This article was co-authored by Emma Lee.

When WeWork started in 2010, it was one of the first players in co-working spaces. It helped to define the industry, becoming nearly synonymous with it. 

The co-working office model exploded not only in the west, but soon took over China as well. Office spaces popped up everywhere in China’s first-tier cities. When WeWork officially entered China in 2017, it faced fierce competition from its China counterparts including Ucommune (UCommune is an investor in TechNode), Kr Space, and MyDreamPlus.

However, WeWork faced an essential problem: it isn’t a tech company. Real estate is a traditional business, in which high adoption rates aren’t a substitute for viable per-unit costs. Nearly a decade later, WeWork finds itself on the brink of bankruptcy after its initial public offering failed miserably.

WeWork’s quick rise and fall serves as a cautionary tale for investors and for co-working companies in China as they prepare for the public markets. As Chinese shared office company Ucommune reportedly moves toward an IPO, investors are asking a simple question: is it any different to WeWork?

Bottom Line: The original WeWork model may not have much of a future in China. China’s WeWork peers’ core co-working businesses don’t look that different from their American forerunner: they’re committed heavy lease payments, struggling with revenue, and facing scrutiny from investors. 

But companies like UCommune and Kr Space are attempting a pivot to a more viable, asset-light model focused on enterprise services. If they can make it around the bend before burning through their funds, viable companies could emerge from the co-working debacle.

A (commercial zoned) land war in Asia: Eager to expand its footprint in China, WeWork didn’t hesitate to burn cash, even as it struggled to keep its other operations afloat. However, the company appears to be reconsidering its China operations after the recent debacle. Nonetheless, there are still believers in the co-working model. 

  • China’s co-working space market was worth around RMB 23.4 billion (about $3 billion) in 2017, according to a 2018 report by Chinese research firm iiMedia Research. The same report estimated, perhaps over-optimistically, the market size would surpass RMB 227 billion in 2020.
  • While capital inflow to the co-working industry in China is drying up, another key driver of the boom persists: the rise of the millennial workforce. Co-working spaces better cater to many of the attributes that define the millennial generation: entrepreneurial, tech-savvy, flexible, collaborative, and nomadic.

A brief timeline: 

  • June 2016: WeWork opens its first China office in Shanghai.
  • July 2017: WeWork sets up joint venture ChinaCo after raising $500 million from investors, including SoftBank and Chinese private equity firm Hony Capital.
  • December 2017: WeWork and Ucommune, formerly known as URwork, settles trademark dispute with the latter changed to its current English name,
  • April 2018: WeWork China acquires local rival Naked Hub, which had 46 working spaces across Asia at the time, around half in Shanghai and Beijing. 
  • June 2018: Ucommune steps up competition with a RMB 300 million acquisition of Shanghai-based co-working space operator Workingdom.
  • July 2018: WeWork China secures $500 million in an investment led by Trustbridge Partners with participation from investors including SoftBank, SoftBank’s Vision Fund, Temasek Holdings Pte., and Hony Capital. The funding bumped WeWork China’s valuation to $5 billion.
  • August 2018: MyDreamPlus completes $120 million Series C funding round, led by Hillhouse Capital and General Atlantic. 
  • October 2018: Ucommunue acquires co-working space Fountown Fountown, marking the 7th acquisition of the company in the year. The company has been actively acquiring smaller competitors including Wedo, Woo Space, New Space, and Workingdom. 
  • May 2019: Kr Space announces that it has completed a RMB 1 billion round of funding, jointly led by IDG Capital, Gopher Asset Management and Hubei Yixing Capital.
  • Aug 14, 2019: After its IPO filing, WeWork faces intense scrutiny of its finances and leadership from investors and the media. Concerns about WeWork’s profitability and about CEO and co-founder Adam Neumann begin to surface. WeWork delays its listing the following month, and ultimately cancels the listing.
  • Oct 22: SoftBank, WeWork’s main investor, strikes a $9.5 billion bailout deal to take control of the company.
  • Nov 21: WeWork confirms plan to lay off 2,400 employees, almost 20% of its workforce.

WeWork in China: Before the IPO fail, China was an important market for WeWork. But the China market exposed the company to a huge amount of economic and political risk as well as regulatory challenges. China represents far more of its facilities than its revenue.

  • WeWork figures revealed that its China operation weighed down on an already loss-making business. The company lost nearly $1 billion in the first half of 2019. Excluding the China Region, the company said its profitability measure, dubbed “contribution margin”, for the first half of the year was approximately three percentage points higher, according to its prospectus.
  • Even though continuous China expansion over the past three years pushed the WeWork’s Greater China revenue from $2.88 million in 2016 to $99.53 million in 2018, it still represents only around 5% of the company’s total $1.81 billion in revenue—scant compared to the revenue generated from the company’s US and UK operations.
  • For the first half of 2019, revenue from Greater China hit $93.56 million, a slight increase to 6% of its total revenue. 
  • According to its website, WeWork currently has 120 buildings across 12 cities in Greater China; around 15% of its global facilities. These office spaces, however, have a high vacancy rate, the Financial Times reported in October.
Co-working leaders, by the numbers.

Chinese WeWorks? Although co-working has been seen in China as early as 2010 with the likes of Shanghai-based space People Squared, the concept only truly exploded after 2016. Chinese co-working companies, at the core, aren’t that different to WeWork. They have been grappling with similar challenges like high vacancy rates and have struggled to turn a profit after aggressively buying properties and expanding.

  • In the initial boom, most of these Chinese players followed WeWorks’s model to cater to the “mass entrepreneurial” trend, acting as an incubator at times.
  • Similar to WeWork—which got over 83% of its revenues from space leasing services—Ucommune also depends heavily on space rental fees, which represent around 75% of its total revenue. Ucommune is trying to diversify its revenue sources with value-added services, franchising, and investment.
  • Ucommune filed a prospectus with the US securities regulator in late September and is now preparing to go public by the end of the year. People with knowledge of the matter told TechNode earlier this week that founder Mao Daqing is in New York preparing for the roadshow.

Pivot to services: Having started as a workplace model for startups, co-working has become an alternative to traditional office space for corporates, especially those in tech, banking, and finance, and professional services to lower real estate operational and maintenance costs. At the same time, mixing with startups and entrepreneurs is an add-on benefit for corporates to gain access to new business ideas. 

  • In May, Ucommune announced a change in strategy: it will no longer rely on expanding its self-owned spaces, but instead focus on “management output projects” and “customized services for enterprises.”
  • The pivot to services isn’t a novelty. WeWork launched Powered by We, an office-management arm, in 2017.

China’s co-working market is undergoing a shakeout: After a few years of astounding growth, co-working operators in China are beginning to face headwinds as the space becomes crowded and financing slows.

  • China’s co-working market saw a market consolidation wave in 2018. Top players like WeWork and Ucommune continued to get capital support to fuel their expansion and acquisition of smaller players. But smaller ones began to disappear at a very fast speed.
  • According to industry association China Real Estate Chamber of Commerce, co-working space in first-tier cities surged two years ago, but by October 2019, 40% of shared office space was more than half empty.
  • According to a report from a Chinese third-party research institute, co-working operators have to maintain an occupancy rate of 85% in order to reach the break-even point.
  • Cody Simms, partner at TechStars, said at TechCrunch Shenzhen earlier this month that main issues with WeWork-type companies is these “tech-enabled” businesses that still have a lot of physical infrastructures are valued like software companies. Some of these companies have now gone public, the market is starting to realize that these businesses are different from pure software firms in terms of operating margins and capital expenses.

Will WeWork China go the way of Uber? WeWork is reportedly in talks to sell off China business to KR Space, the co-working space spin-off of newly-listed Chinese tech media 36kr, Tech in Asia reported on Tuesday. In October, the media reported that the company was mulling over the decision to shelve its China expansion plans for 2020. 

  • Acquisition is a possible future for WeWork China, if a big step down from the company’s former dreams of world domination. 
  • Uber likewise exited China in 2016, selling its China operations to local rival Didi.
  • In a statement to TechNode, the company said that it has a “strong commitment” for the Chinese market.

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email:

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.

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