WeWork Poised to Expand to China in June

WeWork will open its first coworking space in Shanghai this year, but competition awaits.

wework  china

The coworking juggernaut WeWork will soon expand to China, according to a report in the South China Morning Post. The planned expansion will hit Shanghai in June and Hong Kong later in 2016. More locations will open in other Chinese cities over the next year.

The flagship location in Shanghai will occupy two floors of a six-story building, each floor spanning over 17,000 sq ft. It’s located in the Jingan district, which is one of Shanghai’s priciest commercial neighborhoods.

The move to China was preceded by an attention-grabbing funding round in which Hony Capital, a Chinese fund, invested over $400 million into WeWork, pushing its valuation above $16 billion. They are betting that the Chinese market will take to the concept of coworking, and they’re wise in getting there first.

But WeWork will still face competition in China. The country has over 100 of its own version of startup incubators—some, like Beijing’s URwork, are valued at over half a billion USD. Many of these incubators have expanded to multiple cities, and they have cash to invest in growth, just like their American competitor.

As incubators, these companies do not compete over exactly the same audience as WeWork. Some startups need the coaching and guidance they get from incubators, while freelancers and satellite offices from large corporations wouldn’t be accepted to an incubator in the first place. Overall, WeWork’s audience is presumably bigger, since their offering is relevant to any type of small business or remote work, not just scalable tech companies.

Still, it is difficult to imagine the company succeeding without the support of startups, since the startup scene has played such a big role in the success of coworking in the west. WeWork will have to earn the trust (and cash) of China’s startups in order to succeed in the market. The vast network of startup incubators will provide good competition, but the lack of established coworking spaces in the country might be WeWork’s biggest advantage. Coworking is a unique experience, and being the first to offer it to Chinese workers will give WeWork a strong position in years to come.