A “rising tide of investment in elderly care” is seen in China, a nation with over 200 million “elderly people” aged above 60. Real estate companies begin to build large-sized residential buildings for senior people and elderly care establishments one after another. Japanese and American enterprises with relevant experiences also begin to actively partner with local enterprises in order to seek for business opportunities. It is deemed that the market scale of elderly establishments and relevant businesses in China is around RMB 2 trillion. Local and foreign enterprises already formally start their competition around this “largest market in the world”.

Yu Yao, President of Cherish Yearn Co., Ltd., said that the company plans to erect residential buildings for elderly across China. Cherish Yearn is now running a premium apartment project for the elderly in the suburb of Shanghai. Covering an area of nearly two gymnasiums, this project consists of 12 residential buildings, a hospital and a leisure bath facility.

If one wishes to live in this apartment building, one needs to pay a maximum of RMB 1.18 million for the right of residence, plus RMB 30,000 to 70,000 as an annual fee. Since 2008 when the apartments were first available for residents to live in, around 1,500 persons have paid for the right of residence and around 1,300 persons are living in the apartments now. It is said that the company has earned RMB 300 million, 50% of its investment in developing this project. In the future, the company plans to build 12 projects of the same scale in other places with warm, pleasing climate, such as Hainan Island.

With the increasing number of affluent old-age class in the urban areas in China, premium establishments are more and more welcome. According to the report on local Chinese media, more than 80 real estate enterprises have engaged in the elderly care industry and developed more than 100 projects. Vanke, the largest real estate company in China, is going to invest RMB 12 billion in building a community for elderly care in Jilin Province.

Another factor that drives the tide of investment in elderly care in China is the stagnant real estate market. In order to find a way out under the severe business environment, real estate enterprises shift their attention to the elderly care market one after another. For these enterprises, a common challenge is lack of experience in elderly care establishment and service area. In order to make up for the deficiency in the ability to work out business plans and operate the project, enterprises begin to seek for overseas partners.

In early December, at a Sino-Japanese Elderly Care Industry Forum in Shanghai, Tao Kan, Chairman of Shanghai Beijian Huaqing Industry Development Company, a large local real estate developer, expressed his desire to learn from Japanese experiences. His company plans to invest a fund of around 3 billion Japanese Yen in transforming a building in the suburb of Shanghai into a residential building for elderly. At the Forum, Chairman Tao expressed his concern about his company’s lack of experience in operation of such a project and also expressed his desire for partnering with Japanese enterprises.

Chinese consumers normally have good impression on the comprehensive “Japanese-style elderly care” services. In December 2013, RIEI Co., Ltd., an elderly care establishment operator from Japan, partnered with a local enterprise to open a house for the elderly in Shanghai. According to the introduction by local media, Alzheimer's disease patients were not subject to any restriction in their activities, and diets were provided according to the physical condition and ability to eat of each elderly person. After it was introduced to by the media, this house for the elderly immediately attracted others’ attention. At the same time, Japanese enterprises engaged in door-to-door nursing service, nurse training and sales of elderly care products began to take action one after another.

Columbia Pacific Management Inc., an American enterprise specializing in operation of senior housing and medical institutions, has already opened its 3 premium apartment projects for the elderly in Beijing. These projects were jointly developed with local Chinese real estate companies. Different from the small size to medium size of most Japanese enterprises, American enterprises are often in a larger size and launch elderly apartment projects of a larger scale. In addition, American companies have begun to promote chain service of door-to-door nursing in China.

Relevant enterprises from South Korea, Taiwan Province and Germany are also waiting for good opportunities to enter into the market. Mizuta Kenji (水田贤治) from Japan External Trade Organization(JETRO) said, “No foreign enterprise has yet gained a complete victory in China.” In November 2014, the Chinese government published a notice on promoting foreign investment in the elderly care market. Foreign enterprises are allowed to set up their independent establishment and are encouraged to provide chain services.

“The fund of RMB 2 billion and the land are in place. Enterprises with the capacity to operate elderly care establishments are now needed for recruitment.” Such a message was viral on WeChat in December 2014. It seems that the tide of investment is already too high.

In the suburb of Beijing, an elderly care and nursing establishment named “Yanda International Health City” has been open for business. With 12,000 beds in this City, it boasts of being “the largest apartments for the elderly in the world”. However, due to incorrect choice of location and other reasons, “there are currently only around 100 people living here,” as said by relevant local nursing personnel. Since we have no idea how long time this tide will last, at present we can only say that both risks and opportunities co-exist.