In 1979, when China opened its pilot trade zone, it launched an industrial revolution the likes of which had never before been seen. In the 35+ years since, the Chinese labor force has been producing billions of goods for consumers around the world, creating one of the world’s most successful economies. As time has passed, however, China’s worker population has been aging, and now, there are roughly 185 million Chinese over the age of 60. Today, a number of factors are converging to pose serious problems for both this aged population and the society obligated to provide them with care. Just in time, the China-Australia Free Trade Act (ChAFTA) establishes unprecedented opportunity for Australian aged care businesses to provide at least a percentage of the care China’s seniors are going to need.
Chinese Demographics Create Opportunities
A 2012 National Bureau of Statistics report stated that China had approximately 185 million people over the age of 60. A 2007 United Nations study indicated that, in 2007, China had 16 retired people for every 100 workers, and projected that number to increase to 64 retirees for every 100 workers by the year 2025. One reason for this unbalanced ratio is China’s “One Child” policy, which, for decades, has prohibited married couples from having more than one child. This policy has reduced the future labor force significantly, and will require the smaller working population to support an ever-growing group of seniors.
Chinese Services Sector Creates Opportunities
During the Chinese industrial boom, the country focused its efforts primarily on its manufacturing sectors, and not so much on its services sectors. However, that boom has created a new “middle class” of wealthy Chinese, who now have both the money and the desire for improved services in all aspects of their lives. And because of the immediacy of that demand, China does not have the requisite number or variety of services industries available to respond to the demand right now.
Combining the services shortage with the aging population concern creates an immense challenge for the country. Seniors with no children have no one to care for them in the traditional manner, and millions may be forced to turn to the government to support them in their old age. The government, though, has funding available to cover the costs for only 1.6 percent of seniors in need of care, well below the World Banks’ suggested funding standard of eight percent in developed countries. It is estimated that the exploding senior population will require as many as 3.4 million hospital and care beds over the next few years, and China simply does no have the resources to manage this impending tidal wave of senior need.
ChAFTA Offers Australians Opportunities
The developers of ChAFTA clearly had these challenges in mind when they added “Aged Care” services to that agreement. For the first time ever, through ChAFTA, China is inviting wholly owned, for-profit Australian companies to provide health care services to their aging population, with no geographical restrictions. Medical services suppliers are welcome to set up hospitals, clinics and other care facilities to provide both senior and general health care services. This new, Australian-based health services sector will alleviate the stress on China’s existing healthcare systems, which are already overwhelmed by too many patients and not enough resources. There are no other countries that currently enjoy the same market availability.
The lack of geographical restrictions is significant. As China’s economic bases have shifted, so has its population relocated to follow those jobs. Millions of young Chinese workers have pursued careers in big cities and left their parents behind in more rural villages. Consequently, those children are not able to care for their aging parents and grandparents in the traditional way, and the rural locations frequently do not have existing services in place to provide that care, either. Australian senior care providers can now locate their China-based businesses in the communities where the demand for senior care services is highest, and are not limited to locations chosen by the Chinese government.
Speed is of the Essence
In 2013, the Chinese State Council announced its plan to reach its target of 35 to 40 care beds per thousand seniors (seven to eight million beds), and a workforce of ten million senior care workers by the year 2020. ChAFTA went into force in December 2015, so the opportunity for Australian senior care services to open facilities in China is now available. This opportunity is unprecedented and available only to Australian companies. For over 15 years, I’ve assisted hundreds of companies to locate offices and services in China, and I’d be happy to assist your senior care services business to find its new home in China.
If you are interested in knowing more about China, download the first free chapters of my book here.
