Nurs­ing home de­mand spurs in­vest­ment

China Daily (Canada) - - CHINA - By LI YANG in Shang­hai liyang@chi­

In China, many ser­vices and in­dus­tries that have for years been con­trolled by the govern­ment will be­come big mar­kets when con­trol is re­leased. Car­ing for the el­derly is one of them.

By tra­di­tion, el­derly Chi­nese are sup­posed to live at home with their chil­dren. How­ever, the fam­ily-plan­ning poli­cies en­forced since the 1980s and the free­dom to move across the coun­try en­joyed by farm­ers since 1976 have al­ready left many empty-nest el­derly who live apart from their only child.

As of last year, China had nearly 200 mil­lion se­nior cit­i­zens above 60, half of whom lived alone. Over­all, the el­derly pop­u­la­tion is ex­pected to rise to 250 mil­lion, nearly 20 per­cent of the na­tional to­tal in 2020.

To­day, China needs more than 10 mil­lion nurs­ing home beds for the el­derly, but has only 5 mil­lion.

For­eign in­vestors saw this mar­ket well ahead of their Chi­nese coun­ter­parts.

Com­pa­nies from the United States, Europe and Ja­pan started build­ing nurs­ing homes in the form of hol­i­day inns in big cities like Shang­hai as early as the 1990s.

US-based Hol­i­day Re­tire­ment Cor­po­ra­tion in­vested in a cen­ter for the af­flu­ent re­tired in a sub­urb of Shang­hai in 1998. But the project be­came a hol­i­day inn in 2006.

The tim­ing may have been a lit­tle early, be­cause the ac­cel­er­ated ag­ing of the Chi­nese so­ci­ety did not come un­til years later, and the govern­ment had not yet openly wel­comed for­eign cap­i­tal in the “gray” in­dus­try.

Ger­man Au­gust inum Group’s re­tire­ment home project in Shang­hai in 2006 was also a fail­ure, mainly be­cause of dif­fi­cul­ties in buy­ing land from the lo­cal govern­ment.

Dozens of Ja­panese and Ger­man nurs­ing home com­pa­nies planned to start sim­i­lar projects in the coastal city of Qing­dao, Shan­dong prov­ince, in 2007. The lack of rel­e­vant sup­port poli­cies and dif­fi­culty buy­ing land sent them home empty-handed.

How­ever, the govern­ment’s at­ti­tude changes with its bal­ance sheets.

The ris­ing de­mand for pen­sions — es­pe­cially af­ter in­clud­ing 800 mil­lion farm­ers in the ba­sic so­cial se­cu­rity sys­tem — leaves the govern­ment no fur­ther re­sources to es­tab­lish a na­tional nurs­ing home net­work.

Fi­nally in mid 2013, the China cen­tral govern­ment de­cided — in a work­ing con­fer­ence presided over by Pre­mier Li Ke­qiang — to open the el­derly nurs­ing home mar­ket to in­vestors at home and abroad.

The con­fer­ence state­ment rec­og­nized pri­vate cap­i­tal’s im­por­tant role in car­ing for the rapidly ag­ing Chi­nese pop­u­la­tion.

Be­fore that, there were al­ready some spo­radic Si­no­for­eign joint ven­tures pro­vid­ing med­i­cal ser­vices, con­sult­ing and hol­i­days for rich Chi­nese el­derly in big cities.

The govern­ment’s green light whet­ted for­eign in­vestors’ ap­petite for the big mar­ket. Yet they still needed to do their home­work on how to best ac­cess the right groups of cus­tomers af­ter the govern­ment un­veiled a prac­ti­cal set of rules and poli­cies.

In 2012, the pro­fes­sional nurs­ing and med­i­cal care in­vest­ment com­pany Columbia Pa­cific Man­age­ment and re­tire­ment house man­age­ment firm Emer­i­tus Se­nior Liv­ing jointly started the first for­eign ven­ture Cas­cade Health­care in Shang­hai and Bei­jing.

Half of Cas­cade’s beds in Shang­hai are still empty to­day. Project man­ager Zhang Fan said, “It takes time for the Chi­nese to ac­cept pro­fes­sional nurs­ing for the el­derly in place of home care.”

The pres­ence of pro­fes­sional for­eign nurs­ing homes is trans­form­ing care for the el­derly from a fam­ily tra­di­tion into a busi­ness.

Still, a sig­nif­i­cant in­flow of for­eign nurs­ing homes has yet to come. In­vestors still hold a wait-and-see at­ti­tude for the fea­si­bil­ity of fu­ture govern­ment poli­cies, es­pe­cially in land ac­qui­si­tion and taxes.

The cur­rent ad­min­is­tra­tive sys­tems and rules were es­tab­lished in a planned econ­omy decades ago for non-profit, mostly govern­ment-funded agencies.

Un­der these cir­cum­stances, it be­comes a chal­lenge for pri­vate in­vestors in for-profit nurs­ing homes to get along well with var­i­ous lev­els of ad­min­is­tra­tions.

“They just turn us off with the ex­cuse that there is no pol­icy for us,” said one in­vestor.

A year has passed since the cen­tral govern­ment wel­comed for­eign cap­i­tal to the


A woman gets a mas­sage at a day care cen­ter for the el­derly in Shang­hai.

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