Business / Industries

Foreign investors eye senior housing and care market

By Todd Balazovic (China Daily) Updated: 2012-12-01 02:54

Another cultural barrier for foreign companies breaking into the market is the perception that senior assisted living can be a sign of luxury. In many cities across China, many of the current senior health facilities are funded by government and geared toward low-income families.

"In the past 10 to 20 years almost all of the senior facilities were created by the government and geared toward people on low incomes. Because of this (assisted living) has a very bad reputation," Xie of Cascade Healthcare said.

She said if senior care companies want to see the industry grow, they must convince the younger generation that putting their parents in assisted living is not necessarily a bad thing.

"I think for us, making money is one thing, but more important it's that we want to make a difference here. We want to show people what it's like for seniors in developed countries to live," Xie said.

In addition to tackling perception, there is also the reality of numbers.

Ninety percent of seniors will either remain "aging-in-place", or living on their own or with their children, while 7 percent will live in community or government housing geared for those on a low income. Three percent are in high-end private housing centers.

This means high-end foreign healthcare providers are targeting just 5.4 million of China's 181 million elderly people, indicating that the market may not be as large as companies hope.

But the number of the nation's retirees is skyrocketing, meaning the number of seniors looking for high quality may also grow.

Though the need to deal with the rapidly aging population is an immediate and real concern, investment in China has changed and businesses must be cautious before leaping into unknown markets, said Shobert of Rubicon Strategy Group.

"Now, foreign operators are very focused on a patient and disciplined approach that emphasizes market research, cautious build-outs, and careful selection of which demographic or market niche to emphasize."

Whether or not foreign investors have waited long enough to re-invest efforts into getting a foothold in China is still unknown. For now, many are still adopting a wait-and-see attitude.

"The question of whether the industry has the elasticity to absorb excess capacity, learn from early mistakes, and then re-deploy across China in a time frame to make for a compelling industry opportunity or to address the very real human needs this industry serves, remains to be seen," Shobert said.

Contact the writer at toddbalazovic@chinadaily.com.cn

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