Wework the US-based office sharing firm announced on Thursday that it has sold its China division and the buyer is its Shanghai based investors. The control of Chinese division will be shifted in the hands of its new buyer and existing investor Trustbridge Partners (which is a private equity firm). The decision has been taken after considering the factor that the firm wants to step back from the competitive market where it suffered significant losses due to some homegrown as well as government-funded companies.
Though, the current tension between US and China could be one of the factors for the firm to retrieve its business from china.
The firm will receive an annual fee from the new buyer of its business for using its brand and will have a small percentage of a stake in the Chinese Unit. The investor has offered $200 million, which is happily accepted by Wework.
The head office (Wework’s Headquarter) and the China office will be in close communication to ensure the uniformity and consistency of the Wework brand and satisfaction of global clients and employees, a spokesperson said in a statement. According to the person who is familiar with the inside work the other changes will be made soon and there has been some layoff due to the on-going sale.
Wework entered the Chinese market when co-working was at its height. The company successfully expanded its branches across China, approximately 100 branches in 12 cities. Most of which were taken over originally belonged to its rival company called Naked Hub. The company has a huge number of employees counting to be 65,000.
To generate more revenue it created an on-demand service for people who do not want to commit for long including many other initiatives launched by the company. This firm has 843 offices across 38 countries and serves 612,000 clients.
Lately, the firm has suffered significant losses because of high competition and the economic downfall due to the COVID-19 situation. So it opts for a solution which is more practical and will help it to come out smoothly without any serious losses.
Trustbridge will also help in associating with the local communities and local Real estate companies.
Michael Jiang has been appointed as an acting Chief Executive Officer for Wework China’s office.