Home-care companies want more players for rapid growth of industry in China

For thousands of years, Chinese aged at home, with their families often taking care of them, while nursing homes were often the last resort. However, with the 4-2-1 family structure - one person supporting two parents and four grandparents - and more migration, many seniors are left alone at home and exposed to loneliness and potential health hazards.

With 90 percent of China's elderly population estimated to be living at home, investors are now tapping into the fast-growing and lucrative home care segment. Prominent among them is Right at Home of the United States.

The company has set up 11 branches in seven cities in China in less than two years. It plans to open more branches.

"Ultimately, we'll be able to cover the entire country," says Brian Petranick, President and COO of Right at Home.

"China accounts only for a small percent of the global revenues now as we have been here for just two years. If you look at our early years in the US, it was a similar trend. In the long run, we expect to see the same growth trend in China also," he says.

The company had revenue of $250 million in the US last year, a 25 percent rise on the year before.

With more than 200 franchises in the US, Britain and Brazil, RAH had never considered China as a potential investment. That changed after the US firm was approached by an entrepreneur, who had faced great difficulties in finding the right elderly-care facilities for her mother in China.

"When we first planned our global expansion, we looked at places where the home care services would be well received, and honestly China wasn't in our top five destinations. It took us a year to finally decide that we were the right partners for each other, after extensive market research," Petranick says.

Right at Home provides services including companion care, personal care, skilled nursing and minor medical care. Since arriving in China, the company has made adjustments for the local market, including helping make doctors' appointments, providing massage, and taichi coaching.

Compared with senior housing, home healthcare can be the most successful solution for China's aging problem, says Benjamin Shobert, founder and managing director of the Seattle-based consulting firm Rubicon Strategy Group.

"They (home care providers) are further along in accessing the senior-care market in China than any of the real estate-driven solutions. They are moving much faster and further than any of the operators that are trying to find real estate partners," he says.

Eyeing the potential presented by the home-care sector, other companies are following suit. Among them is Home Instead Senior Care in Ottawa, Canada, with nearly 1,000 offices around the world and specializes in social and emotional engagement care.

"We've been getting a great deal of interest from people across China in our brand for several years now. That spike of interest has led us to study the market further. And it led us to conclude that the time is right for Home Instead to look for strategic partners across China," says Bob Maguire, global franchise development director at Home Instead.

Last year, the global franchise development team made several trips to China to meet a group of potential franchisees, as well as seniors who were living independently. The team will make two more trips to China this year, hoping to pin down a master franchisee.

"We are hoping that we can enter one or two regions in China this year. We have up to 12 regions in China that we wish to enter," Maguire says.

The strategy may be a little different from previous trials, most of which were initiated in first-tier cities.

"It's been our experience that sometimes the largest cities aren't the best cities to go into from the very beginning. We are not quite discriminating between the two. But it's been our experience that sometimes it's best to go to the second-tier city and really develop and understand the local adaptation that you need to do with your model of care. After making the local adaptation, it is easier to go to a first-tier city," Maguire says.

Despite all the momentum the home-care sector is showing, there are very few operators aside apart from Right at Home and Beijing-based Pinetree Home Care.

"The scarcity has something to do with the rising labor costs in China and the relatively low technology barrier for home care," says Michael Qu, lawyer at the Shanghai Co-effort Law Firm.

Chinese housekeeping companies without much healthcare expertise have taken a large proportion of the market as they have more competitive prices, he says.

"This affects the output-input-ratio of professional home-care companies. Many of them would rather choose to invest in senior housing or healthcare facilities."

The recognition of home-care service is still relatively low in China, making it harder for operators to distinguish their services from those provided by local housekeeping companies.

"One of the obstacles for us to overcome is to create public recognition of our type of care. Private care is still pretty much a new concept in China. It was no different than the US a long time ago. It is very much about educating people," says Petranick from RAH.

And that is why the market is open to more entrants, he says.

"The more that come to China, the more people will become aware of the home care service model."

sunyuanqing@chinadaily.com.cn

(China Daily 05/10/2013 page5)