Coping with Aging: Leading Firms Speed Up Elderly Care Industry Layout
As the aging population in China accelerates, the silver economy is becoming a focal point of attention across all sectors of society. The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Chinese-Style Modernization," reviewed and adopted at the Third Plenary Session of the 20th Central Committee, emphasizes the development of the silver economy. In addition, the "Opinions on Promoting High-Quality Development of Service Consumption" recently issued by the State Council propose to "vigorously develop the silver economy and promote the development of smart and healthy elderly care industries."
It is understood that the silver economy covers a wide range of economic activities that provide products and services for the elderly, involving a long industrial chain, diverse business forms, and enormous potential. As early participants in the elderly care industry, real estate companies have taken the lead in laying out comprehensive elderly care communities with their development experience and continuously iterating service and operation models, becoming an indispensable important role in this market.
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Reporters have learned that nursing institutions in first-tier cities have become saturated, and industry competition is no longer a simple expansion of beds but has entered a "new stage" of competing in service and operation capabilities. This poses new challenges for real estate companies involved.
Leading enterprises take the lead in entering the market. Data from the National Bureau of Statistics show that by the end of 2023, the total number of people aged 60 and above in mainland China was 296 million, accounting for 21.1% of the total population. It is expected that around 2050, the number of elderly people in China will reach a peak of 487 million, accounting for 34.9% of the total population.
According to Hu Zukun, Director of the Population Development Research Office of the Economic Forecasting Department of the National Information Center and a researcher, China's silver economy is currently in an accelerated development stage, with a scale of about 7 trillion yuan, accounting for about 6% of the same period's GDP. It is expected that by 2035, China's silver economy will reach a scale of about 30 trillion yuan, accounting for about 10% of the same period's GDP.
Faced with the vast market of the silver economy, enterprises related to the industrial chain have increased their investment efforts, among which real estate companies are early explorers. It is understood that over the years, real estate companies have entered the field of elderly care real estate by utilizing land resources and development experience, developing comprehensive elderly care communities that integrate living, medical care, and entertainment, and have long been an important force in this market.
In August of this year, the first district-level nursing home in Tongzhou District, adjacent to the Tongzhou Campus of Peking University People's Hospital—Suiyuan Elderly Care Center Project Phase I was completed, with 2 care buildings and more than 170 rooms starting trial operations.
It is understood that this is the second public-private partnership elderly care project under Vanke, with a total investment of more than 300 million yuan, a total construction area of nearly 30,000 square meters, and an overall plan for 7 buildings, including a comprehensive building, self-care building, and nursing building, which can provide 438 rooms and offer one-stop continuous elderly care services such as independent living, assisted living, and professional care for self-care, assisted, and nursing elders.As a leading real estate company, Vanke began to enter the field of elderly care as early as 2009. In November 2012, it launched its first large-scale elderly care community in Hangzhou - Sui Garden Jia Shu, which has become a model for community elderly care in Hangzhou and is hailed as a "milestone in Chinese elderly care communities."
In the Beijing market, before the Tongzhou Sui Garden project, in 2019, Vanke's first public-private partnership elderly care institution in Fangshan, Beijing - Fangshan Sui Garden, officially started operations. It was one of the few large-scale government-enterprise cooperation elderly care projects in the Beijing market at that time and was referred to by the industry as an "elderly care institution without walls."
So far, Vanke has been involved in the elderly care industry for 15 years and has long become one of its focused industries. Its elderly care communities are widely distributed in 12 cities including Beijing, Tianjin, Jinan, Qingdao, etc., with more than 40 parks opened, and the number of rooms in the Beijing area alone has exceeded 1,000.
In addition to Vanke, Oceanwide Group, which established an elderly care business center and entered the elderly care industry development as early as 2012, is now a pioneer that many peers learn from.
The person in charge of Oceanwide Group's international high-quality elderly care service brand, Chunxuan Mao, told reporters that Chunxuan Mao currently has the "3C" full format, namely CLRC elderly communities, CB elderly apartments, and CB nursing homes, which can meet the one-stop elderly care needs of the elderly. Up to now, it has successfully operated nearly 30 chain institutions in 8 cities across the country, with more than 11,000 beds and more than 1,800 professional elderly care service personnel. Its business covers the five major urban agglomerations in China, including the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Pearl River Delta, the Chengdu-Chongqing region, and the middle reaches of the Yangtze River.
In the Beijing market, Chunxuan Mao mainly provides two types of products, CLRC elderly communities, and CB elderly apartments, operating 7 CB elderly apartments and 1 elderly community. The project layout is in the southeast, northwest, and southwest of Beijing, and customers can choose projects based on their own situation. The occupancy rate varies according to the different operating conditions of the projects.
Among them, Chunxuan Mao · Heyuan Elderly Community is the first CLRC project of Chunxuan Mao in Beijing and also the first A61 elderly care land project in Beijing. It is a milestone project in the elderly care industry and has been operating for 3 years, with more than 120 elderly people living in it.
Entering the "new stage" of competing operational capabilities
Reporters learned through research that after the policy support for the elderly care industry in the previous years, state-owned enterprises joined in large numbers, and a large number of elderly care institutions were opened. After the "subsidy" faded, the elderly care institutions in first-tier cities have now tended to be saturated, and the industry competition is no longer a simple expansion of beds, but has entered the "new stage" of competing services and operational capabilities.
A practitioner of elderly care institutions in Beijing told reporters that, according to the hosting entity, elderly care institutions can be divided into public, private, and public-private partnership categories; according to the investment entity, they can be divided into real estate companies, insurance capital, state-owned enterprises, and local urban investment health care platforms, etc.According to him, real estate companies previously participated in market competition mainly through the real estate health care model, but not many have persisted. In recent years, health care platforms backed by insurance funds, state-owned enterprises, and local urban investment companies have emerged like mushrooms after rain. "Insurance companies have policy benefits that can balance, and elderly care operations can bear certain monthly fee losses; state-owned local health care platforms are not too concerned about short-term benefits, but more about rapidly increasing the occupancy rate of customers. Therefore, overall, the competition in the current elderly care industry is becoming increasingly fierce."
From the perspective of supply and demand, the person believes that although the number of elderly care institutions has grown rapidly, the supply of high-quality and professional elderly care services is still insufficient, and there is still a need for further matching between supply and demand.
Taking Beijing as an example, the "Beijing Elderly Care Institutions Industry Development Report" released by the Beijing Elderly Care Association in June shows that as of March 2024, there are 578 elderly care institutions in Beijing, with a total of 109,000 beds and nearly 45,000 elderly people living in.
However, after excluding institutions that have not yet accommodated elderly people, the average occupancy rate of elderly care institutions in Beijing is only 45%.
In addition, among the nearly 45,000 elderly people accommodated by elderly care institutions in Beijing, the proportion of those over 80 years old and those who cannot take care of themselves is 91.57%. This means that the vast majority of elderly people living in institutions have high demands for nursing and medical care.
It is understood that based on market demand, newly operational elderly care projects also pay more attention to comprehensive services such as medical care, nursing, and care. For example, the Vanke Tongzhou Sui Garden project mentioned above divides the level of nursing into 6 levels in daily services, including 114 nursing actions, and can customize a 24-hour exclusive care plan according to the individual physical condition of the elderly. In addition, more than 60 elderly-friendly details are designed in the indoor part of the building, equipped with rope alarms, nursing monitoring systems, intelligent cameras and other equipment, and the indoor corridor can directly access each building without wind and rain.
As one of the domestic elderly care institutions that paid attention to the care of demented elders earlier, Chunxuan Mao cooperated with the American demented care operator Meridian in 2015 to introduce the internationally advanced demented care concept and method of validation therapy, and launched a professional demented care non-drug solution based on Chinese cultural characteristics. Through five major guiding plans such as therapeutic environment, involvement in life, dining experience, physical and mental health management, and family or caregiver support, promote positive interaction between elders and the surrounding people and environment, and delay the progression of dementia.
Reporters learned that in the past, under the constraints of high land costs and long capital recovery cycles, the phenomenon of "focusing on sales and neglecting services" was quite common in real estate and insurance companies. At present, elderly care institution projects will pay more attention to the light asset operation of the service link, quickly achieve the output of brand and operation model, and expand profit channels.
"Elderly care is not a one-time deal, if you only attract elder customers with low prices and cannot keep up with life services, customers will still leave." The person in charge of Chunxuan Mao told reporters that it belongs to the mid-to-high-end elderly care projects in the market, and the customer coverage is mostly families with relatively good economic strength, such as university professors and retired cadres. Therefore, they pay attention to the quality of life and service quality, and have higher demands in aspects such as health management and cultural entertainment.
Based on this, Chunxuan Mao has been promoted on the basis of CCRC (Continuous Care Retirement Community), shifting from Care to Life (Continuing Life Retirement Community), transforming care into life, paying more attention to vitality and freedom of life, rather than just care, advocating for the happy socialization, self-realization, and healthy lifestyle of the elderly.At the same time, focusing on the health management issues that elders care about the most, Chunxuan Mao has taken a multifaceted approach, including early detection, indicator monitoring, exercise and diet, and scientific medication use. They have built a smart ecological system within living scenarios, such as emergency call systems and intelligent health monitoring devices, to enhance the convenience and safety of the elders' lives.
The person in charge of Chunxuan Mao mentioned to the reporter that the company is currently trying out two new directions. One is entrusted operation, which replicates the years of experience in elderly care services and operation of elderly institutions from Oceanwide Group to other companies entering the elderly care industry. The other is to expand the home-based elderly care business, develop Internet+ home health care products for the elderly, and sell safety monitoring and health monitoring devices to customers according to the health care needs of the elders. The device data can be integrated into the background, matched with health service experts, and provide online health guidance and offline door-to-door services for the elders.