Aging nation creates nursing home boom

Updated: 2011-12-05 07:37

By Tania Lee (China Daily)

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Increasing elderly population and burgeoning wealth open up market

BEIJING - Of all the unexpected things in Chinese society, moving into a nursing home is one of the most unusual.

Nursing homes in China may appear very large and glamorous on the outside, but sometimes what's on the inside reveals a totally different picture. Unlike those in some developed Western countries, experts say many nursing homes in China are overcrowded, receive inadequate government funding, have poor amenities and are often staffed by rural migrant workers with no professional training in the care of the elderly.

Aging nation creates nursing home boom
A senior citizen eats lunch beside a temple wall in Nantong, in East China's Jiangsu province. China's increasingly aging population has led to rising demand for nursing homes. Xu Congjun / For China Daily

Chinese people feel ashamed or embarrassed to put their relatives "away" in nursing homes, but in many cases, it is the last or only resort.

The family structure in China is changing: Women, who once supported the family at home, have entered the work force in greater numbers. Chinese society has become much more educated. People who have better jobs and busier lives as a consequence are among those who have strayed from the strong tradition of filial piety and are thus helping to create the nursing home phenomenon.

This is where East meets West. Global investors have caught on to China's boom in care for the elderly. Given the country's enormous population, this socio-demographic shift symbolizes an opportunity for companies and investors to move into an increasingly lucrative and relatively untapped market.

The statistics

According to the National Bureau of Statistics, China now has more than 178 million people aged 60 or older, approximately 13 percent of the population. By 2042, the elderly will account for more than 30 percent of the population and China will have the biggest aging-society problem of any country in the world, exacerbated largely by its one-child policy. The average lifespan of a Chinese citizen is now 73 years.

"The main issue is not that the population will age - that's a given," said Gordon Orr, director at McKinsey & Co, a global management consultancy. "It's how the government can afford to pay older workers, in terms of pension and other healthcare benefits."

Local governments are discovering that demand far exceeds supply. In rural China, 40 million elderly people will be living on their own during the 12th Five-Year Plan period (2011-2015) because their children are working elsewhere, testing the country's social services and insurance system.

Wu Yushao, deputy director of the Office of China National Committee on Aging, says the situation poses a huge challenge for China. "Services for the elderly are too weak to handle the situation and the welfare system is still backward and a large number of senior citizens in rural areas are not included," the Xinhua news agency quoted Wu as saying.

Nonetheless, the majority of care homes in rural China are funded and, in most cases, operated by local governments.

Until recently, the central government's focus had predominantly been on the lower socio-economic group in rural areas, an argument that explains why there hasn't been much professional development in the sector.

"The reason why we have not done more work in China is because there was little provision in the middle-income groups and very little in the high-income area," said David Lane of ThomsonAdsett & Partners Pty Ltd, an Australian consulting company that has worked in the sector in Asia since the 1990s.

"Most of them (developers and operators) can only really support the employment of local architects with very limited international assistance," he said.

Now, with China facing an aging population, the government has welcomed private and foreign investors to help cover the shortfall in facilities for care of the elderly. Private companies dominate the nursing home sector in most major cities.

Although it is hard to determine exactly what percentage of the elderly rely almost exclusively on the family for support, a study earlier this year by US gerontologists and Chinese academics, published in the Journal of the American Geriatrics Society, indicates that the number of elderly people moving into nursing homes in Chinese cities is soaring.

The study, led by Zhanlian Feng, assistant professor of Health Services, Policy and Practice with the Center for Gerontology and Health Care Research at Brown University in the US, surveyed seven Chinese cities and discovered a growing number of care homes for senior citizens.

The ancient capital of Nanjing, in Jiangsu province, for example, had 27 homes in 1990 and 52 a decade later. By 2009, the number had risen to 148. Beijing and Tianjin showed similar growth, while Shanghai had 552 facilities by the same year.

Despite this sudden growth, many industry leaders believe that the market is still immature and has the potential for enormous growth.

ThomsonAdsett is currently working on numerous projects in Beijing and two in Shanghai, while bidding for further work in Foshan in Guangdong province, Dalian in Liaoning province, Wuxi in Jiangsu province, Wuhan in Hubei province and the municipality of Chong-qing.

"I expect the level of inquiry (from investors and developers) will continue to increase rapidly over the next five years," said Lane.

Official records also show that the number of available beds in nursing homes can only cater for 1.8 percent of China's elderly population, whereas the standard in many Western countries is between 5 and 7 percent.

"We'll need to increase the number by 3.4 million beds to accommodate 3 percent over the next five years," said Li Jianguo, vice-chairman and general-secretary of the Standing Committee of the National People's Congress, in March.

Over the 12th Five-Year Plan period, the government intends to increase pension coverage, expand home-care services and build more nursing homes. But despite their push for more outside input and more favorable policies on land, water, power and taxation in the elderly care sector, businesses are aware of the loopholes and the financial risks - particularly because of the great degree of apprehension about how the general public views care for the elderly and retirement facilities.

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