Following its deep commitment to filial piety, Chinese society
has long exalted multi-generation households. The current elderly
and healthcare system reflect this cultural practice, relying on
elderly individuals’ family members to provide care and
financial support.
However, as the country’s economic, migratory and working
patterns change against the backdrop of an ageing population, the
new demand for quality elderly care has set off the rapid
privatisation of China’s elderly care industry.
In 2021, 18.9% of China’s population was over the age of 60,
around 267.36 million people. And there are 20.56 million of the
population over the age of 65, accounting for 14.2 per cent. This
meant that there were 2.37 working-aged persons for every one
retired person. In 2050, the ratio is expected to drastically drop
to 1.82 working persons for every one retired person. Furthermore,
currently, 180 million Chinese seniors suffer from chronic
diseases, and over 15 million are facing dementia such as
Alzheimer’s disease. The current care system is unable to
sustain these drastic demographic and economic shifts.
To address this issue, the government is looking to increase
private capital and investments in the industry, hoping to provide
seniors with better quality and more accessible services and
options.
China’s greying society
Currently, China’s population is the largest in the world.
It is set to peak in 2030 before it is expected to decline.
However, the population is ageing rapidly as well. It is projected
that by 2050, the elderly will increase to 35% of the overall
population.
This is partially due to the one-child policy, which led to a
sharp decrease in younger generations. Instated from 2020 to 2021,
this practice caused China’s birth rate to decline to 7.52
children born per 1,000 people, compared to the birth rate of 14.03
children born per 1,000 people. By 2065, the overall population is
expected to return to numbers seen in the mid-20th century.
Economic challenges
China’s greying society poses two pressing economic issues.
The first is that the drastic drop in people means a drastic drop
in domestic consumption, a driving force in China’s economic
growth and power. The second problem is the massive imbalance
between China’s retired elderly and its working-aged people.
This demographic disparity is posed to put a significant and
critical strain on the pension system and infrastructure, which
will only be further exacerbated by China’s economic decline.
This has been dubbed the 4-2-1 problem, where one child is
expected to support two parents and four grandparents in
increasingly challenging economic situations.
China’s elderly and younger generations are also
increasingly differentiated by where they live. This makes caring
for elderly family members more difficult. China’s population
is rapidly relocating from the rural countryside to its major
cities, with most of those moving to be the younger working class
in search of economic opportunities. In 1980, right after
China’s major economic reforms, only 19% of China’s
population lived in urban cities.
In 2000, the percentage nearly doubled to 36%, and this year,
another 20 years later, the number has nearly doubled once more,
with over 61% of the population living in cities. The term
liushou laoren, or left behind elderly, has been coined to
refer to the millions of seniors left on their own in the
countryside as their children relocate to China’s metropolitan
cities (this phrase mirrors liushou ertong, or left-behind
children, who are kids whose parents left for the city). As the
traditional practice of children caring for older generations
becomes harder and harder to sustain, the government is looking to
improve the state and private services offered to the elderly.
Privatisation and globalisation of healthcare
The Chinese government regards health and medical care as
critical considerations in improving the elderly’s health,
happiness and quality of life. This is reflected by how China’s
senior care market is increasingly being combined with medical
services. If senior living facilities do not have a hospital on
their grounds, they are likely to either have their clinic or be
built near a hospital. To improve the eldercare system, the
government must first improve the healthcare system.
The majority of China’s healthcare system is state-operated
and non-profit. People often flock to prestigious hospitals in
large cities, greatly exceeding their capacities, while other
institutions are left inefficiently empty. Relatively low salaries
for physicians and complex, non-centralised bureaucratic systems
have led to low levels of transparency and bribery scandals.
Besides comprehensive public healthcare reform, the strong
demand for high-quality, accessible healthcare has led to the
privatisation of urban hospitals. Between 2006 and 2011, the number
of private hospitals in the country doubled. By the end of 2021,
the percentage of private institutions accounted for 2/3 of the
total number of hospitals in China, however, they only accounted
for less than 20% of China’s overall healthcare revenue.
Further legislation promoting foreign investment
Since then, they have further taken multiple legislative steps
to promote and increase foreign capital in the eldercare and health
industry. The Finance and Tax Circular 77/2014 and Article
9 of the 2014 Eldercare Foreign Investment Circular
established that eldercare institutions with foreign investments
are entitled to the same preferential and tax policies as domestic
ones.
Policies like the 2015 Implementing Opinions on
Private Participation in Eldercare outlined benefits like tax
exemptions, administration levy reductions and the increased
allocation of state lottery welfare funds. The government has also
promoted sector jobs and educational opportunities to increase the
number and quality of workers in the industry. In 2016, the Chinese
government announced that they are looking to completely open the
elderly care market to foreign investment by the end of 2020.
Recently, the draft of encouraging foreign investment in the
industrial directory (2022 version) issued by the Ministry of
Commerce, research and development promotes foreign capital to
invest in the elderly care industry. For example, the following
categories are encouraged by the Chinese government:
- Manufacturing of intelligent health and elderly products
(elderly products and auxiliary products manufacturing, elderly
medical equipment and rehabilitation aids manufacturing, elderly
intelligent and wearable equipment manufacturing, etc.) - Elderly services (including home community elderly services,
institutional elderly services and elderly institutions, community
elderly service institutions construction and operation, etc.) - Professional education related to senior care services, senior
care service skills training, home care skills training, senior
care education and senior care human resources services
These legislative reforms have enacted many positive changes. It
has set an attractive foundation for foreign companies to enter the
market. For example, Columbia Pacific Management, an American-based
company, announced a joint venture with Temasek, a Singaporean
investment fund called Columbia China, to operate senior living
facilities and hospitals. They already run a hospital, two clinics
and three senior living facilities in China with multiple projects
in development.
Policy support for the elderly care service
Under China’s 14th Five Year Plan (2021-2025), the
development of an efficient long-term care (LTC) system is a
government priority. The plan specifies major goals and tasks for
the five years, including expanding the supply of elderly care
services, improving the health support mechanism for the elderly,
and advancing the innovative and integrated development of service
models.
It lists nine major indicators, such as the number of elderly
care beds of the ratio of nursing care beds in elderly care
institutions, to mobilise society to actively respond to population
ageing. China will step up institutional innovation and boost
policy support and financial investment to enable the elderly to
share in China’s development achievements. Moreover, it is
stated that China would also plan to establish about 10 industrial
parks dedicated to the silver economy and build a string of cities
into models.
Nutritional supplements and pharmaceuticals
A growing market focusing on at-home care for the elderly is
nutritional supplements. China’s nutritional supplements market
is projected to hit USD 40 billion by 2023, and companies,
fortifying their products with vitamins and minerals like calcium,
zinc and vitamin D, have increasingly aimed their marketing toward
seniors. The government and multinational companies are both
responding to this sudden increase in products. In 2018, the National Health
Commission and the State Administration for Market Regulation
have, for the first time, introduced guidelines and regulations for
labelling foods targeting the elderly. This moves further
emphasised and concreted seniors as a rising market.
Moreover, China and its domestic companies’ tumultuous past
with food safety has led to an increased interest in and preference
for western products. These products are known for their stringent
regulations and rigorous testing or monitoring processes. This
reason, paired with the general industry growth, poses an excellent
entry point for foreign companies. This interest in foreign
pharmaceuticals has spurred western companies’ commitment to
this market.
Many companies are increasing their presence in China’s
pharmaceutical market, the second most valuable in the world. For
instance, GNC partnered with Chinese pharmacy chain Renmingtongtai
to release four new products intended for the elderly. Western
pharma giants like Amgen (American) and AstraZeneca
(British-Swedish) are also increasing their investments as Chinese
policies shift in their continual bid to privatise healthcare.
Technological innovations and remote health monitoring
China is becoming increasingly tech-literate and dependent. With
the extreme popularity and widespread preference for applications
like WeChat, which centralises access to features comparable to
Instagram, PayPal, Uber and Amazon all in one place, China is
consuming more and more high technology. The elderly are a part of
the movement as well, producing popular content like viral plaza
dancing videos or contributing to the popularity of apps like
virtual Mahjong.
This kind of technology makes recreation and routine errands
more convenient and accessible. It also increases the overall
connectivity and communication levels between different, separated
households. Just as how mainstream technological innovations are
looking to increase their elderly users, health tech is no
different. By making the remote monitoring of health data more
convenient, accessible and easy to communicate, it is looking to
streamline eldercare no matter the physical distance between
families.
Given how intertwined the eldercare and healthcare industries
are, any significant progress seen in the general health-tech
market parallels and drives technological change in the eldercare
market. Telemedicine, in general, is rapidly growing, innovating
and developing. For example, big data and artificial intelligence
(AI) have already established themselves as mainstays in
China’s health industries. Companies ranging from Chinese
industry leaders like Alibaba Health and Tencent to foreign
start-ups like VoxelCloud are investing in diagnostic AI and
cloud-computing solutions.
Similar big data analytics is also playing an increasingly
important role in wearable technology marketed toward China’s
elderly. Xiaomi, one of the largest cell phone manufacturers in
China, already caters to certain products and features to seniors,
like their cell phone’s simplified Lite Mode. Their extremely
popular fitness bracelet, able to collect, analyse and report data
in real-time, is a popular option for the elderly.
Other companies are also cashing in on remote health tech.
HiNounou, for example, is a Shanghai startup creating kits for
seniors to test genetic diseases and monitor and report health
data. AI-blockchain is then utilised to extrapolate and detail
preventative and predictive care measures from said data. This kind
of technology is popular and highly favoured because not only is it
accessible and informative, but as nuclear households increase and
multigenerational ones decrease, it is an instant and reliable
source of communication, connection and awareness between seniors
and their families.
Do you want to do business in China’s elderly care
industry?
As China continually seeks new ways to bridge the gap in
eldercare resources and further opens its doors to foreign
investment, foreign businesses are in a better position than ever
to enter the market. The care of China’s elderly will remain a
core focus of healthcare development in China over the next decade.
To enter the market, your company should evaluate what you have to
offer compared to local solutions and construct a proper market entry strategy accordingly.
