Enter the ageing Dragon…..

by Bromme Hampton Cole 柯 博 明

中国龙进入高龄化社会

同 志 好! This is China Senior Living’s inaugural blog. Here, you will read about my opinions on the state of the industry, new events, conferences, project updates and other relevant matters. At first, my entries will be posted randomly and time goes on I will attempt a more consistent and frequent blog.  I also intend on having industry icons as “guest” bloggers as well. But first things first…

This is China Senior Living !

As a general statement, senior living today in China is a trend and a trend that is consigned exclusively to the upper end of the market. In all fairness however, it is a trend with extraordinary facts that underpin its potential; all of which evidence and corroborate a likely near term transformation into a full-fledged industry. These realities are:

1) Demographics: China’s well known and highly publicized demographics indisputably show that it is facing a dramatic transition from a young to an aged society in the coming 10 to 20 years. In 2000, there were 88,110,000 persons aged 65 years and older, which represented 7% of the population. Today this figure is closer to 150 million or 13% of the total population; and by 2020 those over 65 will total an astonishing 265 million. There are no official statistics that account for the relative wealth of those in this age cohort, but it is  safe to say that the overwhelming majority of those over the age of 65 are rural poor. Less than 10% could be considered middle class (western standard) and a corresponding 1% deemed wealthy.

2) 4-2-1: Because of the peculiar 4–2–1 family structure in China, one can expect that older Chinese adults will increase their use of senior living facilities in the coming years. With the China’s burgeoning economy, the lure of prosperity and the consumerism that follows, it is unrealistic to expect that the remaining one child will remain at home to care for the elders. Additionally, the Chinese government has realized that a) it is financially  unsustainable to expand in this area using public resources and b) they have no real understanding of gerontology as witnessed by the government’s “Star Light Program” and the “Beloved Care Engineering” launched in 2001 with suboptimal aged care services to say the least. The government’s current policy, outlined in both the 12th 5 year plan and the recent Circular 58 legislation is to encourage private and foreign investors to participate in the retirement housing business in China.

3) Filial Piety: The Chinese tradition of caregiving for older family members is and has always been an inward looking phenomenon; they rely on family members to support all aspects of an elder’s care. This is what the Chinese refer to as the value of “filial piety.” In fact, China’s constitution mentions that “…Children have a duty to support and assist their parents…”.  While most of the younger persons in China still maintain the attitude that taking care of the older family members is their responsibility, more and more of China’s youth are unable to provide all of the family support functions and require some outside assistance. This is due in part to the 4-2-1 phenomenon mentioned above as well as the impact of China’s prosperity and the consequential trend of small nuclear and empty-nest families.

Yet these facts which will transport the trend into an industry are constrained by a single, stark reality; there is no geriatric health care operator currently in practice in China with the knowledge base that is required to adequately care for a frail, elderly population. This is not to say that there are no such facilities, indeed there are and at last count, I have found and visited about 25. However these facilities are real estate plays and/or strictly independent living opportunities with little or no care services (to wit: Golden Years in Hangzhou). Alternatively, there are facilities that have attempted aged care services but the reality of caring for a frail census far exceeds the ability of the hired staff whose training is simple nursing. The point here is something I have tweeted about previously and is an axiom of the senior living business in China:

The tipping point that transforms China senior living from a trend into an industry is the development of “localized” operators who have assimilated and culturally integrated the fundamentals of aged care into an acceptable Chinese context; simply translating western operating manuals into Mandarin is doomed to fail.

Alas, I think it was Confucius who once said that necessity is the mother of invention and indeed there is at least one geriatric care operator in formation at present and should be open by late next year. This nascent operator will open his doors in a flagship prototype specifically designed for long term aged care. It will be a small facility, which not doubt puzzles the Chinese given their propensity for Freudian accomplishments, but going forward the operator plans to offer contracted services only…..A brilliant move. I need to also mention another facility that is truly a model of Chinese senior care (near) perfection. General’s Garden in Beijing is a CCRC that is at least 5 years ahead of anything else in China built to date. This is not to say that there aren’t issues or mistakes as there are, but from a design and service POV, GG takes the CSL Blog Award for outstanding facility!

All the above is to fully suggest that there is enormous opportunity for western senior living companies. However, the opportunity must be approached with humility, patience and a willingness to fully adapt your care programs to a Chinese sensibility and temperament: this is elemental, essential and of liminal importance.

In my next blog, I am going to address the existing facilities in more detail; their pricing structures, business models as well as how I see western operators being successful in China. Subsequent to this, I plan on discussing the watershed Circular 58 ruling in greater detail as well as a primer to the legal vehicles one might use to enter and exit China in the senior living business.

Thanks. I hope to hear from as many of you as possible.

NOTE: Retirement Communities World conference is in Hong Kong this year. It is being held on October 10-12. I urge all who are interested to register at Terrapinn’s website. www.terrapinn.com