The Chinese population was estimated at 1.39 billion in July 2014, equivalent to 19.24% of the total world population. Currently, the median age in China is 35.7 years, classifying the population as young. However, this median is forecasted to increase dramatically in the coming decades as larger previous generation gets older, reaching a median age of 46.4 years old by 2045 according to the United Nations. Whereas the population of China aged 65 and over is currently estimated at 9.7% according to the latest figures from the National Bureau of Statistics in China, it is estimated that the elderly people over 60 years old in China will total 400 million, representing a whole third of the country’s total population.
This deteriorating situation is often blamed on the “one child policy,” China’s decades long ban on couples having multiple children, designed to address the potential for over-population straining the country’s economic development. Unfortunately, it does not mesh with China’s traditional system of palliative care, where children care for parents in their old age; suddenly, the pressures of care fall on a single child.
This large and growing demographic of elderly without access to necessary care embodies a real opportunity for services to provide elderly care in China and is perfectly aligned with China’s current and projected social changes. China’s government recently classified elderly support services as an “encouraged” sector for foreign investments.
Elderly care in China has high potential
The Chinese demographic shift will be manifested by a change in needs and demand. There are today more than 200 million elderly citizens in China but less than 2.1 million are being cared for in nursing homes distributed across China. This ranks the elderly Chinese population as one of the most underserved market segments in China and forecasts the need of a fast readjustment. Indeed, the rising segment of unsatisfied elderly citizens may represent an economic drain and become a source of societal instability if adapted caregiving options aren’t delivered in the next years. In the last ten years, property investments are among the top drivers of China economy and in 10 to 15 years, health care is expected to reach a similar importance.
This need for heath care, in particular of elderly care in China, comes from current world changes and trends. Improvements in medicine and health education are leading to a greater life expectancy, and thus an older population. China will be widely impacted, but the biggest challenge to China comes from the decreasing family size. The one-child policy is leaving one child (caregiver) for two parents and four grandparents described as the 4:2:1 phenomenon that clashes substantially with the Confucian model of elderly care. If families haven’t anticipated this situation, the child won’t be able to support past generations while simultaneously raising the next. In addition, unlike in traditional Chinese society, elderly are less able to live with their children since the working population is moving towards cities, leaving parents behind in the villages. As a result families are increasingly dispersed and children have less time to take care for their parents.
Government promoting elderly care
The government plays a very important role in China, and can ensure fast changes and favour certain industries according to its citizens’ needs.
The Chinese government has been discussing this challenge and is currently promoting elderly care infrastructures and services with incentives. Currently, the government is funding seniors in need of care that can’t afforded their own, but the amount is still negligible, with some estimates suggesting only 1.6% of eligible seniors receive any help. The committee of the National People’s Congress believes that an additional 3.4 million hospital and nursing home beds will be needed for senior care over in less than five years.
The government is making important efforts in building quality standards for caregivers so that trust and security can be ensured, with a view towards long-term investment.
China is orienting its policy so that real estate developers build entry-level residential senior care into their developing infrastructure, as the middle class elderly Chinese will need the service very soon. To reach this goal, financial incentives have been settled: Elderly care services in china (entertainment and medical service) are exempt from business tax; non-profit nursing homes are exempt from corporate income tax and from administrative fees.
A challenging but very profitable opportunity
Elderly care in China: Misconception & Low confidence stopping local investment
The growth of elderly care investment is currently quite slow and the service isn’t very popular due to a misconception of elderly care in China. The Chinese population doesn’t value the service because they don’t trust it is worth the investment. This behaviour is surprising as the Chinese favour long-term investment and care about their security. But as education and awareness rises with the government’s support, senior care operators will be able to access the world’s largest population of elderly citizens. At the moment, luxury health care is especially popular, as services are clearly defined and offers deliver high quality and confidence to a clientele accustomed to exploring new products.
The Chinese have a low confidence in the senior care industry as it is only just being born. Fear of abuse, poor living conditions, or inadequate value for money is very high, as there have been scandals in the past. However, just like the fashion industry, the elderly care service could become the largest in the world in less than 30 years.
Taking care of elderly Chinese
Today there are already 200 million senior citizens in China, and 50% of them are living alone in rural places of China while 30 million of them are disabled. Offering them affordable and secure elderly care in China, rather than forcing them to travel to receive care, could change their lives and enable them to retire with dignity, delivering on a strong desire in Chinese society. The Chinese market involves unique needs and requirements for senior citizens different from overseas countries. In order to deliver a service corresponding to their needs, the elderly care service must be adapted to the Chinese market and a wide variety will need to be developed, such as regional differences and cultural habits. In China, the elderly population is very health conscious, so providing healthy foods, medicine and opportunities for activity to elders would be greatly appreciated.
The success would also depend very much on the way it is communicated. Everything must be extremely clear so that trust from the customer can be secured in the long term. Marketing effectively is essential in converting the Chinese opinion, and separating the notion of elder care from the stigma of filial abandonment. Delivering customized and cost effective services could be extremely successful since it would honour parent and grandparents. Furthermore, the pharmaceutical and health care are growing at a fast pace. Waiting for regulation to be installed by the government would be a mistake as participating in their development could enable a great competitive advantage as the market is being shaped.
The market for elderly care in China is growing quickly with an ageing population. Foreign investment can fill the gap that local investment is creating with its distrust of this highly lucrative and essential sector. The government is encouraging foreign companies to join the development process.