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WeWork to accelerate China expansion plans in 2019
Published on: 2018-11-27
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032WeWork's expansion across China has accelerated and shows no sign of slowing down.

According to WeWork executive Sern Hong Yu, China has been one of the fastest growing regions for the New York-based office space company.

030WeWork has prospered thanks to an innovative business structure where it acquires leases to properties and rents shared office space to a variety of clients, including entrepreneurs, startups and big-name clients like Facebook Inc.

These leases provide a "shield" for the parent company (WeWork) in case there are failures at individual locations. WeWork typically uses single-purpose entities, registered as limited liability corporations, to sign its leases with landlords. If one of its locations does poorly, the landlord has to deal with it, rather than WeWork.

031This business model allows WeWork to protect itself financially. The company can theoretically close any individual location, without being legally liable for a broken lease.

The model obviously worked well in China, a market WeWork first entered back in 2016. The move took place after it raised close to $700 million from Chinese investors, including Shanghai Jin Jiang International Hotels.

Since then, WeWork has grown from four to around 60 locations spanning Shanghai, Beijing and Shenzhen. That’s one-sixth of WeWork’s 360 locations worldwide, the report continued.

033Meanwhile, one of WeWork's rivals in China continues to expand in its own right.

Recall how UrWork was sued by WeWork in 2017 for its "confusingly similar name." UrWork is now doing business as Ucommune and operates 110,000 workstations in 223 co-working spaces in 37 cities. The company plans to eventually reach 350 cities across 40 countries.

Last week, UCommune raised new capital from Hong Kong-based All Stars Investment and Chinese investment bank CEC Capital.

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