Retirement Home in China: Another Investment Opportunity

An Expert's View about Growth Industries in China

Posted on: 1 Jun 2010

Retirement homes in demand in China (source from CCTV 9)

As China becomes a graying society, more senior citizens are choosing to live in retirement homes rather than putting pressure on their children. But many such homes in major cities are not prepared for the increasing demand.

Residents of this retirement home in Beijing enjoy a peaceful life. Special nursing and health care sets their minds at ease, as well as those of their children.

They're very lucky to be living here.

Zhao Lijun, director of Beijing 1st Social Welfare Home,said, "Our current occupancy is full. And there are still over 1,000 on the waiting the list."

1,000 are waiting, but only 50 beds become vacant a year. The home has almost doubled its beds from the previous 300, but can't keep up with increasing demand.

Senior citizens are making up an increasing proportion in China. A fourth of the population is now over 60. As more of them chose to live in a retirement home, it's putting tremendous pressure on resources.

A senior citizen said, "We registered on the waiting list at the beginning of 2006. After two years, we can finally move into the home."

Local governments are looking for ways to meet the increasing demand. In Shanghai, where a fifth of residents are 60 and over, the budget for welfare accommodation has been increased.

Shanghai Social Welfare official Zhang Shuping said, "Altogether there are about 70,000 beds in retirement homes in Shanghai. We are planning to add 300,000 beds by 2010."

Meeting the needs of the elderly has to come in line with the completion of the country's social welfare system.

And as their lifestyle changes, China's seniors are hoping it will be secure and rewarding.

China’s Current Legislation on Retirement Home

Currently China has not formed a complete legal system on retirement home. Most of legislation is local regulations promulgated by local governments such as in Shanghai, Tianjin, etc. And in Shanghai, some of foreign investor has already begun their investment in this industry and prepared well in the next round of expansion.

Retirement Home Investment in Shanghai On June 8, 1998, Shanghai government promulgated Administration Rules of Retirement Home Institutes, which provides some basic principles on establishment of retirement home by domestic and foreign investors.

# Business Model allowed Under current regulation in Shanghai, foreign investor is not allowed to set up a retirement home in the form of a WOFE. It has to find a local partner and set up a JV in Shanghai. Therefore for the foreign investor, the first step is to find a reliable partner in China.

# Conditions for the retirement home As required by the regulation, the following conditions shall be met for setting up a retirement home:

a) the retirement home shall be in line with the city plan in Shanghai;

b) there shall have a fixed service place with at least 50 beds;

c) the building design shall be in line with architecture and design criteria for retirement home with disability friendly facility for old people. The retirement home shall have separate entry and exit;

d) the retirement home shall have its own dining room, washroom, bathroom and indoor/outdoor activity place;

e) the retirement home shall have its article of association and management rule;

f) the retirement home shall have management personnel and nursing staffs. The principles and nursing staffs shall have qualifications as required by the government;

g) qualified medical staffs are required;

h) with required capital for operation.

# Approval by government

The application of setting up a retirement home shall be approved by both Shanghai Commission of Commerce and Shanghai Civil Affairs Bureau.

Our Firm’s Service for foreign investors Our firm, V & T, is one of the largest law firms in China having three offices in Shanghai, Beijing and Shenzhen with more than 200 attorneys and staffs. Currently we provide service for our clients to find business opportunity both in China and oversea countries. In particular, we have broad connections with local governments as well as companies and with rich resources to find projects/investors for the clients.

In consideration of China’s society population development, retirement home can be a sun-rising industry under current economic crisis. However, since the law and regulation in this aspect is not complete, the coordination with local government in setting up the retirement home becomes very important.

If you are interested in this industry, you can feel free to contact us for more information.

Should you have any questions about this Law Newsletter, please contact:

 Erex Chen Attorney at Law


Tel: 86 21 5081 9091

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V & T Law Firm PRC ATTORNEYS 45811

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Posted: 01 June 2010

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