This past summer while at the Senior Living Innovation Forum in Napa I sat down with Bill Pettit the President of R. D. Merrill Company and vice chairman of Merrill Gardens to talk about the senior living work they are doing in China.
By Steve Moran
This past summer while at the Senior Living Innovation Forum in Napa I sat down with Bill Pettit, the President of R.D. Merrill Company, and vice chairman of Merrill Gardens to talk about the senior living work they are doing in China.
Merrill Gardens purchased their first community in 1993 and currently has 30 communities. They have had as many as 75 but over the last few years sold their older communities. They are currently focused on building new generation senior living communities for the next couple of decades. They have raised around $130 million in development capital that is expected to fund about $850 million in new projects.
Merrill in China
I know that a number of folks have dabbled in the China Senior Living market, but it seems to be a scary place to work. There are three big issues:
Is it safe, meaning will I be able to invest without losing my properties to the government?
Dealing with language and cultural issues.
Is there a market demand?
The China Market
Here is what Bill had to say about the China Market:
They are on the verge of opening their first two communities (this interview was done in June, 2016)
They have been working in China for 5 years consulting with the government, large employers, developers.
To this point China has primarily focused on turning themselves into a manufacturing powerhouse and neglected their aging population. This will be a big problem in the coming decades particularly given the one child policy which means no children to care for the elders.
China is particularly appealing to Merrill because it is a market that is 5 or 10 times the size of the US marketplace with one big difference. There is no competition.
Merrill In China
The first and most important aspect of developing senior living in China is to appreciate that you cannot just take a US style building and operation, and plop in down in China and expect it to be successful. What Merrill is working on is a unique, just for China product that will reflect Chinese culture, Chinese architecture, Chinese society.
The projects they are currently working on will include much smaller units and will be integral elements of much larger planned communities.
They did a lot of research on values and found that in many respects the desires of families and elders are very similar to what we find in the US. They want the elders to not be a burden on their children; families want to be involved in the caregiving process; they want residents to have the right to choose how they live their lives. They want to live an enriched full life.
One unique difference is that the elders of today are coming out of the cultural revolution, which means they have little in the way of assets. Most of the wealth resides with the children of the elders.
The biggest single takeaway was that any organization looking to go into China need to find great local partners to work with.
You can watch the entire interview here: