Big firms not ready for old customers

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Big firms not ready for old customers


Korea is rapidly transforming into an aged society but corporations aren’t ready to capitalize on the changes, according to a recent survey by the Korea Chamber of Commerce and Industry (KCCI) on Monday.

By 2060, people aged 65 or older will account for 37.1 percent of Korea’s total population, more than double the average for the world at 18.1 percent, the report said, citing statistics from the United Nations.

This year, the population of those 65 years or older will tally 600 million, but the figure will grow to 990 million by 2030 and 1.84 billion by 2060, the same data showed.

At that point, Korea will have the second-oldest population in the world.

The KCCI, a business lobby representing large companies including conglomerates, predicts senior citizens will also have their purchasing power augment over time. The employment rate of those aged 65 or older grew from 9.2 percent in 2001 to as much as 11.4 percent in 2013. The size of their pension funds also jumped from $23.8 trillion in 2009 to $32 trillion in 2013.

However, the lobby’s survey of 300 companies involved with business fields that are potentially relevant to senior citizens - from pharmaceuticals and food to cosmetics, medical equipment, life necessities, finance and leisure - showed that only 11 percent of them have actually jumped into the so-called silver industry. Some 24 percent of the respondents answered they are currently preparing to enter the field, whereas 64.4 percent said they have no plans to target the market at all.

As reasons for refraining from engaging with the silver industry, 47.7 percent cited a lack of information and know-how, and 30.8 percent said there wasn’t enough government policy support to foster the industry.

Despite its rapidly aging population, Korean businesses are statistically less friendly to the elderly. Within the industries that count senior citizens as consumers, only 47.7 percent of businesses cater specifically to the population. In contrast, 85.2 percent of such businesses in Japan, and 59.1 percent in Germany, cater to senior citizens, according to the KCCI.

Korea has allocated only 0.9 percent, or 4 billion, of the entire welfare and medical budget at 453.5 billion won ($386 million) on research and development for senior citizen-friendly products this year. Germany, on the other hand, invests about 400 billion won on related fields each year.

“Aging is a social trend across the globe and the consumption power of senior citizens is seen to get bigger,” said Jeon Soo-bong, head of the economic research division at KCCI. “But many Korean corporations appear to lack preparation to take advantage of the situation to boost revenue.”

He also predicted that the demand for products specifically designed for senior citizens will grow even more when the second baby boomer generation, born between 1968 and 1974, gets older.

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