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Demand for home services to drive growth

Hu Yongqi
Updated: Feb 26,2019 7:25 AM     China Daily

China has decided to promote the development of the home services sector, which business insiders said will boost domestic consumption and attract more investment and professionals to help existing providers improve their services.

The decision was made at an executive meeting of the State Council on Feb 20, presided over by Premier Li Keqiang, with a view to meeting demand for household help as the number of elderly Chinese grows rapidly and more families have two children.

The home services sector will be encouraged to use the internet and other new technologies, a statement released after the meeting said, while training and supervision should be strengthened to improve service quality, with operations standardized.

The meeting also approved some supportive measures, including tax reductions for small companies and new majors to be offered by vocational colleges.

The new policies will help boost the development of home services in terms of new technologies, quality standards, and training and welfare for middle-aged women working as cleaners or baby-sitters — who are known colloquially as “aunties” in China — and others working in the sector, said Wan Yong, founder and CEO of Ayibang, an online home services company that provides services in Beijing and 10 other cities.

The policies could encourage more startups, with more investment coming into the sector, Wan said, but existing companies would need to improve their services to survive the competition.

“I take these new policies as a good signal,” he said. “Our real concern is how to get them carried out.”

The new policies, if fully implemented, will be good for the industry and those using its services, given the huge potential demand and different services needed, said Li Xiaoyue, branding manager of Daojia, another online home services company.

Government support would mean that quality standards and norms can be established for the home services industry, she said, while companies engaged in the sector also need support in providing housing and social security for workers.

Wan said his company needed more workers due to an increase in online orders. Good “aunties” are in extremely short supply, he said, which provided opportunities for them to earn very good salaries. One worker supplied by his company earned more than 30,000 yuan ($4,470) cleaning home appliances during last month’s seasonal peak in demand, almost triple the average per capita monthly income in Beijing last year.

“Traditional home services providers cannot manage a huge number of ‘aunties’, but internet-based technologies can, while improving service quality,” he said.

Wan’s company focuses on service quality and efficiency using internet-based approaches. The ultimate goal is to bring good services to consumers and win market share, he said.

A report released by the Chinese Academy of Labor and Social Security said more than 25 million people worked in the sector in 2016, accounting for about 3.3 percent of China’s workforce. The number rose to around 30 million last year.

As people’s livelihoods improve, an increasing number of families can afford home services, providing a new driver for China’s economic growth and employment, the academy’s report said. The number of workers in the sector is expected to hit 50 million in 2025, it said.

Over the years, home services have seen good development, with revenues increasing fast, said Tang Jianwei, a macroeconomic analyst at Bank of Communications’ Financial Research Center. But such services are still in short supply and demand for high-end services is surging, he said.

As of the end of last year, there were 249 million people in China aged 60 or older, accounting for 17.9 percent of the population, the National Bureau of Statistics said. There are 190 million families living in urban areas, with 15 percent of them needing home services, according to a survey by the China Home Service Association.

To meet demand brought about by the aging population and the second-child policy, the sector’s development can boost employment and expand domestic consumption, Tang said.