Law firms interviewed: Dacheng Law Offices, DeHeng Law Offices
China is grappling with an escalating demographic crisis. In 2023, the senior population has ballooned by 30 million in the world’s second-largest economy, taking the total size of the elderly class to 300 million – almost a fifth of the country’s population.
In the meantime, the number of newborns has plummeted to an all-time low of nine million last year as economic challenges, soaring childcare costs and cultural shifts deterred couples from having babies. Deaths, on the other hand, have risen to 11 million - the highest since 1974.
The fatal combination has led to a population decline in a country in desperate need of a robust labour force to shore up its sputtering economy. But on the other side of the coin, some sectors are poised to see growing commercial opportunities in the wake of the demographic shifts.
In January, Beijing has released official guidelines to strengthen the so-called “silver economy” as part of the concerted efforts to tackle the challenges of an ageing population. The “silver economy” refers to a collection of economic activities that offer products and services tailored to the needs of the elderly population and aim to support them during the ageing process.
Spearheaded by the State Council, the guidelines detailed measures, including establishing ten industrial parks to facilitate sectors catering for elderly citizens, improving food and healthcare services, expediting the development of elderly care institutions, and stimulating consumption by senior citizens. Indeed, health-related consumption, ranging from medical devices to pharmaceuticals, is estimated to account for the biggest share of spending among the older age group.
SILVER WORK
Lawyers monitoring this development closely believe demand for legal services is set to rise in sectors propelled by the “silver economy” directives. “Notably, sectors like tourism, sports and recreation, elderly consumption, healthcare, financial services, and infrastructure development for the elderly are expected to unveil significant opportunities,” explains Charles Wu, a senior partner at Dacheng Law Offices in Shanghai.
Proactive policymaking might have injected strong momentum into these growth sectors, but admittedly China’s “silver economy” is still in its embryonic stage of development, which calls for a thorough understanding of the specific industry dynamics and financial intricacies to deliver tailored and effective legal advice. Lawyers believe that is one of the reasons legal services in this area will be in great demand.
One of those industries is the real estate sector. Wu, who also sits on Dacheng’s China Region Board, tells ALB that he has been entrusted by a few insurance companies to acquire a stock of hotels, flats, and other properties and convert them into high-end nursing homes after age-appropriate renovation.
Per the instructions from the government and state-owned enterprises, Dacheng has also been undertaking urban renewal projects in dilapidated communities in Shanghai. These communities usually accommodate a large population of elderly individuals, yet the deteriorating quality of buildings and housing conditions have rendered them unsuitable for habitation, according to Wu.
“When dealing with infrastructure construction, urban renewal, and other projects initiated by government or state-owned entities, it is crucial to thoroughly consider the financial balance and expected returns. Consequently, legal services should be provided with a focus on these fundamental factors,” says Wu.
DEEP POCKET
In a clear sign of commitment to developing the silver economy as a viable growth engine, Beijing has also allocated sufficient financial resources to support projects at the local level. For example, Wu has recently been commissioned by a local government to advise on the design, implementation, and investment management of a government-led urban renewal fund.
“With the silver economy being a prominent policy focus, it is foreseeable that the urban renewal fund will allocate a greater portion of its resources to ‘elderly +’ projects. These projects will foster the development of age-friendly infrastructure and services, catering to the specific needs of the ageing population and promoting their well-being within urban environments,” says Wu.
As the silver economy continues to mature, it will also create increasing demand for the integration of legal services, such as "insurance plus real estate,” “intelligence plus real estate,” “healthcare plus new retail” and so on, notes Wu. These novel demands could put law firms’ capability in cross-practice offerings to test.
However, it’s a less bullish picture for the private sector without the backing of policy support in terms of sustainable legal demand and long-term commercial viability.
Wang Jianwen, a partner at Beijing-based DeHeng Law Offices, says currently the size of private business actors remains relatively small. As such, not many of these private companies have the capacity to afford premium legal services as of yet, says Wang.
“In recent years, many law firms in China have dipped their toes in industries related to elderly care. But the overall size of that market remains slim, limiting firms’ ability to scale,” adds Wang.