New Policy in Encouraging Foreign Investment in China’s Senior Care Services
2015-05-04 14:14:50   Source:   Hit:

Author:Gordon Xu
China is aging rapidly. By 2015 there will be 220 million over-60s and within 40 years the number will rise to 500 million. Aging population has become a serious social problem. Thus, Chinese government determined to promote the reform and development of senior care service. Ministry of Civil Affairs and Ministry of Commerce issued jointly the notice on encouraging foreign companies, individual investors and other economic organizations (hereinafter foreign investors) to set up profitable nursing homes individually or joint with Chinese companies or other economic organizations (hereinafter the Notice) in December 2014. The Notice is seen to have a ground breaking effect in open-up to the outside world regarding the senior care service.
The aim and main contents of the Notice are as follows:

Chinese government is aimed at attracting foreign investors to set up profitable nursing homes individually or jointly with Chinese companies or other economic organizations by means of   issuing this latest notice. The Notice encouraged foreign investors to go into more senior care  related investments so as to establish large-scale and chain operating nursing homes around  China. In other words, Chinese government now welcomes more well-known brand nursing homes to be established in China. Moreover, foreign investors are encouraged to engage in reform and restructure of state-owned nursing homes. It should be noted that Chinese government requires foreign investors to pay attention to the interests of staff and the value of state-owned assets in the reform and restructuring process.

2.Preferential policies
According to the Notice, foreign invested profitable nursing homes could be granted same government subsidies through tax cuts and reduction of administrative fees as domestic profitable nursing homes. To be more specific, administration fees include land reclamation fees, idle land fees, land registration fees, house registration fees, termite control fees, civil air defense transfer-construction fees and other construction fees for nursing homes which were set up by provincial administrations.
3.Approval procedures
In general, the approval procedures could be divided into three steps:
(1)Formalities for access to Chinese market: Foreign investors are advised to apply to the provincial department of Commerce (hereinafter DOC) where the establishments of profit private nursing homes are intended. The application documents are as follows:
        a. Establishment application;
        b. Statements regarding the site, security, medical care, etc;
        c. Relevant contracts and articles of association;
        d. Name list of the board of directors and its appointment letter;
        e. Materials showing that foreign investors or actual controller had relevant working experience or materials showing that the aforesaid people have employed the senior care service professionals to operate the proposed nursing home.
Provincial DOCs shall make a written decision on whether to grant approval within 20 days as of the receipt of all the above-mentioned documents.

(2)Formalities for business license: Foreign investors should apply to the administrative department for industry and commerce for foreign-invested corporation registration within one month after receiving the approval from DOC.
(3)Formalities for setting up nursing homes: After passing through the registration procedures, the proposed nursing homes shall apply for the license of nursing homes in accordance with the regulations. If the business  scope includes  the  medical  and health  services, nursing homes should also go through the formalities according to the policies and regulations.
As the senior care service is an emerging industry in China, Chinese government did not have comprehensive  policies  towards  this  industry  especially  for  the  foreign  investors.  Although Chinese  government issued  some  policies  in allowing foreign  investment in this area,  these policies are lagging far behind. Thus, there were very few successful cases of foreign invested nursing homes in China. However, this latest notice was different, which put forward clear and comprehensive preferential policies. It was understood that Chinese government got an open attitude towards foreign investment in senior care services. And above all, the latest notice indicated that the time is ripe for foreign investment in this industry.

Senior care service involves many aspects, such as basic necessities of life, living care, medical service, fitness, culture and entertainment. It has a wide range and tremendous potential. However, Chinese traditional public senior care service cannot adapt to the market economy, because of the stereotyped management. In comparison, foreign investors could promote the development of Chinese senior care services through their capital, brand and professional management advantages. Owing to these advantages over domestic nursing homes, it is a golden opportunity to invest in China’s senior care service industry.