Firms wise up to aging challenge

Companies eye opportunities as spending power of nation's older people set to rise

"Show your love for your parents and grandparents, who have cared for you since you were a baby; care for them now, like they are babies."

So reads a slogan for a shop on Taobao - an online marketplace - selling adult diapers.

Lu Jianxiang, the shop's owner, said that sales of adult diapers have been increasing over the past two years.

"Although the sales volume is much lower than baby diapers, the growth rate is much higher," said Lu.

"China is becoming an aging society. The elderly, including our parents and grandparents, deserve a dignified life," said the 32-year-old Beijinger.

China had 185 million over-60s by the end of 2009, accounting for 13.7 percent of the population. That number will jump to 221 million by 2015 and 250 million by 2025, according to the Ministry of Civil Affairs.

A report from international marketing firm Ogilvy & Mather said that Chinese senior citizens' spending power is rising.

They command about 300 billion yuan ($47.21 billion) to 400 billion yuan in annual disposable income, a figure which is expected to grow to 5 trillion yuan over the next three decades.

As a result, the demand for various products and services for the elderly will witness a boom in the coming decades in China, which will also be prompted by the increasing spending power of the daughters and sons of the elderly, said the report.

Personal care

Adult diapers, which are usually for the elderly and people suffering from urinary incontinence, were introduced into the Chinese market a few years ago.

Lu's online store sells a number of brands including Depend, from international paper-based personal care products company Kimberly-Clark Corp, Chinese brands Qianzhiya and Baodaren, and Merries from Japan-based chemical and cosmetics company Kao Corp.

"The adult-care category is growing at low double digit rates today in China," said Kenneth Whitaker, sales and marketing vice-president of Kimberly-Clark China.

"Depend is growing slightly faster than the category average and we expect the next three to five years to deliver consistently healthy growth," he said.

The main distribution channels for Depend are hypermarkets, supermarkets and increasingly e-commerce.

Zhu Weihua, an analyst at domestic brokerage China Merchants Securities, said that the size of Depend products in China is somewhat smaller than those in the US and European markets.

The company has introduced multiple choices for Chinese consumers, such as protective underwear and a strapped diaper - which is easier to put on and take off.

There is also a type that is suitable for paralyzed elderly people. It has an adjustable elastic plaster at the back to prevent leakage when the user is lying down. It is also fitted with a gauge to indicate the quantity of urine.

However, Whitaker said China's adult-care market is generally underdeveloped compared to others in Asia and is primarily focused on briefs and bed pads.

Depend is relatively unknown in China, so distribution is limited compared to Kimberly-Clark's many other well-known consumer goods categories.

Price is also a factor, as foreign brands, such as Depend, generally cost 30 to 50 percent more than their Chinese counterparts.

"We like to think that our advantages include excellence in quality, a differentiated positioning of our brand and fair pricing. When combined we believe these elements are very compelling for our Depend users," said Whitaker.

He added that elderly consumers in China are "quite reluctant to spend on themselves, preferring to spend their hard-earned savings on their children and their grandchildren".

But Zhu said things are changing, as elderly people pay more attention to their quality of life, and their children have the ability to spend more money on their parents and grandparents.

In addition to adult-care diapers, demand is also rising for items such as false teeth, hearing aids, electronic blood pressure monitors, and wheelchairs.

Medical devices

Family of Health is China's largest chain retailer specialized in selling health-related items for elderly people, including wheelchairs, household treatment appliances, small blood-sugar testing machines and special food products.

Established in 2004, the company now has more than 300 direct and franchised stores around China, and its average sales are increasing at more than 20 percent annually.

Bai Yi, general manager of the chain retailer, said while it had previously focused on selling foreign brands, it is now turning its attention toward domestic products, as they are more tailored to local people and are generally more affordable.

Medtronic Inc, the developer and the world's largest producer of pacemakers, opened a new R&D facility in August in Shanghai, says an important part of its work here is to deal with China's aging problem.

"We have noticed the rapidly growing number of seniors in China who need our products. They are living longer, and we want them, meanwhile, to live well," said Simon Li, Medtronic vice-president and the company's president in China.

The US-based company now provides devices and solutions for more than 30 diseases and conditions primarily affecting the elderly, including cardiovascular illnesses, Parkinsons, urinary incontinence, diabetes and osteoarthropathy.

Meditronic's facility, the company's only one outside the United States and Europe, plans to increase its payroll from the current 100 to more than 1,000 over the next five years, including hundreds of engineers, to help meet the growing demand for its products.

"They will jointly work with local counterparts, academic institutes and universities to develop locally tailored products and technologies," said Li.

In August 2011, Medtronic promoted a pacemaker with newly developed materials on the Chinese market, which can be used safely when patients are undergoing magnetic resonance imaging examinations.

The new pacemaker will not influence imaging results and cannot be influenced by other examination machines, an important factor for elderly people, who tend to require more physical examinations of this kind.

The device for Parkinsons patients can be installed in the patient's brain and they can control it easily with an extracorporeal controller.

A device for diabetics has a small insulin pump that can be linked with body via a thin pipe, thus insulin can steadily enter the patient's body and they do not require regular injections.

Meanwhile, with the increasing incidence of these chronic diseases, also called lifestyle illnesses, among middle-aged people, such equipment is becoming increasingly popular, said Li.

The sector is promising and more products and services can be explored, according to Zeng Qi, secretary-general of China Elderly People's Industry Association.

"Demand for entertainment, tourism, education and financial services specifically for the elderly is still at a burgeoning stage in China, in which foreigner investors can play an active role introducing new service models from developed markets," Zeng said.