WeWork revs up its ex­pan­sion in Chi­nese main­land

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

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.

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