WeWork expands its business in China.
Co-working space startup WeWork has set up a separate Chinese unit, with the help of a $500 million investment from China’s Hony Capital, Japan’s SoftBank Group Corp, and other undisclosed investors, to tap into a booming demand for shared office space in the world’s second largest economy. The $500 million funds will be used to expand on WeWork’s current locations in Beijing and Shanghai to at least 5 more large cities in the next 6 to 12 months.
China’s local investors are optimistic about the WeWork development.
It is also worth noting that WeWork has raised money to target China’s market for more than one time . In the last 3 years, WeWork has been funded for 4 times to explore China’s market. Some local investors, including state-owned real estate developer Greenland Group(绿地集团) and hospitality firm Jin Jiang International (Holdings) Co Ltd （上海锦江国际酒店（集团）股份有限公司）- parent of Shanghai Jin Jiang International Hotels Group（上海锦江国际酒店集团） – are also investing.
Table 1 Funding Rounds of WeWork during the last 3 years
WeWork will receive tremendous changes after the deal.
In China, WeWork currently has offices only in Shanghai, Beijing, and Hong Kong. Millennials requires a free and opening space to finish their work, and WeWork happen to meet their requirement. Meanwhile, China is undergoing a tide of entrepreneur .WeWork has its own superiority in the incubation market segmentation, which runs different from incubator and co-working space in China. Along with all the reasons above, China is found to adopt the coworking model faster than other country, which confirms the idea of WeWork to expand its market in China.
After closing the deal and the fund rise, WeWork will approximately hit $20 billion valuation and become the world’s fifth most-valuable startup. WeWork, which provides shared office space for users such as entrepreneurs, freelancers and large corporations, operates more than 155 properties in 16 markets including the United States(its biggest market), Canada, Germany and China.
WeWork has its own signature strength.
Up to now ,WeWork has launched in 50 cities in the world, serving more than 400 entrepreneurs and 300 startups, successfully nursing Consmr, Truf, Fitocracy, Reddit and New York Tech Meetup. Its sub-institution, WeWorklabs, is dedicated to the incubation of the early startups, offering the right things to meet their most urgent needs. WeWork has the appetite to build a sustainable structure to make the profits from the incubation by tying the startups and the co-working space with a strong community. What they do now is just to make this structure more steady, and provide visible and invisible service approach to creativity.
Competition in China’s co-working space market will be much fierce.
In the foreseeable future, the competition in sharing office market in China will be fierce. Although WeWork reaches China with strategic financial support, other local co-working space such as WePlus(We+联合办公空间), UrWork (优客工场) and SOHO 3Q etc, are also finding their own experimental practice in Mainland. There will be a challenge and great opportunity for WeWork to accelerate its localization and expansion in China.
