26 March 2015
Yangtze River Delta Urbanisation: Opportunities in Jiangsu’s Healthcare and Wellness Sector
- Photo: China ageing
- Photo: Strong demand for wellness and medical services in Jiangsu
- Chart: Jiangsu: Changes in Age Structure
- Photo: Demand for wellness and healthcare services: On the increase among the middle class
- Photo: Jiangsu: Planning to develop its recreational and wellness sector
- Chart: Per Capita Urban Disposable Income in Jiangsu
- Chart: Per Capita Urban Medical & Healthcare Expenditure in Jiangsu
- Photo: Hong Kong investors can now set up wholly-owned hospitals in Jiangsu on a pilot basis
- Photo: Hong Kong investors can now set up Chinese medicine hospitals in Jiangsu on a pilot basis
Jiangsu in the Yangtze River Delta (YRD) region is among the first provinces in China to properly address the problems associated with being home to an increasing number of elderly citizens. Its rapid urbanisation process has led to many people changing their lifestyles, resulting in increased spending on medical and healthcare services. As a result, the demand for wellness and healthcare services is on the rise, especially among the middle and upper classes. In addition to improving basic retirement and healthcare systems, Jiangsu is also developing its high-end services market by combining elements of wellness, medical services and recreation in order to meet the rising middle class demand for a balanced lifestyle, as well as for services that cater to their physical and mental wellbeing.
Since 2014, the mainland authorities have allowed Hong Kong companies to establish wholly-owned hospitals and Chinese medicine clinics in Jiangsu and other pilot sites, enabling Hong Kong investors to enter the relevant healthcare services market in the province. In addition to leveraging on Hong Kong’s financial services in order to provide strategic advice on financing arrangements for wellness and medical projects, Hong Kong businesses can introduce the latest generation of Internet of Things (IoT) technology to the mainland. Hong Kong companies also have experience in providing non-governmental and private sector continuing care services in a diverse community setting, enabling them to offer customised management solutions for mainland projects.
In advancing its “new-style urbanisation” programme, China aims to accelerate social development, maintain sustained economic growth, and enhance the overall quality of life. It also wants to enhance its retirement and medical healthcare systems, with a target of having the majority of permanent residents in urban areas covered by these public services, including basic retirement and medical services, by 2020.
The relevant development targets are especially important in the more developed YRD region. In particular, Jiangsu is one of the provinces in China most directly affected by changes to the age demographic. As a result, it has a strong demand for wellness, retirement, medical and healthcare services. The elderly dependency ratio in Jiangsu, for example, has reached 16.5%. This is higher than the national average of 13.1%, and ranks it second in the country behind Sichuan. Its elderly population - as a proportion of the total population in the province - also ranks it second in China.
Jiangsu’s urbanisation rate is also among the highest in the country. It has an increasing urban population and a decreasing birth rate. There is also a rising life expectancy in the cities on account of the better medical services and hygiene compared to the rural areas. In Jiangsu, the proportion of the population aged 60 or above went from 15.9% in 2003 to 18.9% in 2013. This inevitably resulted in increased demand for retirement-related medical services.
The Urban Middle Class and the Rising Demand for Wellness Services
With economic development leading to increased income levels and urbanisation ushering in distinct lifestyle changes, Jiangsu has undergone something of a demographic transformation. In particular, given the increasing pace and pressures of urban life, many urban residents have gradually turned away from the pursuit of wealth and consumption in favour of physical wellbeing and mental health, as well as a more balanced lifestyle. Demand for wellness and healthcare services has increased particularly among the middle and upper classes, a group characterised by higher educational qualifications and professional expertise. Such individuals want to improve their health, while considering fitness and wellness activities as part of their recreation regime and a way of “taking a break” from their busy lives.
Those residents that long ago moved to the cities of Jiangsu from villages and other provinces are now entering middle age. They are of an age when they realise they need to start planning and making arrangements for retirement and possible medical problems. As support and related facilities tend to be better in the cities than in rural villages, the number of people staying or planning to remain in the cities for their retirement continues to grow. The demand for wellness, retirement, medical, and healthcare services, then, will only increase in the future, inevitably creating business opportunities for suppliers of these services.
Thanks to the rapid level of the economic development in the province, the incomes of Jiangsu residents have increased considerably over the last decade or so. Medical and healthcare spending has also gone up significantly during the same period. Based on statistical data, medical and healthcare spending (per capita) among urban residents has increased almost threefold. This has seen it rise from from less than Rmb300 in 2000 to Rmb1,122 in 2013. The per capita spending of middle-and-above income families is even higher, currently estimated at around Rmb1,254-1,688. Based on Jiangsu’s 2013 urban population figure of 50.9 million, it is estimated that the total annual urban medical and healthcare spend in the province now amounts to Rmb57.1 billion.
Source: Jiangsu Statistical Yearbook
Developing the Wellness and Medical Services Market
To meet the huge demand for wellness, retirement, medical and healthcare services from retirees as well as from the general population, the Jiangsu provincial government’s urbanisation plan incorporates the enhancement of many of the relevant public services and facilities. These include the provision of basic urban and rural retirement insurance, basic medical insurance systems and other related retirement and medical services. The agreed development targets include promoting equal participation in the retirement, medical and social insurance systems by local and non-local workers, focussing on optimising medical and healthcare resource allocation, increasing the number of medical and healthcare facilities, and ensuring “access to healthcare services within 15 minutes walking distance for both urban and rural residents”.
It is also worth noting that, apart from focussing on basic retirement and medical systems, certain districts are also developing high-end services by promoting the elements of wellness, medical and recreational services, and putting less emphasis on ageing and medical consultation. This is in order to meet the health-related demands of the middle class, and to develop the increasingly vibrant market for quality wellness and medical services.
In August 2014, the Ministry of Commerce announced that foreign investors would be allowed to establish wholly foreign-owned hospitals through start-ups, mergers or acquisitions in several areas, including Jiangsu. In addition, Hong Kong investors (as well as those from Macau and Taiwan) can also establish Chinese medicine hospitals. Related measures will further facilitate the entry of foreign enterprises, especially Hong Kong investors, into Jiangsu’s healthcare market.
Changzhou Sets Sights on Medical Tourism
In view of the huge demand for wellness and medical services, Jiangsu’s Changzhou city is striving to become a pioneer in the provision of related healthcare services. The Changzhou International Medical Tourism Pilot Zone, located in the city’s West Taihu Lake Science and Technology Industrial Zone, is the first of its kind on the Chinese mainland. Combining concepts from tourism, healthcare and medical wellness to offer one-stop services – including high-end health check-ups, third-party biomedical tests and examinations, medical advice, specialist clinics, rehabilitation and convalescence services, recuperation tourism, retirement and healthcare services – the zone is aimed at middle and high-end consumers within the province, as well as customers from neighbouring areas.
Bringing in Technology and Management Experience
There is no lack of seed money on the mainland for funding wellness and medical start-up projects. The question of how to develop an operation to a sustainable level and maintain an effective financing channel by attracting private sector funding along with social security funds, though, remains a challenging one. As such, Jiangsu’s urbanisation plan calls for collaboration between the private sector and social insurance, and for the development of supplementary retirement, medical and health insurance services in order to enhance the relevant public services.
Interviewed by HKTDC Research during a visit to Jiangsu at the end of 2014, a number of investment and planning departments indicated that, given Hong Kong’s role as a global financial centre, the city is in the ideal position to offer an enhanced level of financing and financial services options to mainland businesses. They, therefore, hope that Hong Kong’s services providers will provide strategic recommendations with regard to financing arrangements for the relevant projects in the province.
Healthcare facilities have developed rapidly in Jiangsu in recent years. The number of hospital beds has almost doubled from 24 per 10,000 persons in 2003, to 43 per 10,000 persons in 2013. This figure, however, is the combined number of beds for both hospitals and health clinics. In effect it is far less than the 51 hospital beds per 10,000 persons ratio that Hong Kong has achieved. In addition to hardware and facilities, there is also still room for improvement in the management of China’s wellness and medical services sector.
In particular, private sector participation in the elderly care and medical systems is still at an early stage. As a result, the Jiangsu government is encouraging the private sector to operate publicly-owned elderly care facilities, and is looking to increase the overall coverage of home care service centres in urban and rural communities. The relevant government departments in Jiangsu are very interested in establishing elderly care and medical services of a community service nature, such as those offered by non-governmental and private organisations. These include continuing care services, notably residential care, health clinics, elderly care and rehabilitation treatments offered in a diverse community setting. They are also keen to utilise public and private resources to ensure the effective and sustained operation of such services in the medium-to-long term.
In the area of technological applications, China also hopes to apply new generation information technology, especially IoT technology, to help develop home-based elderly care services. Apart from the key technologies, however, China also lacks specific applications and complete management systems and solutions. A number of technology companies in Hong Kong are already using sensor technology to collect users’ medical, lifestyle and health-related data, as well as to carry out big data analysis via IoT management systems. They are also controlling related equipment remotely via the Internet in order to provide cost-efficient routine services to the general public. With its large pool of Chinese and foreign research talent and businesses, Hong Kong can effectively introduce R&D achievements and market experience from overseas, while also offering tailored solutions to mainland clients.
(For more on IoT and how it works, please see Smart Cities Augur Well for IoT Opportunities in Yangtze River Delta)
 Key targets related to basic public services under the National New-style Urbanisation Plan (2014-2020) include: basic retirement insurance coverage for urban permanent residents reaching or exceeding 90%, and basic medical insurance coverage for urban permanent residents reaching 98% by 2020.
 (i) Source: China Statistical Yearbook / 2013 figures; (ii) Dependency ratio = ratio of people aged 65 and above to those aged 15-64
 For details on urbanisation in the Yangtze River Delta / Jiangsu, please see “New-Style Urbanisation in Yangtze River Delta Boosts Service Sector Demand”
 New-style Urbanisation and Integrated Urban-Rural Development Plan of Jiangsu Province (2014-2020)
 On 27 August 2014, the Ministry of Commerce released the Circular of National Health and Family Planning Commission and Ministry of Commerce Regarding the Pilot Programme for the Establishment of Wholly Foreign-Owned Hospitals. For details, please see Business Alert-China article: Seven Chinese Cities and Provinces Approved for Wholly Foreign-Owned Hospitals
 Sources: Jiangsu Statistical Yearbook; Information Services Department, HKSAR
 Source: Implementing Opinions on Accelerating the Development of Elderly Care Services and Enhancing the Elderly Care Services System, Jiangsu Provincial People’s Government, April 2014