The Silver Economy : a golden opportunity ?
This column was previously published in Hong Kong Echo, the French Chamber of Commerce and Industry in Hong Kong (Winter 2019)
“China will get old before it gets rich”: remember the prediction of a former Nestlé CEO a few years ago when he was at pains to find excuses for his successive quarterly profit warnings? This was a splendid illustration of the West’s misunderstanding of how an ageing population would affect China, including Hong Kong. Even today, the West continues to quote ageing population with contempt as a key weakness of China for the future, thinking only in terms of uncovered liabilities. But like in numerous areas, the West can only foresee a looming crisis where Chinese people see future opportunities.
How can Hong Kong play a role?
One of the most surprising opportunities related to ageing may not lie in healthcare but in the financial industry — a key traditional strength of Hong Kong: namely, the savings and asset management sector. Promisingly, Beijing recently took the decision to open the mainland market to foreign players, allowing them to enter a region which — while accounting for less than 15% of today’s world investable assets — will represent more than 50% of worldwide industry growth over the next decade.
The biggest opportunity should obviously lie in redesigning the healthcare industry, where China will be keen to avoid the Western system’s moral hazard of excessive social benefits
The combination of declining interest rates and the necessary rebalancing of the mainland economy through internal consumption pushes Beijing to finally favour the remuneration of the very large savings pool of its ageing population: a tremendous opportunity for Hong Kong-based asset managers to enlarge their asset base while offering their long established know-how through managing savings in the Anglo-Saxon world.
The biggest opportunity should obviously lie in redesigning the healthcare industry, where China will be keen to avoid the Western system’s moral hazard of excessive social benefits, artificially boosting healthcare costs to around 10% of European GDP and close to 20% of that of the US. Expect rather a new industry model to emerge drawing inspiration from the traditional model of ‘money for value’ that has inspired previous generations in the region: one should be paying for the doctor only as long as remaining in good health, stopping funding in case of a disease until being definitively cured.
Startups take the lead
I have been fortunate enough to be personally involved in one of these new amazing startups emerging in the region, Active Global Specialised Caregivers, which has developed a unique home and day care offering for the elderly. Present not only in Hong Kong, but also in Singapore and Shanghai, its innovative model has allowed it to offer a unique service thanks to qualified nurses at a fraction of the cost of typical hospitalisation. Western governments should clearly try to copy this model when one takes into account that in a country like France, up to 25% of overnight stays in hospitals are deemed to be unjustified.
Talking HealthTech
But there is no doubt that the next opportunity will come from the HealthTech sector. Tim Cook, CEO of Apple, has already warned us that one should expect the biggest future contribution to society of smartphones — and in a broader sense, connected devices — to emerge in the healthcare sector, allowing for much improved prevention. Expect mainland China to be at the forefront of this revolution, and more particularly the Greater Bay Area, being already home to potential worldwide champions like Mindray in imaging, BGI Group in DNA sequencing, or Tencent — and Alibaba — backed startups in digital healthcare services.
At a time when Hong Kong will be keen to gather its population back towards common values and purposes, the Silver Economy offers a unique field where all energies should find a way of pursuing a common goal: to turn silver ageing into a golden area.
