Policy shift gives birth to investor optimism
Updated: 2013-11-20 09:48
By Wang Zhuoqiong (China Daily)
With China's loosening up of one-child policy, many industries serving mothers and newborns are eyeing potential business opportunities. But will the policy deliver on their expectations? Wang Zhuoqiong reports
Having been an only child, Li Xia has been longing for a sibling for her 2-year-old daughter.
Up to now, China's family planning policy ruled that out. She wasn't eligible to have another baby because her husband wasn't also an only child.
But with the recent adjustment, Li is preparing to welcome a new family member in the near future. According to the National Population and Family Planning Commission, couples where just one spouse is an only child will be permitted to have two children.
Although the timetable for implementation of the policy has not been fixed, newly eligible couples like Li and her husband are gearing up to welcome a new baby.
They're not the only ones excited about the prospect of another child. Companies that make products for mothers and babies, and investors in those companies, are optimistic, too.
Sitting in the Lidu area, outside of the north Fourth Ring Road in Beijing, Amcare Corp, a private hospital specializing in mother and child healthcare, welcomes newborns every month.
Their business is looking brighter thanks to the relaxation of the one-child policy.
Warburg Pincus LLC, a private equity firm, has recently led a majority part of an investment of $100 million in Amcare to fund the company's expansion.
Within five years, Amcare is expected to add seven new facilities, making a total of 10, in major cities including Shanghai, Hangzhou and Wuhan to cope with the rising demand for medical services for newborns, children and pregnant women.
"The landmark initiative is a boost to our hospital," said Hu Lan, chief executive officer with Amcare, which was been operated since 2006.
"But we're also a bit cautious about the impact of the relaxation of the one-child policy."
Demographers have estimated that after the relaxation of the family planning policy, there will be an additional 1 million newborns in China each year. That's about a 5 percent increase.
Hu said the relatively small number of additional newborns will give the hospital group time to catch up with the rise in demand while maintaining the safety of its operations.
Amcare's three facilities in Beijing and Tianjin achieved revenue of 300 million yuan ($49.2 million) last year, up 50 percent year-on-year.
Hu said each of the seven new facilities will require investment of 100 to 200 million yuan.
The group's patients are middle- and high-income earners, with a majority working for banking, Internet, technology and entertainment companies, Hu said.