MANABU ITO, Nikkei staff writer
TOKYO -- The business of caring for China's elderly is taking off as property developers and other newcomers enter the fray, recognizing the huge potential for growth.
Cherish Yearn operates a massive retirement community on the outskirts of Shanghai, complete with 12 condominium buildings, a hospital, a spa and other amenities. With a membership fee of up to 1.18 million yuan ($189,000) and annual charges of 30,000 yuan to 70,000 yuan, it qualifies as upscale. But the company has had no trouble finding 1,500 members since the property opened in 2008. About 1,300 are now living there.
Having already recovered half of the 600 million yuan it cost to build the facility, the company is planning 12 more, including one on the resort island of Hainan. "We want to build residential properties for the elderly all over China," a company official said.
With more than 200 million people aged 60 years or older, China's elderly care market is considered to be the biggest in the world. Yano Research Institute, a Japanese marketing specialist, puts the value of China's "senior market" at 1.83 trillion yuan this year
More than 80 real estate companies have entered into the elderly care business, according to local news reports. They are carrying out more than 100 development projects at the moment. One big player is China Vanke, a developer working on a 12 billion yuan community for the elderly in the country's northeastern Jilin Province.
Property developers are stampeding into elderly care as they face a slowdown in the broader property market. Many of these newcomers, lacking experience in operating homes for the elderly and providing nursing care, are tying up with established players outside China.
At an event in early December in Shanghai to promote cooperation between Chinese and Japanese elderly care companies, a Chinese property developer was looking for partners. The company plans to spend around $25 million to convert a building in a Shanghai suburb into a nursing home. "We feel a little uneasy, because we have no know-how in the operation of homes for the elderly," an official said.
Come one, come all
Japan's style of elderly care enjoys a positive image in China for its attentive service. Riei, a nursing-care facility operator based in Chiba Prefecture, is taking advantage. It opened a nursing home in Shanghai in December 2013 in a partnership with a Chinese company. A news report showing how the facility treats residents -- allowing dementia patients to move around freely and tailoring meals to residents' health needs -- was well received. Other Japanese businesses are moving into China to offer home nursing care, provide training for would-be helpers and sell related products.
Among U.S. companies, Columbia Pacific Management has teamed up with a Chinese real estate company and others to open three residential properties for the elderly in Beijing and two other locations. Columbia Pacific, a big operator of nursing homes and hospitals, is developing a franchise business in China for home nursing care.
The Chinese government in November announced a policy aimed at encouraging foreign investment in the senior care market. Foreign companies can now set up elderly care facilities on their own, without a local joint venture partner. Development of elderly care franchises is also encouraged. The policy change appears to be having the desired effect. Companies from South Korea, Taiwan and Germany are also looking to enter the market.
China continues to age rapidly. The number of people aged 65 or older is forecast to reach 330 million by 2050, or 26% of the total population. That is certain to drive up demand for nursing homes, hospitals and other facilities to care for the elderly. The government is trying to get ahead of the problem. It wants to raise the number of beds in nursing care facilities to around 6.6 million by the end of this year through subsidies and other support.