April 30, 2011

CHINA: Looking forward to age of the ‘silvertown’

SHANGHAI, China / The Financial Times / Asia-Pacific / April 29, 2011

By Patti Waldmeir in Shanghai

Fang Lianshan hunches over a plate of stir-fried beef and a plastic rice bowl in one of the Shanghai government’s new community centres for elderly people.

The 78-year-old reflects on why he prefers not to live with his 41-year-old only son. “There is a generation gap ... t is better to give each other some space.”

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Previously, the Chinese had no choice but to live together because of the shortage of housing, but Mr Fang says people are now influenced by western thinking.

“Most of my friends live alone. They are not happy to live with their children,” says Mr Fang, who lives in his own flat.

A combination of economic growth, the one-child policy and recent property boom has formed a bulge in the number of pensioners in China, with the country’s single children preparing to care for as many as six parents and grandparents per person.

China published census results on Thursday, which showed the number of people over the age of 60 rose by about 48m, reaching 13.3 per cent of the population. Ten years ago, they accounted for slightly more than a 10th of the population. China’s total population is now 1.339bn – up 5.84 per cent from the last decade.

A fifth of Shanghai’s population is already over 60. That figure is forecast to rise to 29 per cent by 2030.

People such as Mr Fang are at the vanguard of a landmark shift in attitudes toward filial piety and life beyond work – changes that are fuelling rapid growth in the business of old age in China. Property developers, insurance companies, foreign and domestic investors are poised to invest tens of billions of renminbi in only one slice of the caring business: housing people in private retirement complexes known as “silvertowns”.

With only 1.3 per cent of elderly people currently living in government retirement homes, demand for private accommodation for pensioners – from assisted living communities for the ambulatory to nursing homes for the debilitated – has risen sharply.

As government restrictions begin to squeeze property developers – and the property boom fuels the personal wealth of old people in big cities, who obtained flats when long-term urban housing was privatised in the 1990s – conditions are ripe for an investment boom, analysts say.

Cultural change is a big part of it: China’s much-vaunted tradition of filial piety has long decreed that elderly parents should never live alone; but recently it has been eroded to the point at which more than half of old people – and a far higher proportion in big cities – already live apart from their children. Erosion of such tradition is so serious that Beijing recently introduced a law to compel adult children to visit their elderly parents.

Still more surprisingly, many old people welcome the change: according to a study by Ogilvy, 26 per cent of those surveyed said they would agree to live in a retirement home.

Until now, people who preferred living in a retirement community had few options.

“The silver industry is still in its infancy,” says
Yoko Marikawa, who runs a speciality business consultancy on retirement complexes, and coined the term “silvertowns”.

Photograph by courtesy of Reuters

She says investors have previously shied away from the industry for cultural reasons: “People think oriental culture is very different from western culture . . . investors think that is a disadvantage.”

Now, that is changing, says Xi Zhiyong, chairman of Cherish Yearn, which owns Shanghai’s largest private old age community: “Social change means there is a big profit space in the market for ‘eldercare’ services.”

Cherish Yearn is relatively expensive – but it offers perks such as a sports club, hospital and personal assistants to arrange the social life, health, shopping and entertainment of residents, and Mr Xi says 85 per cent of places have been sold.

Mr Zhiyong Xi,  Chairman, Cherish-Yearn Co Ltd, China
He complains however that – although the government encourages private investment – a policy vacuum in regard to issues such as standards of hardware and service make investing risky. He nevertheless intends to open more Cherish Yearns. “The richest people in China are the elderly,” he says.

Additional reporting by Shirley Chen

Copyright The Financial Times Limited 2011.