Aug. 29 (Bloomberg) -- The Chinese increasingly eat, shop and play in ways their Western counterparts would instantly recognize. They’re aging like them too, living longer lives that are often limited by debilitating illnesses.
As the almost 200 million population of over-60s more than doubles in the next 40 years, China faces a deluge of infirm elderly who can’t live alone. Nor can they rely on Confucian tradition of children caring for their parents: the country’s one-child policy has left fewer offspring to share the load, while more Chinese are moving away from home to study or work.
While China spent 1.1 trillion yuan ($179.7 billion) over the past four years to cut the cost of drugs and provide basic medical coverage for more than 90 percent of its 1.3 billion people, services for the elderly have fallen behind. To plug the gap, Premier Li Keqiang said Aug. 16 the government will cut red tape and costs to spur foreign investment into the type of privately funded care that is common in the West.
“They’re going to be struggling with an enormous burden in terms of caring for their elderly,” said Benjamin Shobert, managing director of Rubicon Strategy Group in Seattle, which advises companies on how to enter Asian health-care markets. “They don’t really have two bites of the apple. Purely from a time-frame point of view, the next 10 years are critical.”
More than two decades of record economic growth turned the Chinese into the world’s top consumers of cars and smartphones. At the same time, China's people can expect to live 76 years on average, seven years longer than in 1990, World Health Organization data show. They can also look forward to 16 years of life after retirement, according to Bloomberg data.
Those gains came at a cost. Uneven growth lured hundreds of millions of people from rural areas into cities, separating families and removing a key source of support for the elderly.
The social upheaval eroding China’s multi-generational family structure is accompanied by changes in health, a study published in June’s edition of the Lancet shows.
China’s health profile in 1990 looked like that of other developing countries such as Vietnam and Iraq, according to the paper by the Chinese Center for Disease Control and Prevention and Peking Union Medical College. By 2010, it resembled rich nations such as the U.S., with heart disease, strokes, high blood pressure and diabetes among ailments gaining prominence.
A “shift to chronic disability” poses a major challenge for China’s health system, the report said.
More than half of U.S. seniors over 65 suffer from one or more chronic disease, with more than a quarter needing help with activities such as eating or washing, according to the Department of Health. Private care in America -- from home visits to full-time nursing facilities -- will generate more than $300 billion in annual revenue by 2016, according to a December report by Freedonia Group Inc.
In China, those options are largely missing.
“Everything that you need as an elderly person, from nutrition to care to recreational needs, that gap needs to be filled here,” said Bromme H. Cole, founder of China Geriatrics Institute, which trains health-care workers. “This is an embryonic industry still -- it’s chaotic, there’s confusion, but at the same time there’s enormous opportunity.”
Premier Li’s statement signals China’s leaders feel pressure to accelerate growth in the sector to meet their commitments under the 12th Five-Year Plan, he said.
“Development of competent senior care operators is very time sensitive as about 7.5 million people enter the over-65 cohort each year,” Cole said. “China is unprepared to offer the minimal standard of care to all their citizens in this age group.”
One priority is home-care services that China wants to meet 90 percent of elderly needs, said Rubicon’s Shobert. Current rules, for example, deter foreign home-care companies from offering services typically provided in the U.S., like physical rehabilitation, he said.
For now, the government and foreign players are still searching for the policy framework that’s right for China and will spur investment into services Chinese will want and can afford to buy.
“If you look globally, this is a business model that doesn’t typically export,” Shobert said.
Eight months after Columbia Pacific opened its first assisted-living facility in Shanghai, only 25 of the 100 beds have been taken.
“We’re still experimenting with the best way to market this,” said Nate McLemore, managing director of the Seattle-based investment fund. “It’s a new concept for people to know they can live a full life in their aging years and be very well taken care of.”
Columbia Pacific unveiled its second project at a ceremony last week in Beijing attended by U.S. Ambassador Gary Locke and Dou Yupei, the Deputy Minister of the Ministry of Civil Affairs.
Elderly residents of Senior Living L’Amore will have a roster of activities that include mahjong, tai chi and Karaoke. For about $2,000 to $3,000 a month, caregivers wash, feed and remind them to take their medicine, according to Serena Xie, the head of Columbia Pacific’s China unit.
When Xie moved to China three years ago to set up the business, she recalls “nobody had an idea of how to process the applications” and it was difficult to bring regulators together. Today, political support starts at the top.
“Every government person I’ve met with recognizes that there are needs that must be addressed,” said Mark Spitalnik, founder of China Senior Care Inc., which is building a residential aged-care facility in the eastern Hangzhou city. “It comes down to giving people a face-saving way to take care of the elders in their family.”
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