Hello, I am working on an assignment related to the long-term implications of Ch

Question

Hello, I am working on an assignment related to the long-term implications of China's "One Child Policy". After reading the Wall Street Journal article below, please complete the three questions at the end.

Article

BEIJING—Companies looking to make money off Chinese consumers have for years targeted lucrative niches like the young and the rich. Now many are eyeing a different market: the elderly.

Researchers at Abbott Laboratories ABT 0.45% in Shanghai are busy testing flavors of nutritional drinks for China’s senior citizens. Kimberly-Clark Corp. has launched television ads for its Depend adult diapers and expanded distribution online. Local e-commerce companies like Alibaba Group Holding Ltd. BABA 0.25% and JD.comInc. are rolling out senior-focused marketing pushes.

The companies are after the growing ranks of people born during a Mao Zedong-inspired baby boom that took the country’s population to nearly one billion people in 1980 from 542 million in 1949. China’s birthrate dropped sharply during the 1970s and 1980s as the government reversed course and implemented a one-child policy.

The boomers are now hitting old age: China’s over-65 population is projected to soar to 210 million in 2030 from 110 million, and by 2050 will account for a quarter of China’s total population, according to United Nations data. By then, the U.N. says, China’s elderly population may exceed the entire U.S. population.

“What has us interested…is that half a billion people over the age of 60 will be living in China over the next 35 years,” said Scott White, president of Abbott’s international nutrition division. China’s elderly are hardly affluent. The average monthly pension income for an urban resident as of last year was a little over 2,000 yuan, or about $320, less than half the average wage of an urban worker, according to government statistics, though payouts vary by region and program.

China’s graying population represents a major problem for Beijing. It is facing a potential shortage of young workers who can support the elderly as a result of its one-child policy, which leaders recently relaxed.

Han Wenzhen, a 75-year-old retired factory worker browsing for fish and soy sauce at a Beijing Wal-Mart recently, said he was skeptical of e-commerce, and his senior-specific purchases consist mostly of long underwear and thick down coats. “We just want to stay warm,” he said.

But the sheer numbers make Chinese seniors a big market. Sales of goods and services for the elderly could reach 106 trillion yuan by 2050, up from four trillion yuan in 2014, according to the China National Working Commission on Aging’s “China Report on the Development of the Silver Hair Industry.”

Many companies doing business in China previously focused their efforts on luxury baubles and baby bottles, said Matthew Crabbe, a director of research at consultancy Mintel Group, leaving other niches untouched. That left consumers like a 70-year-old Beijing woman who gave her name as Lao Fu, or Old Fu, seeking out products that better fit her needs. “There are plenty of vitamins everywhere, but I need stools that aren’t too low to the ground,” she said, adding that more companies need to design products for aging knees and aching bodies.

Swiss food company Nestlé SA in 2011 began building free health-check stations that let seniors check their blood pressure and cardiovascular health in outlets of retailers like Wal-Mart Stores Inc.and Carrefour SA across China. Nestlé sells at retail a senior-targeted milk nutrition powder that it rolled out for the Chinese market in 2009.

Aware of the reputation of elderly Chinese as skinflints, many companies seeking their business are marketing to their children—a potentially effective strategy in a country where adult children feel deep cultural pressure to take care of their parents.

Ms. Fu said that—with the help of her daughter—she often shops online, buying everything from clothing to chairs on Alibaba Group’s Taobao marketplace. “She taught me two years ago and now I shop on it at least once a month,” Ms. Fu said.

Alibaba, with two million online shoppers over the age of 50, according to a 2013 company survey, recently launched a senior shopping section on Taobao where links to products like slippers and long underwear are more readily available, a spokeswoman said. Rival JD.com said it is revving up marketing to reach children who shop for their parents online. In November it aired an online advertisement about a young man who replaced his parents’ old sound system after some safety problems.

The companies declined to disclose specifics on sales figures for senior-related products on their sites.

In September, Chinese electronics company Hisense Co. launched a smartphone for seniors featuring easy-to-access flashlight and medical-help options. The phone, the E360M, also sends automatic texts to loved ones when seniors activate emergency functions.

Abbott has spent the past six months setting up distribution in more than 11,000 retail outlets and pharmacies across China. For Lunar New Year, a prime gift-giving season, the Illinois-based company is stocking retail shelves with special gift sets of Ensure, a senior nutrition drink.

Abbott plans to vastly expand its product offerings to cater to China’s elderly, said Mr. White.

Most of the first movers in the segment have focused on improving health or addressing health problems, but many of China’s elders are fit, active and are looking to travel, said Mintel Group’s Mr. Crabbe, adding that there is room for companies to fill high demand for travel, leisure and entertainment.

Some banks have also moved to tailor their services to an older population. In 2013, China Construction Bank Corp. rolled out a card for the elderly that, when used at a pharmacy, links directly with the claims system of a person’s insurer. The insurer then decides on the spot whether to cover the transaction and by how much, saving pensioners from having to pay up-front.

Other business opportunities could open up in China. A 2013 blueprint for economic reform called for relaxing restrictions for private-sector investment in elder care, among other areas.

Some developers are scurrying to build nursing homes, and China’s leaders are making it easier to register and invest in private companies. One example is closely held Beijing-based Pinetree Senior Care Services Co., which provides basic in-home elderly care several times a week for around 900 yuan, or $145, to more than 20,000 seniors in Beijing and Shanghai.

Lu Lin, 60, began using Pinetree last year when caring for her 90-year-old father and 85-year-old mother. A nurse comes each week to check her parents’ blood pressure and help them with an exercise routine. Ms. Lu, who is retired, said she herself may end up in a nursing home, but paying for it will be a problem.

“The government has work to do,” said Ms. Lu. “The situation with nursing homes isn’t perfect and for the future I think it needs to be better.”

1) How would you characterize the market segment of elderly consumers in China?   

2) How should foreign companies adjust their products/marketing in China to appeal to this growing market segment?                                                                              

3) What are some of the issues global brands may face trying to reach this segment?

(Please answer the three questions in a paragraph with 300-350 words total, thank you so much).

Explanation / Answer

Answer:-

1). Ans= As the chinese one child pilicy started it leads to quickly increase the problem for the carrying and maintainane of the eldery people in the china. sine there is only 'one child' policy. Therefore, the government of china should or could set up the market in such away that there is a commodity which is essentials and neccessary for the good nutritions of the china elderly people. The market segenment in the china for eldelry people will be more realistic and desirable for the their health improvement to adjust their blood pressure balance and all their entire health. For the manufacturers, to contribut and constite of the generations of such segmented market for the elderly people in a huge challange. desining, researching makes a huge incurred cost. This makes the costly for the commodity which essentials for the elderly people. Thus, the market could be characterize and segmented seperately for them amd at the minimal cost. Sine the elderly monthy income is at the range of $320 to $300.

2) Ans= For the elderly people of china, the market and companies operate by the foregin companies should be in such a way that the product of the commodity should be necessary and avial according to the elderly people preference and for the betterment of their health. The foregin companies will be neccessarly manage the manufacturing product and goods as much as at the minimal cost and sell and provide in the market with effective cost. The mindset of companies also should focous for the upgradation and sympathy for the elderly people instead of for profit maximisation.

3) Ans= with the emerging of new companies and markets in china for the betterment and welfare of the elderly people in china, the global companies MNC will face some cost and benefit analysis for their companies cost internalsiation. Since the cost of the production and the market channelisation. The companies will also faced rivalry and monopolistic competition as the private companies is concered.

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