More than real estate: Chinese tech coworking spaces build community to create added value for startups
SOHO’s 3Q office space
The trend of increasing numbers of coworking spaces in China is on the up-and-up. According to a report from Cushman & Wakefield, the “Coworking space” policy introduced by China’s State Council in January has led to a huge inflow of investment for coworking spaces. China’s Ministry of Science and Technology in recent years has continued to promote the establishment of new incubators. According to official data, incubator office space surpassed 64,966,000 square meters by the end of 2014. Over 1500 incubators have been set up around the country by 2015.
However, this may not be a guarantee of innovation. An in-depth feature on coworking spaces and incubators by Caixin found that many Chinese coworking spaces and incubators are real estate projects that provide only space and a working environment, relying on rent and short-term government funding to make a profit and sustain themselves. For example, one of China’s biggest real estate developers SOHO’s 3Q project, which has an Airbnb-inspired O2O space-booking model, only provides a space for working, mostly for short-term stays.
The concept of coworking is much more mature in the United States. Wework, headquartered in New York, is arguably one of the most successful coworking business models. Its valuation shot to USD 10 billion in June. Because its sky-high valuation is very unusual for the real estate industry, it seems that Wework is being valued for its future potential, like a tech startup, instead of a real estate company.
It’s clear that what Wework provides is not just real estate. The company is focused on creating a community, with community managers on site to help businesses make connections. It’s building an extensive online and offline network, and even hosts a three-day summer camp/music festival/networking event for its members. Inspired by Wework’s success, Chinese tech-focused coworking space DayDayUp has caught onto this idea of providing added value for customers in the form of a community.
DDU claims the company is “transforming physical spaces into a connected community.” With mostly companies in the mobile tech industry renting their space, DDU is tech-focused but not limited to tech.
Bo Yiqun, co-founder of DDU, saw the potential for a community-oriented coworking space in China. Like Wework, DDU has a community manager who helps connect businesses with local resources like investment, marketing, PR, and business development, as well as connecting startups with series-A investors.
“I believe running a shared office as a community will be a big market trend,” says Bo.
DDU seems to feed the specific needs of the startups and foreign companies new to China that DDU houses. For them, the value of being close to people who are doing the same thing is self-evident.
Appsflyer, an Israel-based company that opened its branch in Beijing last year, started out at Regus, the international office space provider. The company moved out of their Regus office and into DDU because Regus did not have the space and flexibility they needed to expand.
“Another reason we don’t want to stay in Regus was that it was too conventional-business oriented,” says Appsflyer’s Country Manager Wang Wei. “Regus holds a lot of local branches of foreign companies, and that’s fine, but most of them are from traditional industries. So people just sit there doing stuff that’s not relevant to us.”
For Naranya, a mobile company that just started their office in Beijing to help Chinese developers get into the Latin America market, this was the primary reason that they chose a coworking space as opposed to a traditional office.
“Setting up a new branch of a company here…it’s much easier to do it if you’re surrounded by people that are doing the same things. If I was in a traditional office by myself, it would have been much more complicated to get things started this fast,” says Arturo Velez, their Business Development Manager.
The only drawback is that this can make for a noisy workspace. “Sometimes it’s too close [together],” says Lanmay Zhang, Project Manager for Cmune, an international game developer that was DDU’s first client. “If it’s too noisy, I can’t focus on my own work,” says Zhang, who sometimes needs to fine-tune the audio in her projects.
Events are crucial to building and maintaining a community, says DDU’s Bo Yiqun. For one thing, startup companies have a good space to hold their own events. For another, events hosted by the space provide a good chance for networking.
When Cmune hosted a party to celebrate their local partnership with Xiaomi at DDU, they found that people were very impressed with the space. “They think the whole floor is your company. It’s very good for showing off,” says Zhang.
Popular coworking spaces in Beijing:
Established in September, the occupancy rate of DayDayUp exceeds 60%. It has already attracted companies like AppsFlyer, CMUNE, and YHouse to move into its 1280 m² space.
People Squared was established in 2010 in Shanghai and has now expanded to Beijing. It claims to be the biggest coworking space in China, having served more than 250 teams and over 10,000 entrepreneurs. Its Zhongguancun location covers 4000 m².
Established in February, SOHO 3Q has nine locations, with five in Beijing. The Wangjing SOHO location is 5091 m².
i20 coworking space
The i20 coworking space is located within Beijing’s second ring road. It targets young entrepreneurs in their 20s with a space designed in conjunction with office goods brand NIWOTATA.
UR WORK was established in April by Mao Daqing, who used to be the vice CEO of Wanke, one of the biggest real estate giants in China. In total, UR WORK offers 50,000 m² of working space.
This is written by Catherine Lai with contributions from Toni Tang and Stella Yu. Catherine is a copy editor at AllChinaTech. Originally a writer and photographer from Canada, she came to Beijing looking for a challenge. She is interested in how we use technology and the way it changes who we are. Follow her on twitter @catherinehslai.