dance shoes but later built up an e-commerce platform that also serves as a social network for square dance enthusiasts.

Furthermore, as a result of the continuous improvements to China's pension system, pension financing services that cater for the middle-aged and elderly have also emerged.

There are also several insurance companies or pension management companies who sell their personal wealth management products to individuals or institutions, including China Life Pension, New China Pension and Ping An Pension.

This category of products are sold primarily on online platforms such as Alipay, Tencent Licaitong and JD Finance. Characteristic features include short cycles, low starting purchase amounts, flexible purchasing, and relatively high returns compared to other products, making them highly popular with consumers.

By the end of 2018, Chinese pension funds had reached approximately 8 trillion RMB, or US$1.15 trillion, in total value, while total value of U.S. pension funds were US$28 trillion. Fair to say that the pension fund market in China holds enormous potential.

At the same time, these days more and more middle-aged and elderly people are traveling. Research by the National Committee on Aging shows that elderly people comprised more than 20% of China's total population of travellers in 2018, making the travel market for the elderly the second largest travel market only behind that of the middle-aged. In 2018, the tourism consumption of the elderly in China exceeded 400 billion RMB, while it is predicted that the figure will surpass 700 billion RMB in 2021, an increase rate of 23%.

Although the market is large, currently there are not many products that specifically cater for senior travellers. For example, most so-called tailored products developed by OTA (online travel agency) platforms consist mostly of 'history' or 'well-being' tours, and there is a need to develop new options for this group of travel consumers. There is sufficient scope for exploration in more segmented areas.

The silver generation economy is full of potential and ready to boom. On top of this gold mine, it is likely we will witness the birth of at least a few unicorns with valuations in the hundreds of billions of dollars.

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This article was edited by Dido Pang. The original Chinese version was written by Jia Boxin.

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