Four years after entering the Chinese market, followed by rapid expansion with bleeding, WeWork decided to cease operations in the country.
WeWorks The Chinese entity has secured a $ 200 million investment led by Shanghai-based public company Trustbridge Partners, which backed WeWork China for the first time in its 2018 Series B round, the American cooperation giant announced. The press release failed to emphasize that the recent funding effectively makes Trustbridge Partners a controlling shareholder and leaves WeWork a minority stake in its Chinese entity.
The investment marks WeWork in China Transition from a subsidiary of a multinational company to a Chinese-owned company – with a globally recognized brand, similar to franchising.
WeWork China will continue to work closely with WeWork global headquarters to "ensure the consistency of the WeWork brand and the satisfaction of its global members and employees," a spokesman said in a statement to theinformationsuperhighway.
However, other changes are already underway. There have been layoffs on the sale and "many things remain uncertain," said the person aware of the matter. WeWork China declined to comment on the matter.
WeWork arrived at the height of the country's collaboration boom in China. Its brand, service, and chic design have long drawn well-funded startups and open-minded big corps. As of 2016, more than 100 WeWork spaces have sprung up in 12 cities in China, including dozen acquired by local rival Naked Hub. It now claims 65,000 members in the country.
In addition, a number of initiatives have been launched in China, including an on-demand service for customers who do not want to commit to long-term leases in order to generate more sales.
WeWork serves 612,000 members in 843 offices in 38 countries worldwide. China accounts for around an eighth of its locations, compared to a sixth in 2018.
Not only is WeWork China competing with cheaper home-grown alternatives – both privately and government-subsidized – but we are also dealing with a weakening economy in COVID-19 times and uncertain US-China relations. The task of operational control in a cash-burning market seems logical given all the problems it already faces at home.
Prior to the planned IPO, which was later postponed, WeWork said the uncertainty in trade policy could be detrimental to business. China, a cheaper market, was also highlighted as a drag on profit margins.
After the investment, Trustbridge Partners will introduce a major localization transformation for WeWork China, from "decision making and management, product and business to operations and productivity," said the WeWork China representative. The new owner will also seek partnerships with local communities, real estate companies and Chinese companies during the process.
WeWork China gets a new boss through the sale. Michael Jiang, an operational partner of Trustbridge Partners, will serve as acting general manager. Jiang previously served as senior vice president at Meituan, China's grocery delivery and on-demand service giant.