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Is China Ready for American-Style Eldercare?

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Seattle's Cascade Healthcare recently announced its plan to open a nursing home in Shanghai, which, says the Asia Times, "is the first major investment by a North American eldercare operator, but is anticipated to be only the first wave of such investments."

Explains reporter Benjamin A. Shobert :

According to a recent statement by Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People's Congress, "3.4 million beds will have to be added in five years" and this is the very front end of a demographic tsunami that will by 2050 leave more people in China older than 65 than younger. For a country with an incomplete social safety net, this is both a compelling business opportunity as well as a potential source of social instability.

While the promise of foreign investment in this sector is likely to address some of this need, it will initially be the upper-end of the market that first benefits as Western eldercare operators expand into China. The faster Beijing can encourage foreign investment into this sector the swifter a proven business model becomes clear and solutions for the mid-market emerge.

Joseph Christian, one of the leading experts on China's eldercare market and a real-estate lawyer at DLA Piper in Hong Kong, "Private, for-profit senior housing is a brand new business in China, and I think that there is a great deal of uncertainty among Chinese investors and developers over exactly how to approach the market."

However, Shobert adds that, "in China, one of the most sacred duties is that of a child to his parents. For millennia, the Confucian ideal of filial piety has required Chinese to open their homes to their elderly parents when they can no longer take care of themselves."

As the Economic Observer (China) points out:

随着年轻人异地工作,父母与子女异地居住,空巢老人越来越多,2010年城乡空巢家庭约50%;失能、半失能老年人数达3300多万。

It is an interesting trend -- as the new generation picks up and settles in far-flung cities for work, 50% of China's elderly now live alone, with 33 million partially or fully disabled.

A piece in the Epoch Times blamed China's one-child policy for the "challenges of elder care falling on the shoulders of too few."

To wit:

Owing to the implementation of the one-child policy 30 years ago, many families now consist of one child, two parents, and four grandparents.

A recent online post, which was reposted on nearly ten thousand Chinese websites, expresses the sentiment of only children born after 1980:

“The burden of elder care is like a huge mountain on the back of every child in a one-child family. In childhood, we enjoyed the most undivided attention from our parents. But as adults, we are made to suffer the most. When we are in our 30s and 40s, our parents will be quite elderly, and we will become the most exhausted group on this planet.”

Does Western-style eldercare have a shot at usurping thousands of years of tradition?

In March, a study by Zhanlian Feng, an assistant professor of health at Brown University, was published online in the Journal of the American Geriatrics Society. Feng and his team found that the idea of professional care for the elderly was beginning to gain acceptance.

From Medical News Today:

Under a National Institutes of Health grant to co-author Vincent Mor, professor of medical science, Feng and colleagues at Brown, Georgia State, and Nanjing University found that the number of nursing homes in Nanjing grew from only three in 1980 to more than 140 in 2009. In Tianjin, where there are 136 nursing homes, only 11 existed before 1990. More than half of the nursing homes in the capital Beijing opened after 2000.

"Institution-based long-term care has been very rare in the country in the past," said Feng. "Even now it is still rare, but we've seen explosive growth, which is quite a phenomenon in a country where for thousands of years people have relied almost exclusively on the family for old age support."

The change in attitude is quite a shift. Over the summer, Brown's Feng, who left China in 1997, told the New York Times that, in the past, “If you talked to an adult child and asked, ‘If your mother or father gets too sick to care for at home, would you consider some sort of home or facility?,’ they would be shocked. It was a shameful idea.”

Chinese officials attempted a rather half-baked solution to the country's lack of comprehensive eldercare back in January, when legislation was proposed "requiring adult children to visit regularly and care for the emotional needs of their elderly parents," UPI reported.
 
Wu Ming, of the Ministry of Civil Affairs, told the news service that "the elderly will be able to invoke the law if their children do not often go home to take care of them," but others admitted "the law would be difficult to enforce."

POSITION:  No positions in stocks mentioned.

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