Managing China’s Elderly. As Easy as 90-7-3

Thursday, May 24, 2012 1:52

Dan’s article Elder Care In China, American Style over at China Law Blog a few week ago reminded me of some research I was working on last year where we were looking to understand the size of the problem, the expectations of China’s elderly (lifestyle, healthcare, family, etc), what were the solutions on/ coming to market, and what were the likely opportunities within the market. It was one of the more interesting projects I worked on as we were able to spend a lot of time talking to the different stakeholders, and a lot of time with the elderly themselves.

In Dan’s short post, he ends with the following (rhetorical) question:

I guess I still have to wonder though how much room there is for foreign influence/investment/expertise in China’s soon to be booming private senior care market and I would love to get reader feedback on this. Is China elder care a great opportunity for Western companies? What do you think?

To which I would say that this is a market with huge potential, and in a number of product / service offerings.

Referring to the Slideshare above, where I lay out the problem, the foundation for nearly all the opportunities that exist is in the gaps between policy, expectations, and capacity. At the very basic level, the (Shanghai) government is expecting 90% of elderly residents to live with famliy (spouse or children), a goal that is falling far short, and ultimately will place a large burden on the gvoernment who are only expecting to support 7% of elderly through their community infrastructure. An opportunity for foreign players on many levels, as service providers to the government, through affordable clinics, insurance plans, etc.

But more interesting market opportunities we found are within the active elderly (60-75 years old wtih living spouses) who are looking to enjoy their post-retirement years. this group is already physically quite active, and very sociable, but for those who have larger nest eggs they are looking for more than taichi every morning in the park. they are looking for excitement, a sense of fulfillment/ worth, and are prime for luxury travel, online platforms, and ongoing education.

All markets that are open to foreign investors.

Which leads me to a final point. When thinking about elderly in China, it is important to remember that there are several distinct segments in the market, and that while each one is in need, the revenue models for each segment can be quite distinct. And given the size of the market, the current offerings on the market, and the speed by which it will grow, you can bet that this market will offer foreign players returns that are as competitive as anywhere else in the world.

It will just come down to scale.

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3 Responses to “Managing China’s Elderly. As Easy as 90-7-3”

  1. Chris Devonshire-Ellis says:

    May 24th, 2012 at 11:34 pm

    Its a no-brainer really, demographic drivers dictate that China is getting older. So not much news there. What needs to go along with that is Government policy to support a health care industry open to foreign investment, and that’s patchy at best. One major sticking point is the old TCM debate (traditional Chinese medicine) where the US and EU won’t let TCM products be sold on those markets as Chinese medicine has not identified the active ingredient. That’s hugely problematic as treatment is unpredicatable, and potentially even dangerous. Why don’t the Chinese identify active ingredients? Because its extremely time consuming and concerns over losing patents. As a result, foreign drugs companies – and medical suppliers – find it very difficult to break into China’s market. Its a tit for tat thing. (am I allowed to say “tit” here?). That’s the main blockage. Until that is solved, it’ll remain a tough market to break into. China will be relying on it’s new middle class to support the elderly at home for decades yet. – Chris

  2. Tim says:

    May 28th, 2012 at 12:29 am

    Actually depending on what specific activities foreign investors are engaged in these areas – tourism, online platforms and education – are restricted in terms of how a foreign investor may participate. I have worked with a couple foreign senior care providers who have found that the level of interest in foreign investment in elderly care depends on what level and bureau you are discussing the project.

  3. The Opportunities of Urbanized China Cannot be Ignored. | All Roads Lead to China - Business News, Analysis, and Insights from China says:

    July 19th, 2012 at 11:47 am

    […] back to the post Managing China’s Elderly. As Easy as 90-7-3, the key take away should be that while Shanghai offers a huge opportunity for firms and […]