Five Key Light-Asset Investment Opportunities in China's Elderly Care Sector: Policy Insights and Strategic Directions
VCBeat recently organized an offline venture capital trend forum centered on the theme of asset-light elderly care, released the research report “Global Venture Capital Trends in Asset-Light Elderly Care (2016 Edition),” and published a series of profiles on domestic and international startups. To gain a more macroscopic and comprehensive understanding of the development trends in the elderly care industry and the investment opportunities in asset-light models, this article reviews the elderly care policies issued by various central government departments since 2000. The analysis reveals that the elderly care sector has entered a phase of pragmatic, multi-departmental collaborative promotion, with government-encouraged directions for asset-light elderly care primarily focusing on elderly care information platforms, home-based care services, community care services, smart elderly care, and the integration of medical and elderly care services.
Policy Focus: Home-Based Elderly Care Remains the Unchanging Foundation
Since the turn of the millennium, population aging has become increasingly prominent in Chinese society, drawing significant attention from the government to elderly care issues. From 2000 to the present, home-based care has remained the central focus of policy, while the role of community-based and particularly institutional care has grown increasingly important alongside socioeconomic development, the rising number of “empty-nest” seniors, and the trend toward smaller household sizes:
The 2000 “Opinions on Accelerating the Socialization of Social Welfare” proposed that the development direction of China’s elderly care sector should be “home-based, community-supported, and supplemented by social welfare institutions.”
The “12th Five-Year Plan for the Development of China’s Aging Cause” (2011) proposed that institutional care should serve as the “backbone” of the elderly care service system, while continuing to uphold home-based care as the foundation and community-based services as the support, thereby demonstrating the state’s emphasis on institutional elderly care.
Continuous Relaxation of Investment Entity Restrictions: From Private Capital to Hong Kong and Macao Capital, and Then to Foreign Capital
With the rapid development of China's socialist market economy and the increasingly severe aging population, policies have continuously relaxed restrictions on investment entities in the elderly care industry. Initially permitting only collective and individual investments, the sector has gradually opened to domestic private capital, capital from Hong Kong and Macao, and eventually foreign capital.
The 2000 "Opinions on Accelerating the Socialization of Social Welfare" proposed adopting multi-channel investment approaches involving the state, collectives, and individuals, thereby fostering a development pattern in which social welfare institutions with diverse forms of ownership coexist and thrive.
The 2012 “Implementation Opinions on Encouraging and Guiding Private Capital into the Elderly Care Services Sector” pointed out that encouraging and guiding private capital into the elderly care services sector is of great significance for diversifying investment entities in elderly care services, alleviating the supply-demand imbalance in elderly care services, and accelerating the development of a social elderly care service system based on home care, supported by community services, and underpinned by institutional care.
In February 2015, ten ministries and commissions, including the Ministry of Civil Affairs, the National Development and Reform Commission, and the Ministry of Education, jointly issued the “Implementation Opinions on Encouraging Private Capital to Participate in the Development of the Elderly Care Service Industry,” providing clearer guidance on the specific investment directions and modes for private capital participation.
The 2013 "Notice on Matters Concerning Hong Kong and Macao Service Providers Establishing For-Profit Elderly Care Institutions and Disability Service Institutions in Mainland China" liberalized the entry of Hong Kong and Macao capital into the elderly care sector, permitting the establishment of for-profit elderly care institutions in Mainland China through new ventures or mergers and acquisitions, in the form of Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, or wholly foreign-owned enterprises.
The 2014 “Opinions on Encouraging Foreign Investors to Establish For-Profit Elderly Care Institutions in China to Provide Elderly Care Services” proposed encouraging foreign investors to independently establish, or to jointly establish through equity joint ventures or cooperative joint ventures with Chinese companies, enterprises, and other economic organizations, for-profit elderly care institutions in China.
Increasing Number of Competent Authorities and Policies: The Elderly Care Industry Enters a Phase of Pragmatic Promotion
According to incomplete statistics from VCBeat, prior to 2013, only one or two elderly care policies were issued annually (with four in 2012). These policies addressed relatively broad and macro-level themes and primarily involved departments directly related to elderly care, such as the Ministry of Civil Affairs, the National Working Commission on Aging, and the National Health and Family Planning Commission.
Since 2013, the number of elderly care policies issued annually has increased significantly (13 in 2013, 20 in 2014, and 7 in 2015). The number of competent authorities involved in elderly care has also grown year by year, with some departments seemingly far removed from this sector joining the effort. These include government agencies such as the Standardization Administration of China and the General Administration of Quality Supervision, Inspection and Quarantine; financial regulatory bodies such as the People’s Bank of China, the China Banking Regulatory Commission, and the China Insurance Regulatory Commission; as well as Party and government departments such as the Publicity Department of the Central Committee of the Communist Party of China, the Central Guidance Commission on Building Spiritual Civilization, and the Communist Youth League.
Moreover, policy themes have become more detailed and in-depth compared to the period before 2013, indicating that the elderly care industry has entered a phase of pragmatic promotion. Examples include the "Notice on Doing a Good Job in the Management of Projects Supported by the Central Special Lottery Public Welfare Fund for Rural Happiness Homes in 2013" and the "Measures for the Administration of Projects Supported by the Central Special Lottery Public Welfare Fund for Rural Happiness Homes," both issued in 2013; the "Notice on Issues Concerning the Reduction or Exemption of Administrative and Institutional Fees for Elderly Care and Medical Institutions," the "Notice on Doing a Good Job in Government Purchase of Elderly Care Services," the "Notice on Strengthening Barrier-Free Renovation of Public Facilities in Elderly People's Homes and Residential Areas," the "Notice on Launching the National Smart Elderly Care Internet of Things Application Demonstration Project," the "Guiding Opinions on Launching Pilot Programs for Reverse Mortgage Pension Insurance for Elderly Housing," the "Guiding Opinions on Strengthening Standardization Work in Elderly Care Services," and the "Notice on Launching Pilot Programs for the Information Benefit Project for Elderly Care Services and Community Services," all issued in 2014; as well as the "Implementation Opinions on Development Finance Supporting the Construction of a Socialized Elderly Care Service System" and the "Guiding Opinions on Regulating Service Fee Management in Elderly Care Institutions to Promote the Healthy Development of the Elderly Care Service Industry," issued in 2015.
Key Investment Areas Encouraged by Policy
Elderly Care Information Platform
In an era when concepts such as “Internet Plus,” the Internet of Things, big data, cloud computing, and smart hardware are widely recognized, policy frameworks have long been established. The 12th Five-Year Plan for the Development of China’s Aging Cause, issued in 2011, was the first to propose accelerating the development of information systems for home-based elderly care services.
After 2014, relevant policies entered a phase of detailed implementation. In October 2014, six departments, including the Ministry of Civil Affairs, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, issued the “Notice on Launching Pilot Work for the Information Benefit Project for Elderly Care Services and Community Services,” proposing the research and development of standards and specifications for data collection, transmission, and exchange in elderly care services; elderly health records; the construction of integrated information platforms for community public services; and the development of smart communities.
The “Notice” also proposes the establishment of an information management system that facilitates mutual support between elderly care institutions and healthcare service providers, enabling integrated card-based access for elderly care facilities and community clinical services and seamless connectivity with medical and health institutions. It aims to achieve community-wide integrated information services with a focus on home- and community-based elderly care, and to build an informatized community service system that effectively integrates public services, volunteer services, and convenient citizen-oriented services.
Home-Based Elderly Care Services
The main policy thrust of China’s elderly care sector is “home-based care,” and thus elderly care services centered on the household are a development direction particularly encouraged by policy. The 12th Five-Year Plan for the Development of Aging Causes in China, issued in 2011, proposed vigorous development of the home service industry and designated elderly care services—especially home-based nursing care for the elderly—as a key priority.
In 2013, the State Council’s “Several Opinions on Accelerating the Development of the Elderly Care Service Industry” reiterated the need to actively cultivate enterprises and institutions providing home-based elderly care services, offering customized in-home services such as meal assistance, bathing assistance, cleaning assistance, emergency assistance, and medical assistance for seniors living at home; vigorously develop domestic housekeeping services to provide standardized and personalized services for home-based elderly individuals.
Community Care Services
In China’s elderly care policy, “community-based support” constitutes a key component. The 12th Five-Year Plan for the Development of Aging Undertakings in China, issued in 2011, called for vigorous development of community-based care services and mandated the inclusion of community elderly care facilities—such as day care centers, elder care centers, Starlight Elderly Homes, and mutual-aid community elderly care service centers—in the planning of residential area supporting infrastructure.
In 2012, the Ministry of Civil Affairs and the China Development Bank issued the "Opinions on Implementing the Cooperative Agreement to Support the Planning for the Construction of a Social Elderly Care Service System and Jointly Promoting the Development of the Social Elderly Care Service System," which once again emphasized prioritizing support for government and social forces in establishing various elderly care institutions and community day-care centers. This support aims to enhance the quality of social elderly care service facilities through funding for new construction, expansion, renovation, and acquisition.
In 2013, the State Council’s “Several Opinions on Accelerating the Development of the Elderly Care Service Industry” reinforced the approach of encouraging non-governmental participation in elderly care. It proposed supporting communities in establishing and improving home-based elderly care service networks, introducing social organizations and enterprises from the domestic service and property management sectors, and launching or operating a diverse range of elderly care services, such as meal provision for seniors, community-based daytime care, and senior activity centers.
Smart Elderly Care
Elderly care policies also specifically encourage the application of new technologies such as mobile internet, the Internet of Things (IoT), and smart hardware. The 2014 "Notice on Launching the National Demonstration Project for IoT Applications in Smart Elderly Care" proposed leveraging IoT technology in elderly care institutions to provide services including location-based emergency assistance, automatic fall detection, bed-rest monitoring, wandering prevention for seniors with dementia, intelligent behavioral analysis, self-service health check-ups, exercise measurement and assessment, and intelligent video linkage.
The “Notice” also presents a list of pilot entities and specifies the pilot tasks: building an IoT-based sensing system for smart elderly care in elderly care institutions, exploring new models for extending services from these institutions to seniors in surrounding communities, and accelerating the establishment of a technical standard system for IoT-enabled smart elderly care services.
In October 2014, six departments, including the Ministry of Civil Affairs, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, issued the "Notice on Launching Pilot Projects for the Information Benefit Project for Elderly Care Services and Community Services." The Notice reiterated the need to enhance the level of informatization in elderly care institutions by upgrading and transforming their existing management information systems. This aims to enable services such as wireless positioning and emergency assistance, fall detection, nighttime monitoring, intelligent behavioral analysis for the elderly, prevention of wandering among dementia patients, intelligent video linkage, access control system integration, Location-Based Services (LBS), and consumption and entertainment facilities. The Notice also encouraged the development and promotion of smart terminal products related to informatization in elderly care, leveraging mobile information technologies to carry out remote medical services, health monitoring, and home-based nursing care.
Medical-Nursing Integration
Integration of Medical and Elderly Care: A Policy Priority in Recent YearsIn 2014, six departments, including the Ministry of Civil Affairs and the National Development and Reform Commission, issued the “Notice on Launching Pilot Programs for the Information Benefit Project for Elderly Care Services and Community Services.” This notice proposed advancing the integrated development of medical and health services with institutional elderly care services. By leveraging electronic health records, electronic medical records, and regional health information platforms, it aimed to establish systems within elderly care institutions for health assessment, health monitoring, medical emergency response, rehabilitation nursing, and hospice care. Furthermore, it sought to build an information management system that facilitates mutual support between elderly care institutions and healthcare providers, thereby achieving seamless integration through a unified card system for elderly care institutions and community diagnosis and treatment, as well as with medical and health institutions.
In November 2015, the National Health and Family Planning Commission and other departments issued the “Guiding Opinions on Promoting the Integration of Medical Care and Elderly Care Services,” which reiterated the need to integrate medical, rehabilitation, elderly care, and nursing resources through various measures such as establishing medical-elderly care consortia, so as to provide older adults with integrated health and elderly care services covering inpatient treatment during the acute phase, nursing care during the rehabilitation phase, daily living assistance during the stable phase, and hospice care.
The integration of medical and elderly care is also closely related to multi-site practice, family doctors, and traditional Chinese medicine. The “Opinions” point out:
Encourage licensed physicians to practice at multiple sites, including medical institutions established within elderly care facilities; support physicians and professionals with relevant specialized expertise in providing standardized non-diagnostic and non-therapeutic health services—such as disease prevention, nutritional guidance, and traditional Chinese medicine-based conditioning and wellness—at elderly care facilities.
Promote the integration of primary healthcare institutions and medical personnel with community-based and home-based elderly care services, establish contracted service relationships with elderly households, and provide continuous health management and medical services for older adults;
Leverage the unique advantages of traditional Chinese medicine (including ethnic minority medicine) in prevention and healthcare, and vigorously develop a series of service products that integrate traditional Chinese medicine with elderly care services.
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