The Journal The Authority on Global Business in Japan

Healthcare | Aging—Part One

October 2013
SUPER-AGING: JAPAN’S SECRET WEAPON?
By William R. Bishop Jr.
Aging . . . if there is one thing we can all agree on, it’s that none of us are getting any younger. My mirror reminds me of this simple fact of life every morning.

The year 2000 was a demographic watershed in Asia. After a century marked by population growth, the number of children reached a peak in 1999. In 2000, that number began to decline.

Yet, at the same time, mortality has dropped dramatically. For the whole population across 22 Asian countries, life expectancy at birth was just 41 years in the early 1950s.

In 2008, according to a recent study by the Organisation for Economic Co-operation and Development, life expectancy at birth had reached nearly 72, a gain of more than 30 years.

Asia is expected to double its life expectancy at birth from the 1950s figure as early as 2020. And, although countries in northern Asia—Japan, with life expectancy of nearly 80 years for males and 86 years for females; followed by South Korea; China; and Taiwan—all have longer life expectancies at birth than countries in Southeast Asia, the gap between north and south has narrowed greatly in recent years.

The baby boom of the twentieth century, the sharp decline of infertility rates in recent decades, the rising life expectancy, and the steady decline in mortality are reshaping the size and age structure of Asian populations. The proportions of national populations aged 65 and over are expected to grow rapidly across Asia over the coming 40 years.

Indeed, in all countries, especially developed ones, the older population is also aging. People over the age of 75 make up the fastest-growing segment of this older population.

In developed and developing countries, the aging population raises concern regarding whether a shrinking labor force will be able to support a large and increasingly less independent elderly population.

Japan is aging faster than any other nation. Nearly one-third of the population is already aged 60 or over and, by 2015, one-quarter of the population will be 65 or over.

By the end of this decade, there will be three retirees for every child under 15. Before long, one in six Japanese will be over the age of 80.

The important thing to understand about aging in Asia is just how fast it is progressing. Japan’s rapid aging becomes even more pronounced when compared with that of its European counterparts. It took Germany 57 years and Italy 44 years to double their populations of those over 65 from 10 percent to 20 percent of population.

It is expected to take the United Kingdom and France even longer, although Japan achieved this feat in just two decades.

Japan, however, is not alone in Asia when it comes to rapid aging. Although Japan leads the pack, it is closely followed by South Korea, while China is not far behind on a vastly larger scale. In 2009, over 12 percent of the country’s population was aged 60 or over, due to its one-child policy implemented in 1978. By 2050, 33 percent of China’s population will be over 60 years of age.

One might point out here that it took France 126 years for the proportion of its population aged 65 and over to double from 7 percent to 14 percent, yet it will take South Korea only 18 years, and China 25 years, to achieve the same rate of increase.

When we take a closer look at regional population pyramids, a very clear pattern emerges. Japan has a 10 to 15 year lead on developed countries, such as Australia, Taiwan and South Korea, and a 20 to 30 year lead on emerging Asian economies.

The Philippines stands out as a country that has retained a traditional demographic pyramid. The reduction in its ratio of live births per 1,000 head of population heads in recent years—down from 6.9 in 1960 to 3.1 in 2010—will stabilize the Philippines’ population growth in coming years. However, it will take many years for the country’s population pyramid to look anything like that of even Indonesia or Vietnam.

Japan, meanwhile, already confronts a shrinking population. South Korea is graying even more quickly. And although China’s population is projected to continue growing for another few decades, demographic change is running head to head against economic development.

China could become the first country to grow old before growing rich. In Southeast Asia, Singapore also confronts a declining birthrate and an aging society. Increasingly, Asia’s aging countries are looking to the region’s younger societies—such as Vietnam, Indonesia, and the Philippines—as sources of migrant labor and even wives.

These countries, in turn, face their own demographic challenges, such as how to provide their growing populations with a globally competitive economy, universal education and healthcare.

For Japan, the silver lining in its cloudy outlook is that its elderly population controls more than half the country’s wealth. Accumulated wealth for those aged 60 to 90 stood at roughly $14 trillion. And, for the year ending March 2012, people aged over 60 spent more than any other age group, accounting for 44 percent of Japan’s consumption.

With 29.8 million people aged over 65 as of October 2012, retailers in Japan are adjusting to the customer group that packs the financial clout. It is providing lighter shopping carts and smaller packages, slower escalators and brighter display cases.

One indication that things have already changed is that in 2012, Unicharm Corporation, Japan’s largest diaper maker, for the first time sold more adult diapers in Japan than baby diapers.

Unicharm has moved quickly, and taken its lessons learned here to China, where the population aged 65 or over had risen to nearly 9 percent as of the end of 2010.

Although dogs wearing diapers might seem funny, don’t be surprised should you run across any. The pet market in Japan is no laughing matter. As of 2012, there were more pets (22 million) in Japan than children under the age of 15 (16.6 million).

Driven by the growing number of elderly people, the large number of couples without children, and the over 10 million unmarried people aged between 20 and 34 who still live with their parents, the pet industry has grown to be worth over ¥1 trillion per year. This market is expanding into such areas as gourmet dog foods, pet restaurants, hot spring resorts, yoga classes, pet fashion shows, and even baby diapers for puppies.

To address the many challenges presented by its fast-aging population, Japan has moved to leverage its regional leadership in the provision of healthcare, and to create a healthcare economy by developing hi-tech products and services for its elderly that can also address the needs of a rapidly aging Asian population.

Indeed, a key driving force behind the Abenomics growth strategy is the urgent need to turn a growing mountain of lemons (the growing needs and costs of a super-aged population) into a river of lemon-aid (an engine for medical innovation and economic growth).

William R. Bishop Jr. is chair of the ACCJ Healthcare Committee and director of corporate affairs at Nippon Becton Dickinson Company, Ltd.

William R. Bishop Jr. is chair of the ACCJ Healthcare Committee and director of corporate affairs at Nippon Becton Dickinson Company, Ltd.

The baby boom of the twentieth century, the sharp decline of infertility rates in recent decades, the rising life expectancy, and the steady decline in mortality are reshaping the size and age structure of Asian populations.”