(Yicai Global) Feb. 14 -- Workspace-sharing giant WeWork Companies Inc. is amping up its presence in China and plans to enter new cities after opening its first location in the country around 18 months ago.
The expansion will cover a range of cities, including the capital Beijing, the nation's biggest metropolis Shanghai, and Shenzhen, Suzhou, Hangzhou and Chengdu, Ai Tiecheng, general manager of the firm's Greater China unit, told Yicai Global.
"I wouldn't be doing my job properly if WeWork wasn't expanding in China several times faster than the company's global average," Ai said.
The firm has 212 space-sharing offices around the world at present, and over 200,000 members across 66 cities in 20 countries. It currently has 11 offices in Greater China, in Beijing, Shanghai and Hong Kong.
"We spent a lot of time gaining insight into the domestic market to better understand Chinese startups and larger companies, as well as local partners," he added. The regional economy, population and innovation levels are the focal factors the company considers before settling in a new city.
"Understanding what your customers want is how you learn their emotional and functional demands," Ai continued, drawing on his experience from a former role at The Walt Disney Co. He aims to provide local users with exactly the services they require.
"Localization isn't just a phrase," Ai added. "It means actually catering to the needs of China users. When Disney first moved here, we carried out research to learn about their preferences. For example, they believed that Disney princesses should be foreign, not Chinese."
WeWork set up an independent company in China to help penetrate the local market with help from partners. Japanese software maker SoftBank Group Corp. and Hony Capital invested USD500 million in July 2017 to set up a company in tandem with WeWork.
"SoftBank, Hony and WeWork share the same vision," Ai said. "Investment returns will grow in the next few years; right now our primary goal is expansion."
Varied Partnership Styles
WeWork runs three different types of partnership in China, Ai said. One is profit sharing with real estate operators, such as when the firm teamed up with Sino-Ocean Real Estate Ltd. in November 2016. Under the agreement, WeWork provides branding, interior design, data and global membership resources, while Sino-Ocean offers property management and funding. The two companies split profits equally.
Another strategy is Powered by We, where the company offers services to corporations with their own office spaces, such as kitting out interiors, licensing software to book conference rooms and analyzing data on how these rooms are used.
"Ultimately, this will be embedded into our global community. WeWork won't pay for rent," Ai said.
The third type is the traditional leasing model, where WeWork rents property and revitalizes the interior to attract a host of companies, from one-man startups to major corporations.
None of the approaches are more effective than the others, he believes.