China’s WeWork Locations Sold to a Partner Investor

China has been one of the emerging WeWork locations globally.

The firm’s shared-workspace offerings primarily target the country’s booming technology sector. Thus, giving it a hint of an attractive growth opportunity more than anywhere in the world.

In mainland China alone, the firm boasts 115 buildings across 12 cities. This translates to about 15% of the total number of facilities.

However, even before the pandemic, gradual positioning in the Chinese market had been turbulent.

The commercial real state company encountered problems mostly from conditions provisioned by local laws.

Among the usual issues are long term leases and data storage and security intervention enshrined in China’s Cybersecurity Law.

The following year after it opened operations in Shanghai in 2016, the firm created a joint venture capital along with the investor giant Softbank and Chinese companies Trustbridge and Hony Capital.

Even with additional support, WeWork locations in China continue to fall short of profitability. This is with a $900 million loss in a revenue of $1.54 billion in 2019.

That same year, the firm fell short of its IPO bid in China.

WeWork Finally Decides to Let Go

Even at a marginal loss, the NYC-based company was hesitant to let go of its operations in the world’s second-largest economy as it grows optimistic about the market’s eventual shift to shared workspace schemes.

Just at the right time, the pandemic happened. In fact, the prospect of China becoming a critical business material faded.

Today, WeWork announced that it would sell control of its China operations to one of its key investors, Trustbridge Partners.

The firm is stepping back from the competitive market due to successive setbacks in recent years, combined with a low occupancy rate at present.

In the deal, the parent company will receive $200 million in funding and maintain a minority stake and participate in the market.