US co-working phenomena WeWork became the latest US “sharing economy’ startup to take aim at Asia this week when it raised $430 million in a round led by Chinese investors.
The six-year-old shared office provider is now valued at $16 billion following this latest round of funding, which was led by Beijing-based Legend Holdings and its private equity wing, Hony Capital, according to an account in the Financial Times.
WeWork has been preparing to launch its coworking office offerings in China since last year, and the tie-up with the Chinese investment giants is seen as paving the way for the American company’s entry into the mainland market.
WeWork Finds a Chinese Partner and Takes Aim at Asian Markets
In a post on the WeWork corporate blog, co-founder Adam Neumann referred to Legend and Hony as a “new partner” for New York-based startup.
Commenting in the same blog post, Hony Capital CEO John Zhao remarked, “Not only does WeWork have one of the largest addressable markets I have ever seen, but the quality of its execution and fit for the Chinese culture is unparalleled.” Adding that, “Our investment in WeWork is both strategic and obvious.”
With locations already open in the Canada, Germany, the UK, Israel and the Netherlands, in addition to the US, WeWork now appears focused on Asian markets.
Building Up a Local Team in China
In addition to tying up with Hony and Legend (which is also the parent company of computer brand Lenovo), WeWork has already put in place a team of local and international staffers in Shanghai to help launch operations in China.
During January and February of this year WeWork put in place City Lead, Wilson Wan; CM Manager, Joshua Li; and Growth Lead, Sally Chia in Shanghai, as well as APAC Project Manager, Jessica Lee. WeWork Labs co-founder Matthew Shampine is heading the company’s APAC operations from New York, while WeWork’s head of real estate for APAC, Evan Kleinberg has set up shop in Shanghai while travelling regularly around the region.
WeWork representatives have reportedly been actively discussing potential locations in Shanghai with brokers from major property consultancies, although no centers have been opened to date.
The company has stated that in addition to opening in mainland China, it is targetting new locations in Seoul, Hong Kong, Sydney and India, as well as in Mexico City.
WeWork to Face Mainland Office Sharing Competitors
Even with a deep-pocketed Chinese partner, WeWork could face major challenges gaining a foothold in the mainland market.
Fellow sharing economy super-unicorn Uber is reportedly losing $1 billion per year in China as it spends heavily on subsidies and promotions in the face of fierce local competition. And local Chinese ride-sharing leader Didi Kuaidi is reportedly in the midst of raising $1 billion in new funding to keep the pressure on the Silicon Valley interloper.
While no clear leader has yet to emerge among co-working platforms in China, a number of entrants have already begun testing the market.
Office developer Soho China, led by billionaire power couple Zhang Xin and Pan Shiyi, last year launched an online platform to lease out office space in its’ SOHO 3Q centres. Local developer Naked Retreats launched the first of a planned chain of co-working centres in Shanghai last year, and Carlyle Group and Hines alum Gavin Lu has reportedly been working on his own office sharing platform, Uban.com.