Japan’s Elderly Offer a New Market
The senior citizen population is exploding, the elderly are isolated more and more and the need for adequate housing is on the rise. Welcome to Japan, which is turning gray at a swifter pace than even the United States.
As a result, some American businesses have begun to consider whether profits can be made by providing services to elderly Japanese, who increasingly are living their final years outside the society’s traditional three-generation family.
Earlier this week, Beverly Enterprises of Pasadena announced an agreement in principle to build retirement housing in Japan with Shimizu Construction Co. of Tokyo. Beverly’s initial investment will be modest, possibly $500,000, said David Banks, the company’s president. But he said he is excited about the long-term potential of a market that is roughly half the size of the United States.
“You look at the demographics and you salivate,” said Sanford R. Goodkin, an international real estate analyst and chairman of Goodkin Group in La Jolla. “The potential is incredible.”
Currently, 14.8% of Japan’s 120 million population is 65 or older, compared to 11.5% in the United States, according to the Senate Special Committee on Aging. By the turn of the century, the percentage in Japan will increase to 23.3%, compared to 13.1% in the United States.
Cultural, Economic Challenges
But, however attractive a graying Japan may appear to U.S. entrepreneurs, the market presents the kinds of cultural and economic challenges that have daunted businesses in the past. It will be Shimizu’s job to help Beverly, which owns 920 nursing homes in the United States and Canada, surmount the distant cultural terrain and plan facilities that appeal to aged Japanese.
In an interview, Banks recalled the “elaborate” pool-like baths included in Japan’s limited elderly housing. “If I were building in the United States, I probably wouldn’t build elaborate bathing facilities,” he said. “There, it has been accepted for centuries.”
He added: “We can clone what we have here--but only a Japanese would know the subtleties. That’s why we chose a partner.”
But other cultural factors are working in favor of a retirement housing industry in Japan. Traditionally, young couples moved in with the groom’s parents. But, increasingly, the young now live alone in large apartment complexes because urban Japan is so lacking in housing space that can accommodate extended families. “Surveys have shown that young people want their own place, their own privacy,” Goodkin said. “It’s a slow movement but a perceptible change. I think it’s the Americanization of the younger Japanese.”
Another changing cultural factor is the move of Japanese women into the work force, which may prompt new independence. “When you work hard all day, you want to go home and not fight battles with the mother-in-law,” Goodkin said.
Gordon Berger, director of the East Asian Studies Center at the University of Southern California, put it this way: “In the urban (Japanese) environment of the 1980s, you’re not living with your mother-in-law as much as you used to. So the elderly more and more are left to their own devices, and this has created formidable problems.”
Fewer Three-Generation Households
According to Japanese government figures, the number of three-generation households is decreasing steadily, if gradually. In 1970, 77% of Japanese 65 and older lived with their children; this dropped to 69% in 1980. At the same time, isolation among the elderly is increasing, although many live near their children. For example, 5.5% of the elderly, or 389,000, lived alone in 1970. This increased to 8.2%, or 835,000, by 1980.
Aware of such figures, Beverly officials hope to parlay the advantages of being the first U.S. firm in the market into a solid long-term position. And Banks’ Japanese fantasies aren’t limited to housing. Beverly has already said, for example, that it may add health- care facilities to its project.
“The ways they’ve traditionally taken care of their elderly may not be adequate in the future,” Banks said. “We feel that there will be a great need for retirement apartments, nursing homes and various areas we work in.” Nonetheless, some question how successful a U.S. firm can be in the specialized housing field once local companies gain more technical skills in the area.
Goodkin, for example, was skeptical that a U.S. company could elbow out the Japanese competition in a significant growth industry such as housing for the elderly: “I think there will be very little opportunity for American builders to build anything residential in Japan,” he said. “There are so many excellent builders in Japan of all kinds. I’m not sure there would be legal restraints, but there would be practical restraints. So many people there know the turf.”
Berger said the Japanese market might hold potential for growth in health care and other services for the elderly but asked, “What will American firms have to offer that Japanese firms don’t have to offer? That will be the critical question.”
