The Real Deal by Lloyd D. Ward
Business Insights Beyond the News
Feb. 17, 2019
Vol. 1, Issue 8
I have spent considerable time in the past two months in China with Mr. Changquan Lu and others in a vibrant network of some 300 small- and mid-size business owners and entrepreneurs who are seeking to partner with cross-border investors. Many of these businesses are innovative, offer high-growth potential, operate in a fast-growing market and are capable of delivering out-sized returns. In fact, some of them look like future Unicorns of the Chinese marketplace.
Next week I will return to China with a delegation of potential investors to make site visits of two such companies.
One company is The Dingsen Group. It developed an innovative and disruptive product called Xuetan (Snow Carbon), a pollution-free carbon fuel for commercial and consumer barbeque cooking and grilling. The other company is Oak Hospital, a system of specialty health care facilities treating Alzheimer’s patients with a unique approach based in eastern medicine.
Xuetan – Snow Carbon
Xuetan (Snow Carbon) is a revolutionary cooking briquette that burns hot, clean and cooks without creating harmful carcinogens. The product has been introduced in limited markets in China and is positioned to be distributed throughout the entire country.
Snow Carbon addresses environmental and health issues caused by traditional charcoal used in preparing barbequed cuisine, a hugely popular cooking method in China. The superior product characteristics include its ability to cook at an extremely high heat, resulting in fast, efficient smoke-free and flavor-filled cooking. Dingsen reports up to 50% reduction in energy costs. Dingsen holds four Chinese patents and has been recognized by the China Food Culture Research Association, Beijing Science and Technology Commission and China Productivity Society for its technological innovation.
Dingsen’s growth projections for 2019 and beyond are optimistic – and for good reason. In 2018, Chinese environmental protection bureaus closed most charcoal factories due to pollution concerns. Therefore, charcoal currently used in the marketplace is from inventory stock. That inventory is expected to be exhausted this year, and when it is Dingsen is well positioned to explode.
In light of these circumstances, we’re anticipating 2019 to be Snow Carbon’s year. Furthermore, my company hold the exclusive rights to produce, market, distribute and license Snow Carbon in the Western Hemisphere.
Oak Hospital Alzheimer’s Care
By 2050, the number of those with Alzheimer’s in China is expected to reach 20 million – about half the world’s Alzheimer’s patients.
“No health care problem looms larger in China than Alzheimer’s disease. It is the fastest-growing major disease on the mainland, with at least 9.5 million sufferers and perhaps as many undiagnosed cases. Almost a million Chinese are diagnosed every year with Alzheimer’s, with the number of new cases expected to rise sharply by around 2030,” writes Peter Fuhrman and Wang Yangson, in the South China Morning Post, July 20, 2018. Fuhrman and Yangson are principals of China First Capital.
China’s aging population represents the largest medical market for dementia-related treatment in the world. In Hangzhou, where Oak Hospital currently operates, 20% of the 8.9 million population are aged 65 to 85, of which 60% are estimated will need hospital treatment and 21% of that group are middle-class patients and have the financial resources to pay for their care.
These stats build a solid business case for Oak Hospital, a system of specialty care facilities for Alzheimer’s care. Two hospitals currently operate – cash-flow positive – in Hangzhou. The business case calls for a buildout of 10 hospitals within five years – followed by accelerated growth in the number of hospitals in the following five years.
Alzheimer’s patients at Oak Hospital enjoy a better quality of life most elderly suffering from dementia-related illness due to the hospital’s proprietary five-point care system. The system involves medical (medicinal and holistic), nursing, rehabilitation, nutrition and companion care. The treatment objective is to prevent the patient’s further deterioration and prolong the quality of their lives.
This care system uses a blend of Eastern medicine, high-tech solutions and traditional TLC. Patients receive acupuncture, massage therapy and utilize specially designed equipment to enhance physical independence, such as standing and strength training.
From a financial perspective, Oak Hospitals turn cash flow positive in the second year of operation compared to five years for a traditional hospital. This makes for a great investment in a project that helps improve lives and make the world a little bit better.
We will share more on these two innovative companies in future newsletters.