China’s “baby boomers” are nearing retirement and will spend more on travel, health foods and commercial insurance than earlier generations, according to Credit Suisse.
The upcoming retirement of about 245 million people – about a fifth of China’s population – will lead to business opportunities for a host of industries, the Swiss investment bank’s China Quantitative Insight (CQi) team said in a report recently.
Much like the United States after the second world war, China witnessed a spike in birth rates in the 1960s following the end of the Great Famine. This was a lucky generation, entering adulthood when China began its great reform and opening up in 1978 that would eventually led to the economy ballooning 90 times in the following four decades.
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“They are the biggest generation ever born in China,” said David Murphy, who leads the CQi team, which surveyed more than 1,000 so-called baby boomers – people aged between 49 and 60 – across China in February and March. Another 500 current retirees were also polled.
“When you have this large cohort coming to retirement … it’s important to understand what they are doing, what they want to spend on and what they like.”
Compared with the generation that has already retired, China’s baby boomers are more likely to own property and a car, and have only one child, the survey found. This gives them greater independence and freedom to pursue their preferred lifestyle after retirement.
Travel, entertainment and fitness are sectors that could benefit the most, according to the report. Nearly half of the respondents said they planned to spend more on travel after retirement, making it their top area of interest and source of increased expenses. In comparison, less than a fifth of those who had already retired had increased their travel spending.
“The tourism market for Chinese senior citizens could potentially double,” the report said. Baby boomers expected to take an average of 6.3 trips per year after retiring, compared with just 3.5 trips undertaken by current retirees.
Health care services and health foods will also be in greater demand. More than half of the baby boomers were already taking dietary supplements, and 68 per cent expected to do so after retiring.
This cohort is also more internet-savvy than the older generation. About 57 per cent said they had shopped online in the past year, spending an average of 4,214 yuan (US$617). A sixth had food delivered in 2019. In contrast, only 29 per cent of retirees shopped online and just 4 per cent used food delivery services.
Additionally, a greater awareness of the shortcomings of the state health care and pension system was driving demand for commercial insurance among baby boomers, according to the report. About 40 per cent believed their social health insurance would not be able to cover their medical expenses in retirement, and the same percentage planned to buy commercial insurance as a result.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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