Over the past decade, China's elder care sector has experienced rapid growth, marked by a surge in new and luxurious senior housing, and assisted living facilities. Currently, Shanghai alone has around 800 nursing homes. In the past decade, numerous companies, including real estate developers, insurance firms, and home-care service providers from around the world, entered the Chinese market. However, many faced challenges such as property ownership issues, mismanagement, and a lack of professionalism, leading to failures.
Sourcingcares editor recently interviewed Kevin Zhou, assistant general manager of Shanghai Index Exhibition and deputy chairman of the Shanghai Rehabilitation Device Association, to gain insights into China's elder care market and industry. Zhou highlighted the following key trends and projected developments for the next 5-10 years.
Companies providing long-term care insurance have become more prominent due to their ability to offer reliable housing options for the elderly. These companies benefit from low land costs, a solid member base, consistent income sources, and diversified product portfolios. As a result, they are often viewed as more trustworthy by the general public. Some of these companies are state-owned, while others are private, further bolstering their credibility.
The Chinese government has recently increased its involvement in the senior care sector, contributing to a more structured and well-regulated market. This involvement has transformed elder care into a formal industry, making related products and services more accessible to consumers. The success of the home-care service model has led to the creation of product sales channels for end users, enhancing accessibility.
Emergence of community-based service providers
China's elder care industry encompasses services and products used in facilities, communities, and homes. Most elderly individuals prefer to stay at home, and the government is promoting "active aging" or "aging in place." The terms "0973" and "0964" reflect government projections, with 90% of the elderly staying home, 7-6% in communities, and 3-4% in nursing homes.
Shanghai, home to over 5.5 million people aged 60 and above and 800,000 aged 80 and above, is nearing the "0973" target. To support active aging, the government has built around 400 complex community elderly centers in Shanghai. These centers, located within a few kilometers of most residents, offer services such as rehabilitation, health and wellness programs, recreation, and learning. Some centers even provide catering services and short-term accommodations for those who cannot live independently.
The government outsources these services to professional elder care companies, which in turn charge minimal fees to the elderly. This outsourcing has led to the emergence of community-based service providers, with major players expanding to open chain stores in multiple cities. Each store can service 30-40 community centers, leading to significant growth.
Long-term care insurance and home care services
In the past 5 years, China introduced long-term care insurance in 40 cities nationwide, with each city having its own policies. In Shanghai, 1% of total medical insurance income funds long-term care services, covering medical care, bathing, and other services. There are approximately 200-300 home-based service providers in Shanghai, contracted by the government to deliver these services.
Due to the need for professional medical services in communities, the government has also contracted with these service providers to establish service points for offering medical services, contributing to their growth. The largest provider now operates around 400 shops nationwide and is working on standardizing home-based services.
These providers have also created product sales channels for consumers, offering assistive device rentals and introducing new products to the elderly. Seeing the potential of home and community-care services, some professional product providers, representing high-end brands, have opened retail shops or showcased elder care products in large shopping malls and supermarkets.
Final suggestions for foreign companies entering the Chinese market
Zhou projects significant growth in home care-based services and products over the next five years. For foreign companies interested in the Chinese market, collaboration with local channel players and home-care service providers is crucial. Additionally, the elder care service model in China is still developing and moving towards standardization. Companies offering professional consulting services, unique services, or management expertise are highly welcomed. There is also a rising demand for professional care models for dementia patients in China.
China's elder care industry is poised for substantial growth and transformation in the coming years. With increasing government involvement, the emergence of reliable long-term care insurance providers, and the emergence of community and home-based service providers, the market presents significant opportunities for both domestic and foreign companies. As the sector continues to evolve, it will be essential for businesses to adapt and collaborate to meet the growing needs of China's aging population.
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