Foreign investors may bring cheer to elderly care sector

New measures to build service system covering urban and rural areas by 2022

China is pledging to further open up the elderly care market for overseas investors, to better meet challenges brought by an aging population.

The National Development and Reform Commission and 17 other government departments, recently rolled out a new plan to fully open up the senior care market, encouraging foreign capital to invest in and set up care homes in the country while offering them preferential policies equivalent to those benefiting domestic players.

The plan aims to build a comprehensive senior care service system covering both urban and rural areas by 2022, with home-based care as a basis, community nursing as a support and institutional care as a supplement.

Ever since the government introduced the opening-up policies to encourage foreign investment in the industry, a wide range of international companies have actively embraced the business opportunities, aiming to grasp the huge potential in the booming market.

Europe's major nursing home operator Orpea Group launched a nursing center in Nanjing, Jiangsu province in 2016. The company opened its second nursing home in Changsha, Hunan province at the end of last year.

Nathaniel Farouz, president of Orpea China, said that"China's elderly population is growing fast, resulting in increasing market demand, and this is why we invested in the Chinese market."

According to Farouz, support from the Chinese government is enabling the company to develop rapidly and bring European experience to China."We hope to expand our business across China and plan to open more nursing centers in first and second-tier cities in the country."

Ronald Wujister, CEO of Dutch pension fund APG Asset Management, who has been investing in China's pension funds, agreed. "We are happy to see the government's further opening-up policy, which has brought us more business opportunities in China's pension fund system. We have decided to stay in the Chinese market for the long term."

According to the Office of the National Working Commission on Aging, there were 241 million people aged 60 and above in China at the end of 2017, accounting for 17.3 percent of the total population. That number is expected to hit 487 million by 2050, or 34.9 percent of the total population.

A recent report by the Qianzhan Industry Research Institute showed that the country's elderly care market will reach 6.8 trillion yuan ($1.01 trillion) in 2019, and the number will hit more than 10 trillion yuan by 2022.

"As the population ages, the Chinese government needs to gear up to provide better public services," said Zhou Zhengshun, a researcher from the China Association of Social Welfare and Senior Service. "The emerging market lacks care professionals. And it will take quite a long time to set standards and build a complete senior care system. With the support of government policies, foreign investors will bring sophisticated products and complete operation and management systems to the nation."

"In recent years, the Chinese government has initiated various incentives to encourage companies to construct more senior care homes," Zhou said. "After years of high-speed economic development, China now needs to balance the social development and happiness of the people, meeting growing demands for better social welfare and wellbeing."

Statistics from the Ministry of Civil Affairs show China had more than 144,600 elderly care homes as of September 2017, an increase of 226 percent from 44,300 at the end of 2012.