Rubicon Senior Care Report - pages 1-12

Senior Care Market
E D I T I O N N U M B E R 3 / A S I A M A R K E T S E R I E S
CHINA

No portion of this report may be copied or reproduced in any form or fashion.
www.HealthIntelAsia.com
2 - CHINA’S SENIOR CARE MARKET
China’s Senior Care Market
Authored by:
Joseph Christian, China Senior Housing Advisors
Damjan Denoble, Rubicon Strategy Group
Michael Qin Qu, Law View Partners
Benjamin Shobert, Rubicon Strategy Group
Yu Yan, Rubicon Strategy Group
S T R AT E GY G R O U P

CHINA’S SENIOR CARE MARKET
Table of Contents
Contributor Biographies.......................................................................... B-1
Abbreviations.................................................................................................... 1
Executive Summary....................................................................................... 2
Investor and Operator Key Takeaways................................................ 4
Operator Profiles........................................................................................... 19
Beijing Ensen Care Holdings ......................................................................... 22
Cascade (Columbia Pacific, Emeritus).......................................................... 28
Changcheng Property Group (Goshar, Jiaying) ............................................ 33
Cherish Yearn................................................................................................. 43
China Senior Care.......................................................................................... 50
China Taiping International Senior Living Community................................... 54
General’s Garden........................................................................................... 59
Landgent Senior Living (Golden Heights)...................................................... 62
Li’ai Beijing Enterprise Management Consulting Co., Ltd., by REIE............. 71
Merrill Gardens............................................................................................... 74
Poly-Anping Hexihui Senior Living................................................................. 79
Silvercare........................................................................................................ 88
Shanghai Starcastle Senior Living Services Ltd. (Xing Bao)......................... 91
Union Life ....................................................................................................... 94

Operator Profiles (continued)
Vanke Hangzhou (Sui Yuan Jia Shu)........................................................... 100
Vcanland Holdings ....................................................................................... 104
Yanda International Health City.................................................................... 108
YaDa International Holdings / Wuzhen Graceland / Greentown................. 115
Regulatory Analysis.................................................................................... 120
List of National Legislations during the 12th Five-Year Period... 149
Best Practices................................................................................................ 154
General China Business and Go-To-Market Best Practices ....................... 154
China Partner Due Diligence Best Practices............................................... 156
Counter-Party Motives ..................................................................... 157
Counter-Party History....................................................................... 158
Counter-Party Capabilities............................................................... 160
Counter-Party Concerns .................................................................. 161
Counter-Party Self-Awareness ........................................................ 162
Senior Care Regulatory Best Practices....................................................... 162
Operational Best Practices........................................................................... 165
Sales and Marketing Best Practices............................................................ 167

Home Healthcare......................................................................................... 168
Approved Home Healthcare Regulatory Categories................................... 170
Types of Services Allowed in the Home....................................................... 175
The Article 88 “Medical Equipment” Clause .................................. 177
Non-Binding Guidelines from Other Official Documents................. 179
Nursing Stations............................................................................... 181
Who Can Legally Work within the Home Healthcare WFOE and
in What Capacity?........................................................................................ 183
Competitive Assessment.............................................................................. 185
Care Visions Healthcare Services Ltd. ............................................ 186
Home Instead Senior Care .............................................................. 187
Pinetree Senior Care Services......................................................... 189
Right at Home .................................................................................. 191
Starcastle.......................................................................................... 192
United Family.................................................................................... 195

B-1 - CHINA’S SENIOR CARE MARKET
Contributor Biographies
Joe Christian, J.D., Founder, China Senior Housing
joseph.christian@gmail.com
Since 2012, Joe has been a fellow at the Harvard Kennedy School, where he
has been researching and writing about the senior housing industry in China.
In 2013, he founded China Senior Housing Advisors, LLC, which advises
western companies on entering the China senior housing market, and
Chinese companies on how to develop their own domestic senior housing
businesses. He is also a Senior Foreign Lawyer in Law View Partners, a
boutique law firm in Shanghai that specializes in helping foreign investors
doing business in China, with an emphasis on the senior housing and care
industries. He currently represents U.S-based clients in their expansion into
the China senior housing industry, and a Chinese company that is developing
a senior housing project in Beijing.
Joe is the industry co-chair of a working group organized by the U.S. Embassy
in Beijing to bring best practices in the U.S. senior housing industry into China
and help facilitate the entry of U.S. operators and investors into the industry.
Over the past few years, he has chaired and spoken at many conferences on
the industry in China. He is a member of the advisory board of the International
Association of Housing and Services for the Ageing (China).
Joe has over a dozen years of experience with transactions in South Korea
and China, and lived and worked in Hong Kong for over three years, where he
co-headed the Asia real estate group of a global law firm.

Damjan Denoble, M.A., J.D., Associate and China Hospital Lead, Rubicon
Strategy Group
ddenoble@rubiconstrategygroup.com
Damjan Denoble (杜德平), heads Rubicon’s China hospital practice, where
he has led market research work in China and as of July 2014, a project in
Vietnam. In September 2014, he led a consumer research project highlighting
what the modern Chinese consumer expects from their healthcare. Prior to
joining Rubicon, he was the lead editor of Health Intel Asia (formerly the Asia
Healthcare Blog). Before joining Rubicon he worked as a law clerk at the offices
of Harris & Moure, the leading boutique international law firm for China legal
services, and was a contributor to its widely praised production of the China
Law Blog. Before law school, he worked as a China health industry consultant
for China-side government clients.
While living in China, Damjan saw first hand the challenges foreign companies
and entrepreneurs face. His experiences at the famous expatriate restaurant
group, The Kro’s Nest, were profiled by Bloomberg BusinessWeek. Damjan’s
writing and analysis has been featured in many of the leading China media
outlets including the China Business Review, The Atlantic Magazine, Reuters,
Thompson Reuters’ Bioworld, The Burrill Report and many others.
Damjan is fluent in spoken and written Mandarin. In addition to the language
skills he gained while living in Beijing, he has completed more than four years
of formal Chinese language training at Duke University, Peking University, the
Middlebury College Chinese Language School, and the University of Michigan.
In addition to Mandarin, he speaks English, French and Serbo-Croatian. He
holds three degrees: a B.A. From Duke University in Public Policy, with a
certificate in Health Policy, an M.A. From the University of Michigan Rogel-
Lieberthal Center for Chinese Studies, and a J.D. From the University of
Michigan Law School.

Michael (Qin) Qu, Managing Partner, Law View Partners
quqin@lawviewer.com
Michael is the Managing Partner of Law View Partners, a boutique law firm in
China that specializes in providing services to foreign investors and companies
in high-growth sectors including healthcare and senior care. The firm’s
resources and services span foreign investment and trade, M&A and finance,
construction and real estate, corporate compliance, as well as market-leading
experience advising clients in corporate transactional advice, intellectual
property and commercial litigation.
For years, Michael’s team has been focused on advising foreign investors,
emerging companies and investment funds, capital investment, mergers and
acquisitions, and business strategy and operation. The firm’s strengths are in
the fields of senior housing and healthcare; advertising, technology and media
(“ATM”); corporate compliance; and personal legal issues.
Benjamin Shobert, Founder and Managing Director, Rubicon Strategy Group
bshobert@rubiconstrategygroup.com
Ben is the Founder and Managing Director of Rubicon Strategy Group, a
boutique consulting firm specialized in market access and project management
work in China and Southeast Asia’s healthcare, life science and senior care
industries. During his work at Rubicon, Ben led the team that obtained the
first foreign home healthcare license issued in Beijing, the second such foreign
home healthcare license granted for all of China. He also built their strategy
around the company’s launch including administrative infrastructure, HR,
referral source development, and marketing. Ben regularly advises institutional
investors, private equity and operators focused on China and Southeast
Asia healthcare and senior care sectors. Under Ben’s leadership, Rubicon
completed a research project for one of the first foreign entrants into China’s
senior care and private hospital sectors. This research was a key part of their
successful $200m capital raise for investments in China.

Ben is a member of the National Committee on U.S.-China Relations and holds
advisory board seats at Indiana University’s Research Center on Chinese
Politics and Business as well as IAHSA-China (The Global Aging Network).
He is a member of the Pacific Council on International Policy. For six years, he
wrote a column for the Asia Times on U.S.-China trade and economic policy
matters, with a particular focus on how relations between the two countries
are being impacted post the 2008 financial crisis. For the last several years,
he has written on China’s healthcare, senior care and life science sectors at
AsiaHealthcareBlog (now HealthIntelAsia). In addition, his work has been
featured at CNBC, China Business Review, Forbes China, Harvard Asia
Quarterly and many others.
Yu Yan, Research Analyst, Rubicon Strategy Group
yu.yan@rubiconstrategygroup.com)
Yu Yan is based in Beijing, where she completed a number of the in-person
interviews of key executives for this report. She is a graduate of the University
of Michigan’s Asian Studies program, where she successfully completed
their M.A. program. She has also worked at the US-China Business Council,
where she has been researching the market and policy climate that affects US
companies doing business in China, with topics including policy & economic
reform, market access, intellectual property regulation, and anti-monopoly
investigations.

Abbreviations
AL: Assisted Living Facility
CCRC: Continuing Care Retirement Community
CIRC: China Insurance Regulatory Commission
FDI: Foreign Direct Investment
GOSC: General Office of the State Council of the People’s Republic of China
IL: Independent Living Facility
MCA: Ministry of Civil Affairs of the People’s Republic of China
MC: Memory Care
MLR: Ministry of Land and Resources of the People’s Republic of China
MOF: Ministry of Finance of the People’s Republic of China
MOHURD: Ministry of Housing and Urban-Rural Development of the People’s Republic of China
MOH: Ministry of Health of the People’s Republic of China
NDRC: National Development and Reform Commission
NHFPC: National Health and Family Planning Commission
SAIC: State Administration for Industry and Commerce
SN: Skilled Nursing Facility
WFOE: Wholly Foreign Owned Enterprise

Executive Summary
By 2050, China’s senior care market is projected to reach several trillion dollars
in value, as measured by investments in senior housing developments, home
healthcare operators, and other ancillary goods and services specifically
positioned to serve China’s aging population. Much has been written in various
outlets about China’s senior care sector; however, to date no one has attempted
a comprehensive review of the regulatory system, commercial models, and
strategic insights relative to what is, and is not, working. The purpose of this
market research report is to develop precisely these insights, in three ways.
First, to provide a qualitative review and analysis of the experiences from the
premier early-stage domestic and foreign senior care operators and investors,
capturing key lessons around the market’s acceptance of senior care products
and services.
Second, to evaluate the most important regulatory systems currently in place,
as well as those under development, that effect the ability of senior housing
operators and investors to open, in addition to those government funding
mechanisms being piloted across the country that hold the potential to add
further stimulus to the senior care sector.
While large in number, China¹s current elderly
cohort are also careful consumers. Having lived
through periods of instability and economic
uncertainty, they are going to require significant
education on the value of senior care services - to
themselves and their families.

Third, to develop a list of best practices for both domestic and senior care
providers that reflects what is currently understood about the Chinese family,
its economic concerns, and how to sustainably access and scale a senior care
business in China.
The report has a final detailed analysis of the key players, regulations and
strategic issues home healthcare operators are facing in China. This section
comes last in the report, simply to ensure that confusion around operating
models, regulations and commercial insights specific to home healthcare is
not muddied. Those senior housing operators that have home healthcare as
part of their CCRC are profiled in the earlier section on key senior housing
developments.
Overall, this market analysis is focused on practical insights that shape the
ability of senior care investors and operators to actually execute in China. The
market research was led by in-person interviews through Rubicon’s Beijing
office, over the course of six months (spanning late 2014 through early 2015),
with an emphasis on interviews with the senior executives and investment
managers who have been responsible for the projects in question.
The next section of the report, Investor and Operator Key Takeaways, is a
top-level capture of the whole research report. The subsequent section and
its bullet-point format are designed for executives who want to gather only the
most critical strategic insights into China’s senior housing sector, but who may
not have the time to read the report in its entirety.
Among the most important triggers for a viable
senior care industry to emerge in China will be
the expansion of private long term care financial
vehicles. Many of these are already under
development, and will be offered to existing
middle aged Chinese employees as benefits their
elderly parents can have access to as part of
the younger family member’s employment.

Rubicon Senior Care Report - pages 1-12

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