HONG KONG/BEIJING, March 18 (Reuters) - China's rapidly

aging population is fuelling a promising and fast-growing market

for companies providing recreational classes and activities for

the elderly middle class, from yoga to African drumming and

smartphone photography.

The growth potential of the industry contrasts sharply with

the decline of the after-school private tutoring sector

following a government crackdown in 2021 aimed at boosting

record low birth rates by lowering education costs.

"Education industries are transitioning to the silver

economy," said Qiu Peilin, the Beijing head of Mama Sunset, an

elderly learning business which has opened five centres in the

Chinese capital since launching in April 2023.

Consulting firm Frost & Sullivan expects China's senior

learning market to grow at a compound annual growth rate of 34%

by 2027 to 120.9 billion yuan ($16.8 billion), up from 28

billion yuan in 2022.

It's a numbers game.

Over the next decade, roughly 300 million Chinese will enter

retirement - the equivalent of almost the entire U.S.

population. One in every two people aged over 65 in the

Asia-Pacific region will live in China by 2040, Euromonitor

estimates.

While China's demographic crisis is threatening its

industrial base, government finances and poverty alleviation

efforts, some investors see the growing pool of elderly as a

sure bet.

Mama Sunset, which offers 20 different classes to thousands

of Chinese aged 50-plus, is in talks with domestic investors to

expand to 200 franchised centres across the country in the next

three years, when it wants to list on the Hong Kong exchange.

Nasdaq-listed Quantasing ( QSG ), the largest online elderly

learning provider in China according to Frost & Sullivan, plans

to hire more tai chi and traditional medicine tutors to add to

existing classes ranging from memory training to video editing.

It also plans to leverage its customer base to sell products

such as moxa sticks, used in traditional medicine, or Baijiu, a

Chinese liquor.

Quantasing's ( QSG ) revenues grew 24.7% year-on-year for the final

quarter of last year to $980.5 million yuan ($136.2 million),

while its total registered users shot up 44.6% year-on-year to

112.4 million at the end of 2023.

"It's a real sunrise industry," the firm's CEO Matt Peng

said.

China's government is also getting involved, announcing in

January tax incentives and financial support for products and

services for the elderly. Premier Li Qiang pledged in March

further efforts to develop "the silver economy," without

elaborating.

The provincial government of Hebei provided the land and

space for Mama Sunset's Cangzhou branch as part of a poverty

alleviation program.

BIG BASE, LOW INCOMES

Some analysts warn, however, that a flood of investment into

industries targeting the elderly may get ahead of itself if

China cannot make the leap that other aging societies have made

- escaping the middle income trap first.

Low retirement incomes and insecurities related to basic

needs including healthcare in a society where many of the

elderly are reliant on their child for financial support will

limit the industry's potential, analysts say.

Rachel He, research manager at Euromonitor, said China's

elderly population was a promising consumer base but it was

questionable whether it would match the significance of the

market in Japan and South Korea in the near term.

She cited "deep income inequality" and more conservative

attitudes among Chinese elderly who were less inclined to spend

money on themselves.

Average monthly urban pensions range from around 3,000 yuan

in less developed provinces to about 6,000 yuan in Beijing.

Nomura estimates 160 million Chinese receive rural pensions of

only around 100 yuan per month.

One class at Mama Sunset costs 50-60 yuan, while a 36-class

package costs 1,980 yuan. At Quantasing ( QSG ), one- to three-month

packages range between 1,980 and 3,699 yuan.

Cui Chunyun, a 60-year-old retired accountant in Beijing,

takes Mama Sunset's dance classes to stay fit to keep pace with

her five grandchildren and delay going into a nursing home.

"I want to be able to move, even people older than 70 can

still dance, we have to move to live."

($1 = 7.1964 Chinese yuan renminbi)

(Writing by Farah Master; additional reporting by Sakura

Murakami in Tokyo and Hyunsu Yim in Seoul; editing by Marius

Zaharia and Lincoln Feast.)