New York start-up WeWork just made a big play for China’s co-working crown

WeWork, the New York-based co-working space start-up, is making a big push into China with an acquisition of a local competitor, putting it on a collision course with market leader Ucommune.

WeWork is acquiring China’s Naked Hub, according to a person familiar with the matter, in a move that will add co-working spaces in Shanghai, Beijing and Hong Kong as well as in Vietnam, Australia and London to its portfolio. WeWork did not immediately respond to a request for comment, while Naked Hub declined to comment.

Bloomberg earlier reported WeWork will pay about US$400 million for the three-year-old Chinese business, citing people familiar with the matter.

China’s booming sharing economy may be about to have its own day of reckoning amid growing evidence that financing activities have reached their high water mark. The industry raised a record 216 billion yuan (US$34.28 billion) last year, an increase by more than a quarter compared from a year earlier, according to a report by the State Information Centre, which predicted that competition among platform companies will intensify and drive the number of mergers and acquisitions. 

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Bicycle-sharing has been among the most prominent sectors that have seen weaker players drop out as funding dried up. At its peak, there were about 100 companies offering similar short-term bicycle rental services in China. Now the industry has come down to two major players, Mobike and Ofo. 

The consolidation in bike-sharing follows that in ride-hailing, which saw fierce competition between rival platforms before Didi merged with rival Kuaidi to take on and eventually beat back Uber. Co-working space may be the next sharing sector to see a wave of consolidation.

WeWork’s acquisition of Naked Hub is rivalled by main competitor Ucommune, which acquired New Space and Woo Space in the first quarter of this year. Ucommune also completed a strategic investment in Wedo last July and announced a strategic partnership with Vanke, the Chinese property developer.

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“I think it’s reasonable that companies sharing similar cultural genes and development strategy merge together for further growth,” Mao Daqing, Ucommune’s founder and chairman, said in a statement. “Ucommune will remain committed to our globalisation strategy and we foresee major moves on M&A front from our side in the near future.”