Overview of China’s elderly care market
As the world’s most populated country, China’s total healthcare spending stood at over CNY 4,200 billion (approx. CHF 630 billion) in 2016, with a fourfold increase from 2008 to 2016. Within healthcare, the elderly care industry is together with urgent need in increasing demand.
- As of 2016, there were over 150 million senior citizens (aged 65 and above) in China and this amount is expected to balloon, reaching over 500 million, or 43 percent of China’s whole population by 2045. As China’s elderly population becomes an increasingly large portion of the overall population, the Chinese government is increasing its spending and support of the elderly care industry.
- Traditionally, Chinese senior citizens are more willing to be taken care of by their family members rather than being sent to an elderly care center. But such a family-centered model of elderly care is no longer dominant and becomes more and more unfeasible for China’s urbanizing citizens. China’s attitude towards elderly care service is changing, with more and more people willing to live in care centers and furthermore the increasing disposable income of Chinese people make it more affordable.
- But generally speaking, China’s elderly care industry is still in its early stage and lacks experience, expertise and infrastructure, such as a lack of human resources, a lack of experience and IT infrastructure for home care. Government funded elderly care services are unable to provide for this increase, with a current capacity of only covering 2% of the total elderly population. A massive gap therefore exists in China’s elderly care market and opportunities therefore open for the private sector.
Opportunities for Swiss SMEs
The Chinese Government is encouraging the private sector to invest into this market. For foreign companies, the Chinese government classifies foreign investment into the elderly care industry as encouraged. Possible opportunities for Swiss SMEs are:
- Professional elderly care training service. Currently, there are approximately 220’000 caregivers, among which only 9% are certified and qualified ones. The total amount of qualified caregivers is far from being sufficient for the whole industry. As elderly care professionals or caregivers are traditionally not considered as decent jobs in China, there are few universities and vocational schools which support such training programs. The situation is changing now as Chinese government has created a discipline in universities and colleges for “elderly care service and management”, and more and more universities/vocational schools/private companies are looking for overseas partners to provide training services to caregivers and therefore, fill the gap of caregivers human resources.
- Home care service provider. Due to the Confucian respect for the elderly, a part of the Chinese society still relies much on and prefers individual families providing care for the elderly members of the family. If Swiss SMEs can provide innovative care solutions in home care or community care service, this would most likely be largely welcomed by Chinese families.
- Healthcare IT. In general, it is a relatively new but steadily expanding sector in China’s healthcare market. Telemedicine services and online medical diagnose will be employed more and in elderly care centers as well as at homes where care services are needed. Swiss SMEs can focus on providing software applications or technologies that cater for senior citizens in the elderly care services.
- Foreign Direct investment. The Chinese government encourages the establishment of elderly care apartments, residential areas and care institutions by foreign investors. The government has also streamlined the set-up procedure, offered preferential tax regulations and policies to foreign investors.
While the elderly care service market is an emerging market in China, there are barriers and risks. Swiss SMEs should be fully aware of major challenges they may encounter when entering the market.
- Complex and inconsistent regulatory framework. The Chinese government is, on one hand, offering several incentives to attract foreign investment in elderly care, but on the other hand, it remains vague on how to benefit from government incentives. And the regulations between different government agencies and the administrative bodies lack consistency.
- Finding qualified local partners. It is strongly recommended or rather necessary for a Swiss SME to work with a local partner when entering China’s elderly care market; yet finding a suitable and qualified Chinese partner is a challenge. The market is fragmented and companies active in the industry tend to only have capabilities of reaching out to end users and having strong government relationships in their focus regions. Possibly Swiss SMEs have to work with and manage several partners if they want to cover more geographic regions of China.
- Lack of human resources. China’s elderly care industry is still in its infancy and as such, it lacks human resources in terms of management personnel as well as professional care givers.
- Local competition and governments protection. Swiss companies may have to face strong competition from local businesses and in some regions, local Chinese companies are usually given preference by local governments.
All in all, a proper business partner is rather critical and S-GE together with our network partner Swiss Business Hub China can help you to identify the right partner in China.
If you would like to further evaluate China’s elderly care market, we suggest you get in touch with our consultant responsible for China, Daniel Bont. We will be pleased to discuss the best approach for your company to tackle this promising nascent market with you. Contact