Across The Border | Why foreign nursing home operators struggle to make a profit in China

China’s ageing population has attracted foreign elderly-care services providers to the country but they are struggling to make profits despite the market offering the largest number of senior citizens in the world.

Cascade Healthcare, a US nursing home operator, is profitable in China, four years after it began operating in the country, according to Nate McLemore, managing director of Columbia Pacific Management, Cascade’s parent company.

Japan’s Nichii Gakkan Co., operating in China since last year, is still trying to break even, according to He Jingwen, an analyst at SWS Research.

“China’s post-30s and post-40s generations get old before they get rich. That’s very different from the developed countries where the aged people hold the fortune,” she said, “It’s quite difficult to earn money from this generation.”

Haitong Securities analyst Yu Wenxin wrote in a research report that “surging demand and limited affordability” was the major problem facing China’s elderly-care industry today.

In 2012 the average annual disposable income for an urban Chinese was 24,600 yuan (HK$28,703), while the average price for a bed in a nursing home was 42,400 yuan per annum, Yu wrote.