Two new measures implemented in early July by China’s Ministry of Civil Affairs echo a national strategy to attract private capital into the senior housing industry and provide guidance for regulating the establishment and operation of senior care communities, Chinese attorneys say.
The measures are required under a December 2012 amendment to China’s Law on the Protection of the Rights and Interests of the Elderly, which went into effect in 1996 and required governments at all levels to incorporate planning for the elderly into their overall economic and social development plans.
“The measures are far more general and less stringent than regulations in effect in many other countries, also reflecting the strategy of attracting investment into the [senior care] industry,” write Michael Qu Qin, a lawyer at Co-effort Law Office and editor in chief of the China Senior Housing and Care newsletter and co-author Joseph Christian, principal at China Senior Housing Advisors, LLC.
However, those measures also included some concerning and confusing aspects, Qin and Christian say. Highlights of the new measures include a stance that’s “fully open” to foreign capital; low barriers to entry that are expected to bring more business opportunities; and a less regulated pricing administration.
Previously, foreign investment in a senior care facility using the corporate form of a wholly foreign-owned enterprise (WFOE) was prohibited, but ever since the Guidance Catalogue for Foreign Investment put senior care service in the “encouraged category, the restriction that only a joint venture investment vehicle is allowed is out of date, according to the newsletter.
Following the two new measures, now foreign individuals and organizations can invest in senior care facilities through a WFOE, says the newsletter.
Other new developments included in the new laws make it apparent the Chinese government is trying to attract more private investors into the senior care facility business, it says.
“Developers formerly dedicated a portion of their self-owned community infrastructure facilities for the use of catering, entertaining or accommodation,” write the authors. “Now, with the barriers lowered, other choices and opportunities emerge for the developer or landlord to turn these properties (even just a small portion of them as long as the building specifications can meet the needs) into small or medium-sized senior care facilities.”
There are some new issues raised by the measures that need further clarification, however, including a lack of specificity for investors and a lumping of all senior care facilities into one category.
Written by Alyssa Gerace