WeWork revs up expansion in China

WeWork Cos, a global player that offers co-work spaces, says it will invest $500 million (426 million euros; ￡382 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, says the fresh investment will be used to set up a new company 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 or four new cities next year.

It will be responsible for management and operations of WeWork China, while Hony Capital and SoftBank will each own a minority stake, Neumann says.

He did not disclose details of the shareholding pattern in the proposed new company.

In March last year, parent WeWork received $700 million in funding from investors led by Hony Capital.

By the end of this year, WeWork China expects its co-work spaces to be used by about 15,000 customers, ranging from creators and entrepreneurs to small and medium-sized 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 co-work spaces.

Neumann says 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 says 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, says 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 says 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 conducts business more conveniently, he says.

Another example is that WeWork has supported Chinese bike-sharing company Ofo Inc in the United Kingdom and the United States.

The State Council, China's Cabinet, released a guideline in 2015 for the development of shared workspaces in China to promote innovation and entrepreneurship.

It said China should set up professional shared work platforms to meet the requirements of startups.

caixiao@chinadaily.com.cn

(China Daily Africa Weekly 08/04/2017 page29)