WeWork has revealed the next step in its mission to make its shared work spaces available to millions more people: a new business vehicle specifically for the Chinese market.
Though WeWork already claims hubs in Beijing, Shanghai, and Hong Kong, the New York-based company has partnered with Japanese telecom giant SoftBank and Chinese private equity firm Hony Capital to form a standalone entity called WeWork China.
Backed by a $500 million investment from the trio, WeWork China will be managed by WeWork itself, with SoftBank and Hony Capital each claiming a minority stake in the unit.
Founded in 2010, WeWork offers shared working spaces in 155 locations, across 50 cities in 15 countries, including the U.S., Europe, Latin America, and Asia. The company already claims hubs in China, India, South Korea, and — soon — Japan. Indeed, today’s news comes just a week after WeWork launched a joint venture (JV) with SoftBank to bring its shared work spaces to Japan, kicking off in Tokyo in 2018.
WeWork has raised more than $4 billion over the past seven years, and around $1 billion of that came this year, with SoftBank representing roughly one-third of that investment. With SoftBank’s JV with WeWork in Japan, and now its partnership with WeWork in China, it’s clear that SoftBank sees shared work spaces as a key enabler for the future of business in Asia.
“We are constantly looking to invest in disruptive technologies that will prepare us for the next stage of the information revolution,” noted SoftBank vice chairperson Ronald D. Fisher. “WeWork is leveraging the latest technologies in its transformative and innovative approach to work styles, which fits squarely with that vision.”
Tapping a local player in the form of Hony Capital will also be crucial to WeWork’s longer-term prospects in China, though this actually represents Hony Capital’s second investment in the company — it led on WeWork’s $430 million series F round last year.
“With our capital and other resources, we hope we can help accelerate WeWork’s localization and expansion in China,” explained Hony Capital chairmperson and CEO John Zhao. “Since its entry into China last year, WeWork has demonstrated its unique business model and clear competitive advantages, which highlight not only the shared office space model itself, but also its global network that offers interaction between members, services, and various other resources.”
WeWork may not achieve the same kinds of headlines as other well-funded startups, such as Uber, but with a reported $20 billion valuation, WeWork is now among the top five most valuable startups in the world. With the WeWork China vehicle, it will now expand its operations into new cities across China next year, while also growing its existing presence in Beijing, Shanghai, and Hong Kong “on an accelerated timeframe,” according to the company.
WeWork currently operates in eight locations across its three main hubs in Greater China, and by the end of this year it anticipates having around 15,000 members there.
“We believe that by also increasing our presence in China, we will help to attract more foreign investment and companies into China,” added WeWork CEO Adam Neumann. “China has become an incredible hub for business, finance, and innovation, and through this investment we will expand beyond Beijing, Hong Kong, and Shanghai.”