WeWork revs up its expansion in Chinese mainland
WeWork Cos, a global player that offers co-work spaces, said it will invest $500 million to expand its business and staff in China.
It entered the China market in July last year and currently offers eight co-work spaces spread across Beijing, Shanghai and Hong Kong. It operates the spaces on rented real estate. Another three such spaces are in the pipeline.
Adam Neumann, CEO of WeWork, said the fresh investment will be used to set up a new firm called WeWork China in partnership with Hony Capital, a local private equity firm, and SoftBank Group of Japan.
WeWork China will expand operations to three to four new cities next year.
WeWork will be responsible for management and operations of WeWork China, while Hony Capital and SoftBank will each own a minority stake, Neumann said.
He did not disclose details of the shareholding pattern in the proposed new firm.
In March last year, parent WeWork received $700 million in funding from investors led by Hony Capital.
By this year-end, WeWork China expects its co-work spaces to be used by about 15,000 customers, ranging from creators, entrepreneurs, small and medium enterprises to large multinationals.
It is not clear if WeWork China would own the premises or continue to rent commercial realty to set up its cowork spaces.
Neumann said China has become a hub for business, finance and innovation, and WeWork is aiming to unlock opportunities for businesses.
“If we are not in China, we are not a global company. Our strategy is to work with local partners to better understand local culture and serve clients. So, we will set up the local entity with Hony Capital to focus on Chinese startups and large enterprises.
Neumann said WeWork will seek to grow its customer base in China. “By increasing our presence in China, we will help attract more foreign investment and companies into China and also help Chinese companies to go global.”
John Zhao, chairman and CEO of Hony Capital, said WeWork not only has a unique shared office space model but is creating a global network in which its customers can interact among themselves, creating synergy and demand for services and various other resources.
Zhao said WeWork has helped US media company STX Entertainment to develop its business in China by offering offices in Shanghai. There, STX uses WeWork’s membership services and does business more conveniently, he said.
Another example is that WeWork has supported Chinese bike-sharing company Ofo Inc in the UK and the US.
The State Council, China’s cabinet, released a guideline in 2015 for the development of shared work spaces in China to promote innovation and entrepreneurship.
It said China should set up professional shared work platforms to meet the requirements of startups.