Rising millennial workforce, government support for innovation and startups, changing public attitude from “owing” to “sharing” stuff, and of course the huge market scale: everything makes China a perfect for the development of co-working or shared space industry.
Unsurprisingly, the industry took off in China over the past two years in a big way, marked by the emergence of a slew of shared space operators. At TechCrunch Shanghai 2017, we invited management from world’s top players in the field—WeWork, URWork, and naked Hub—to the same stage to share their insights and ideas on several core issues in the industry.
How design makes a difference
As a shared space operator, finding amazing buildings and furnishing that are not just comfortable but also an inspiring environment is where everyone gets started. This is perhaps one of those most obvious but also the toughest problems. Environment design could be done in a million different ways, but a good one combines aesthetics, functionality, and imagination.
“We have a 400-person global R&D design team, doing A/B testing in buildings. Looking at if we have this much open space, this much closed space, this many meeting rooms and putting up monitors and observing people [to see] what works, what doesn’t, what creates more energy in a building, we can take that and roll it out globally,” said WeWork Asia Managing Director Christian Lee.
Founder and Chairman of naked Group Grant Horsfield echoed Lee’s opinion. “Anybody can arrange a floor and put a coffee machine in, but that’s not co-working. There’s so much more to it. At naked Hub, we have a big design studio with over 50 designers and over 50 software engineers,” said he.
Community is everything
If the design is what gets people started in co-working, building a friendly and vibrant community is how shared co-working space firms manage to stay ahead of other competitors.
Although most of the world still refers to WeWork as a shared space operator, the company is defining itself as a community company to emphasize people. Easy access to the global community is indeed how the firm differentiates from other rivals, especially when tapping China market.
“We’re trying to have as much localization as we can that’s still tied into that global network. We see lots of great innovative companies come into being from this country. Clearly, they are going to be global players in the near future. We can both help Chinese companies grow and expand internationally, not just in space but also through community and ecosystems exists around the world, and of course to provide the access to China for foreign companies who want to be part of this amazing growth story in China,” said Christian Lee in a previous interview with TechNode.
In order to build a more active online community, naked Hub has built a Tinder-like social app (except it’s not about hook-ups but about physically meeting people within their office).
“Chinese people have their friends from high school or college. What we are trying to say is there’s a bigger circle you can build. By liking someone’s profile, we got possibilities to actually meet same-minded people offline. I think we are playing with that technology in order to make people interact and connect more,” pointed Grant Horsfield, founder and chairman of naked Group. A global network is also what naked Hub is aiming for. The firm is opening a co-working space at London’s Victoria Station, first outside Asia.
With over 3,000 companies, URWork is building a global network and community. Nowadays, some of the companies are developing very fast, so they not only focus on the region but broader China or the global market.
“From stories you see, the first office of a startup is often set up in Beijing or Silicon Valley, not even Shanghai or Guangzhou, so they need a platform from which they can go faster. We go a step further: I say that we have locations in major cities that Chinese entrepreneurs are ready to go in Singapore, Jakarta, London, San Francisco, New York, etc. When you are ready to go there you will see a familiar platform, same software, and a comfortable environment as the one you see in Beijing,” said Zhang Peng, CSO of URWork.
Target markets & clients
While all the previous competition among these top players centers around the number of locations and attracting startups, as the market matures, they are gradually targeting different sectors.
Chinese giant URWork stays focused where co-working first boomed—internet plus and pan-internet companies, Zhang Peng started his introduction. With a focus on tech startups, URWork is helping them to eliminate the operational issues to stay fully focused on product development. “We try to raise effectiveness and give more service to help you save time. We will do all the rest, from registering the company, legal service, talent hunting, marketing, distribution, etc,” he added.
On the other hand, WeWork and naked Hub bet on widespread adoption of new workplace models across industries and companies of all sizes to bring diversity to the community. “WeWork started to offer enterprise-targeted services since this October, bringing community, technology, services, and spaces to buildings of enterprise clients,” according to Christian.
Naked Hub is also laying out building management by offering software and services to developers to turn their buildings into flexible workspaces. “Personally, we at naked Hub don’t believe in being vertical. We think it’s very important that there’s a natural balance of males, females, lawyers, architects, and designers,” said Horsfield, the naked Hub founder.
Differentiation is also coming to the markets they are looking at. Currently, Beijing, Shanghai, and Shenzhen are where China’s co-working industry is centered. Despite the fierce competition in these cities, naked Hub still believes in the potential in these first-tier cities, “The guys that are playing in the second- and third-tier cities are not a market we are going to target in the near future,” Horsfield added.
Zhang from URWork sees the problem differently. “We are seeking new possibilities in second- and third-tier cities. URWork just launched our first location in third-tier Xiangyang in Hubei Province, one of the famous car manufacturing cities in China,” he said.
The US shared space giant WeWork is going for something in between. First-tier cities are sure their top priority, but they are also looking at second-tier cities like Chengdu and Hangzhou.
The attitude towards location expansion also varies. WeWork shows no signs of stopping in its global expansion, where China holds an increasingly important position. “2018 will be a big year for WeWork China. We just announced another four newly added locations to be open in early 2018, bringing the total number of locations of WeWork in China to thirteen,” said Christian.
URWork has experienced an aggressive expansion over the past six months, investing in many regional co-working spaces such as New Space, UFO in Henan Province, Fountown in Shanghai, and establishing an incubator and an accelerator. After that, the company is slowing the expansion a little bit in an attempt to consolidate their core business in management, build their community, and other aspects, according to Zhang Peng.