China still has a lot to do to set up a mature senior care industry

Though China's 12th Five-Year Plan (2011-15) has outlined the strong role that private and overseas investment can play in creating a mature senior industry and senior service system, the reality is far from that.

Though the government has proposed the goal of setting up an "appropriate and extensive" senior service network, it is still not clear as to what "appropriate" means. It has not laid out plans for it.

Many of the senior citizens who have lost their ability to look after themselves cannot find a place in most of the public facilities. The ones that have good services and reasonable prices are usually run by the government and have very strict entry conditions. It can take decades to get through the waiting line. Other reasonably priced nursing homes come with bad services while those with good services are usually out of the paying capability of most seniors.

It is estimated that nearly 90 percent of China's senior citizens prefer to age at home, but they don't know where to buy reliable senior services. Fake senior care products and medication have also become very prevalent.

There are four major problems to be solved.

First is the allocation of land resources. Senior communities are part of the social welfare system. It has a low return but requires a long return cycle. Senior housing also has a higher standard on the land scale, natural surroundings and supporting facilities than ordinary housing. If a company has to bid for a land directly, it would be very difficult for them to get it. It's even harder to have a business model for the project to be commercially sustainable.

Second is the lack of supporting policies. Most of the residents in senior communities have very limited incomes. The question still remains if there should be tax reductions for those who invest in senior service and related products. Also, seniors usually spend a lot on healthcare, which can be a very important factor for the occupancy of the assisted-living communities. Only if the hospitals in the community are included in the national healthcare insurance can the dwellers get refunds, so that more clients can pay for these services.

Third is legal responsibilities. Senior citizens are vulnerable to outside accidents. If that occurs and the responsibility is not made clear with the clients and the senior service providers, it could lead to a series of disputes and even affect the daily running of the project.

Next comes the standard on technology. The government has not yet issued standards on building senior communities. Without a unified standard, the bad institutions in the market can't be filtered while the good ones can't get support, which could stunt the development of the industry.

It is not enough to depend on the government's plans and financial support. China needs detailed and practical senior care service system and industry planning. The planning should also give the investors a clear outlook on the return, as well as a reasonable pricing for the consumers.

Yang Yansui is the director of the Research Center of Employment and Social Security at Tsinghua University; Hu Naijun is a researcher at the same center.

(China Daily 05/10/2013 page7)