WeWork Steps Up China Office Drive With $500 Million Investment
U.S. shared workspace specialist WeWork Cos. Inc. said on Thursday it has received $500 million in new investment to accelerate its China rollout, feeding on strong demand from entrepreneurs who like its flexible and affordable office spaces in major urban centers.
The new investment is coming from Japan’s SoftBank Group Corp., alongside local partner Hony Capital, WeWork said in a statement. The deal will see WeWork set up a special China unit, WeWork China, following a similar pattern for many Western companies that create separately capitalized units to tap the vast market. WeWork said it will be responsible for management and operations of WeWork China, which will be based in Shanghai, while SoftBank and Hony will hold minority stakes.
“With this investment and singular focus on WeWork China, we will support the growth of our members in China by creating an even stronger network across this important market,” said WeWork CEO Adam Neumann. “We believe that by also increasing our presence in China, we will help to attract more foreign investment and companies into China.”
Since entering China a year ago, WeWork has set up eight locations in Greater China in the major cities of Beijing, Shanghai and Hong Kong. But like other foreign sharing-economy specialists, it is finding the road to China filled with competitors like Naked Hub, founded by foreigners in Shanghai, and a local giant recently formed through the merger homegrown leaders, URWork and Hongtai New Space.
Such shared spaces are particularly well-suited to entrepreneurs, offering flexible desk arrangements, meeting rooms and other facilities like coffee bars and gyms in buildings usually situated downtown. Entrepreneurs also like them for the environment they create for networking with other businesspeople.
The latest funding comes after WeWork got $700 million last year from two Chinese groups, including hotel operator Jinjiang International Co. Ltd.
WeWork said that following the latest investment, it will continue to build up its local team in China and focus on development of spaces in Beijing, Shanghai and Hong Kong. The company previously said it would consider moving into other cities like the southern boomtown of Shenzhen, and in the latest announcement said it will use the new funds to back such expansion. It added it expects to have 15,000 users of its spaces in the Greater China region by the end of this year.
“We believe with Hony Capital and SoftBank’s investments, WeWork will introduce its unique business model to more locations across China at an even faster pace,” said Hony CEO John Zhao. “The innovative ecosystem it has created will continue benefiting the growth of Chinese companies, while helping to bring in foreign investments throughout the country, therefore providing better products, technology and services to Chinese consumers.”
Contact reporter Yang Ge (firstname.lastname@example.org)
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