Elderly care in china

1. Elderly Care in China

2. Introduction
 The United Nations estimated that in 2005 there were 16 retired people in China to every 100
workers.
 The study projected that this ratio will reach 64 elderly for every 100 workers by 2025.
 In 2012, the section of China’s population aged 60 and above was 194 million. By 2025, this group
is expected to reach 300 million.
 Government funding covers only 1.6%of elderly care v/s standard of 8% coverage as set by United
Nations for developed nation,
 The one-child policy has created what is being called the “4:2:1″ problem.
 “Confucian concept of filial piety” influences Chinese senior to prefer to be cared by their families
over senior care facilities.
 According to the Chinese Government, 90% of the seniors are to be cared at home, 7% to be cared
in the community and the remaining 3% to be cared for at the external institution.
http://www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/
http://www.financierworldwide.com/china-healthcare-government-incentives-for-foreign-investors-in-for-profit-senior-care/#.VcL7Ovmqqko
http://www.financierworldwide.com/china-healthcare-government-incentives-for-foreign-investors-in-for-profit-senior-care/#.VcL7Ovmqqko

3.  The elderly care market in China is estimated to grow to US$ 0.288 trillion by 2020 and US$ 1.216
trillion by 2050.
 Starting in 2013, the Chinese government issued a series of policies and regulations aimed at
encouraging private and foreign investment to invest in the sector.
 In 2014, the Chinese government opened up the elderly care sector for foreign investments and
business operations with a view that China needs not only international expertise but also
additional resources.
 According to Wall Street Journal, foreign funded senior care facilities were running well short of
original capacity projections. This has led to revisiting of the basic assumption about market
acceptance senior care service by Chinese family.
 It is felt that the overall time period within which these facility were deemed to break even would
take much longer.
Growth in Elderly Care Market
http://futureofageing.com/plenary-description/http://futureofageing.com/plenary-description/
http://www.financierworldwide.com/china-healthcare-government-incentives-for-foreign-investors-in-for-profit-senior-care/#.VcL7Ovmqqko
http://www.forbes.com/sites/benjaminshobert/2015/01/19/what-three-different-approaches-to-senior-care-in-china-tell-us-about-the-market-
opportunity-today-and-tomorrow-part-1/

4.  China's adhere to the Confucian tradition of "filial piety," which prioritizes the family unit and values
elders with the utmost respect. This has negatively promoted the idea of shifting the elders to this
external unit even at the cost of lesser quality service at home.
Growth in Elderly Care Market (contd.)
http://theweek.com/articles/462230/how-elderly-are-treated-around-world
http://www.chinabusinessreview.com/looking-after-chinas-elderly/
Senior Population that can afford High-End Senior
Housing & Care in China (in millions)

5. Demand Drivers
http://www.smithstreetchina.com/uploads/20140820/20140820192005_13838.pdf
Paradigm
Shifts
Introduction of
New Concepts
Financially
Prepared
Future Elders
• Their children are already burdened
• Children are not technically skilled to provide elderly care
• Family members are not always around to look after them
• Pension benefits are projected to grow from USD 140 billion in
2010 to USD 1.2 trillion by 2030
• Innovative nursing home models as influenced by foreign players
• Premium nursing homes becoming a social status symbol

6. Challenges
Perceived Value
Government Involvement
Licensing
Human Resources
Infrastructure
Marketing
Elderly Population (65+ y.o.) vs. Nursing Home Enrollment
Only 2 percent of China’s +65 y.o. are enrolled in nursing homes, much lower than 5-7 percent level in
the developing countries
http://www.smithstreetchina.com/uploads/20140820/20140820192005_13838.pdf
http://www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/

7. Challenges (contd.)
Perceived Value Government Involvement Licensing
• A successful elder care model
in China will need to be
perceived by both those
paying for the care, as well as
those receiving it.
• Researchers that have studied
expatriate Chinese
communities in Hong Kong,
Vancouver, and Toronto
found that secondary care-
giving is not the preferred
option of those paying for or
receiving the care.
• This can be dealt by dealing
with the quality of the
services provided over the
luxury
• China lacks regulations
covering quality standards for
caregivers as well as a
government-sponsored
accreditation processes that
would allow consumers to
judge reputable facility-based
care from those that should
not be trusted.
• The government has a
preference for in home care
against residential care
because of its cost
effectiveness.
• Government need to engage
real estate developers to
build entry level care
residential senior care in the
country.
• Elderly care has long been
underfunded but there is no
shortage of regulators.
Licensing of health care and
allied services is an opaque
process in China.
• Foreign level firms need to
have a local representation
that has experience in
working with the
government.
http://www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/

8. Challenges (contd.)
Human Resources Infrastructure Marketing
• China has a ready pool of
vocational labor.
• Foreign operators need to
structure an industry specific
training program for
imparting in China.
• China’s senior care industry
lacks structure, so companies
must anticipate and deal with
quality control issues.
• A developed senior care
industry does not yet exist in
the country, bad
experiences—such as abuse,
poor living conditions, or
perceived inadequate value
for the money—could all
derail the industry in its
infancy.
• The awareness of the Chinese
about in home or residential
based care giving option is
minimal.
• In fact some perceive it as of
a low quality.
• Proposed operator of these
segments should study the
discharge process and
educate the family about the
options.
http://www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/

9.  Investment mainly in the high end market with the hope of creating value for money and positive
perception among the end users.
 There is a doubt if the size of the market is large enough and whether wealthy Chinese will prefer to
see their parents being taken away.
 Opportunity mainly lies in the low to middle end of the market where the actual demand exists but
hardly any operator exists.
 The government is currently offering additional land incentives, tax rebates and fast track approval
to developers. It even might continue with the reimbursement scheme for in home elder care
service providers.
 Foreign investors are allowed to establish senior care facilities by themselves, or cooperate with
Chinese partners. Another alternative is to acquire existing for-profit facilities.
Opportunities
http://www.financierworldwide.com/china-healthcare-government-incentives-for-foreign-investors-in-for-profit-senior-care/#.VcMahPmqqko

10.  The wholly owned structure offers better control and integrated operation but leaves the foreign
investor to deal with numerous stakeholders directly, which sometimes may not be preferable.
 A joint venture with a quality Chinese partner can provide valuable resources, including land, license
and professional and government relations. however, foreign investors will have to share corporate
governance and operations with their Chinese partners.
 Domestic firms are not yet sophisticated enough to pose serious competition in this nascent
industry, which presents good opportunities for foreign investors to invest in this market first.
 Compared to foreign investment in medical institutions which are subject to more regulatory
restrictions, foreign investors may find it easier to establish a wholly owned senior care institution in
China and apply their brand, expertise and know-how as they see appropriate
Opportunities (contd.)
http://www.financierworldwide.com/china-healthcare-government-incentives-for-foreign-investors-in-for-profit-senior-care/#.VcMahPmqqko

11. Elderly Care in China v/s Japan
 Japan and China both follow the principle of “filial piety” and take good care of their aged
population.
 China with a comparatively higher population has a higher old age population than Japan. The old
age population of China will be 240,000,000 in 2020 compared to Japan which will have a
population of 34,559. China will become the world’s most aged society in 2030.
 The one child policy of China leading to “4:2:1” problem does not affect the old people of Japan
where such restriction are not in place.
 According to their respective national bureau of statistics, the average monthly wage of a nurse in
China in constant 2005 dollars is approximately US$187, while in Japan that wage is more than 10
times higher, at US$2140. This implies that the wealth of an old age Chinese is much lesser than
that of Japanese.
 China witnesses very high emigration compared to Japan. Chinese immigrants are now the third-
largest foreign-born group in the United States after Mexicans and Indians, numbering more than 2
million and comprising 5 percent of the overall immigrant population in 2013
http://theweek.com/articles/462230/how-elderly-are-treated-around-world
h http://www.migrationpolicy.org/article/chinese-immigrants-united-statesttp://blogs.cfr.org/asia/2013/11/04/population-aging-in-china-a-
mixed-blessing/
http://www.eastasiaforum.org/2012/12/22/getting-old-after-getting-rich-comparing-china-with-japan