July 26, 2017 11:59 am JST

Aging Asia's trillion-dollar business opportunity

Enterprising companies see a bright future in the region's swelling elderly population

A worker attends to a resident of an elderly care home near Bangkok operated by Japanese company Riei. (Photo by Ken Kobayashi)

As Asia ages, businesses catering to the elderly are swelling along with the demographic. So alluring is the growth potential that even companies with no prior experience in this segment are rushing in, from property developers to newspaper operators. 

By the numbers

First, a look at the numbers. U.N. data for 2015 puts the average age in Southeast Asia at 28.8. While that is younger than the global average of 29.6, the region's population is rapidly aging. In seven of the 10 member countries of the Association of Southeast Asian Nations, the ratio of people age 65 or older is projected to exceed 7% of the total population by 2025.

The bloc's combined elderly population is projected to reach 123 million by 2050, almost equal to Japan's current total population.

Medical spending for the elderly in Thailand, Vietnam and three other Southeast Asian countries in 2030 will be 6.5 greater than in 2015, a survey by major U.S. insurer Marsh & McLennan shows. In Vietnam, the figure is expected to surge 9.3 times. Because government support for elderly care is smaller in these countries than in advanced economies, private companies can find huge business potential there.

That is certainly the case with the Thien Duc Aged Care Centre in suburban Hanoi, a pioneer in Vietnam's nursing care business. It was founded by Nguyen Tuan Ngoc, a doctor who studied and imported the latest Japanese nursing care practices, such as round-the-clock care, elderly homes with resident doctors and rehabilitation programs. Since opening his first facility in 2008, Nguyen has since established two more in Hanoi. A center specializing in rehabilitation is due to open in 2018.

Some 200 people live in the three facilities. The average age is 70, and some are centenarians. A 70-year-old woman who has lived in one of the centers with her husband since 2015 said she and her husband are reassured by the knowledge that a doctor will come immediately if they fall ill. She also said they are healthier than they were before moving in.

Vietnam's top real estate developer, Vingroup, is also getting in on the action. It operates seven hospitals under the Vinmec brand catering to people age 70 or older. People with so-called Vinparents membership can, by paying certain fees, receive advice on how to stay healthy, get regular checkups and join programs aimed at preventing age-related illnesses and injuries. The group aims to increase the number of hospitals to 10 by 2020.

In Thailand, Bangkok Dusit Medical Services, the country's largest private hospital operator, plans to open a large center for providing health services for the elderly and treating people with Alzheimer's. It has already acquired land and a building for 12.8 billion baht ($382 million). The operator plans to serve both local and foreign patients.

Leading Japanese nursing care provider Riei opened a 20-room elderly care home near the Thai capital last year.

In Myanmar, too, companies are looking for ways to enter the market. At the Myanmar Phar-Med Expo, held on July 5 in Yangon, the number of exhibitors increased by 10% from last year to 60.

Riei's nursing care facility near Bangkok (Photo by Ken Kobayashi)

New horizons

A lack of experience in services targeting the elderly is not stopping businesses from taking their chances.

In Singapore, which has the fastest-aging population in Southeast Asia, newspaper and publishing company Singapore Press Holdings acquired a local operator of five elderly care homes in April for 164 million Singapore dollars ($120 million).

In neighboring Indonesia, major property developer PT Jababeka teamed up with Japanese elderly care company Longlife Holding in 2014 to supply housing for seniors. The partners aim to open about 100 "senior towns" with medical and nursing care facilities and barrier-free housing.

Markets for related services are also expanding. Thailand's largest materials maker, Siam Cement Group, is ramping up sales of materials for elderly-specific housing to tap growing demand for home renovations. Its products include flooring materials designed to better absorb the impact of falls, and handrails for toilets and baths. Siam Cement has also teamed up with local property developer N.C. Housing on the sale of barrier-free housing.

Graying China

Given its massive population and a one-child policy that lasted for over 30 years, it is hardly surprising that China has a huge -- and ballooning -- elderly population. At the end of 2015, some 220 million Chinese were 60 or older, and the figure is rising by 10 million every year. The number of Chinese 65 or older, meanwhile, is forecast to top 400 million by 2060.

This problem is also an opportunity. 

At the only nursing care home in the southern Chinese city of Laibin, in the Guangxi Zhuang Autonomous Region, seniors can be seen drawing and engaging in various other activities. Opened two years ago, the home is almost full, with 151 residents. Encouraged by the facility's success, the city in late June invited Japanese companies, including Longlife Holding and Paramount Bed Holdings, to help establish a care home to be built as part of an urban redevelopment project.

"The number of younger people here has shrunk because many of them have headed off to big cities," said a high-ranking local government official. "Looking after seniors is an urgent issue." 

With much of its younger population working in Guangdong Province and other industrialized areas, Guangxi is headed toward a serious nursing care shortage. The Laibin official said the city wants to learn Japanese-style nursing care services aimed at making the elderly more self-reliant, such as by providing beds can be adjusted for easier access and offering daily programs fine-tuned to the needs of the residents.

Residents engage in activities in an elderly care home in the southern Chinese city of Laibin, in the Guangxi Zhuang Autonomous Region. (Photo by Yusho Cho)

Other numbers paint a clearer picture of China's demographic picture. The country's demography is sometimes described as "4:2:1" -- four elderly parents, two working-age children and one grandchild. This formula is said to apply to 80% of households in Shanghai. Meanwhile, some 250 million people, including domestic migrants, live in areas other than where they have a family registry.

Those figures translate into caregiver shortages, in both cities and rural areas such Guangxi.

Growth and gluts

The graying population weighs on China's economic growth and state finances, but it also unlocks new markets. The National Working Commission on Aging, an arm of the State Council, forecasts that the market for elderly-related businesses will grow to 22 trillion yuan ($3.25 trillion) by 2030.

Whether elderly-related industries fully take off in China may hinge on the success of a fledgling nursing care insurance system. Regional governments in Beijing, Shanghai and elsewhere have introduced the system on a trial basis.

In Beijing's Haidian district, senior citizens are divided into three categories based on their level of self-reliance. People who are categorized as having the highest need for care are eligible for a monthly allowance of 1,900 yuan. Residents pay an insurance premium of between 70 and 90 yuan per month according to their age. The central government aims to introduce the system nationwide in 2020. Once this happens, the nursing care market could explode.

But there are already signs of a looming problem: too many facilities and too few caregivers.

"China has a shortage of elderly home operators, not developers," said Carol Wu, head of research at DBS Vickers, a unit of DBS Group Holdings, in Hong Kong.

In a recent report, the bank estimated that more than half of China's 6.7 million elderly care beds were built between 2010 and 2015 and nearly one-fifth were built in 2015. China's Ministry of Civil Affairs reported a 48% vacancy rate for beds at care homes in the same year.

Observers warn that big Chinese developers, such as China Vanke and China Overseas Land & Investment, are entering a segment of the housing market that faces an imminent supply glut.

 

Paramount Bed Holdings Co., Ltd.

Japan

Market(Ticker): TKS(7817)
Sector:
Industry:
Health Technology
Medical Specialties
Market cap(USD): 1,461.10M
Shares: 30.87M
Asia300

Singapore Press Holdings Ltd.

Singapore

Market(Ticker): SES(T39)
Sector:
Industry:
Consumer Services
Publishing: Newspapers
Market cap(USD): 3,092.30M
Shares: 1,600.64M

Longlife Holding Co., Ltd.

Japan

Market(Ticker): JAS(4355)
Sector:
Industry:
Health Services
Medical/Nursing Services
Market cap(USD): 51.08M
Shares: 11.19M
Asia300

The Siam Cement Public Co. Ltd.

Thailand

Market(Ticker): BKK(SCC)
Sector:
Industry:
Process Industries
Chemicals: Specialty
Market cap(USD): 17,597.79M
Shares: 1,200M
Asia300

China Vanke Co., Ltd.

China

Market(Ticker): HKG(2202)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 48,738.75M
Shares: 11,039.15M
Asia300

China Overseas Land & Investment Ltd.

Hong Kong

Market(Ticker): HKG(688)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 33,612.28M
Shares: 10,956.20M

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