On May 2, 2018, Urwork acquired Workingdom, which was its fourth peer acquisition after the acquisition of Hongtai Innovation Space, Wujie Space and WEDO Since 2018. Urwork’s coverage in China is getting bigger and bigger, while its overseas expansion is much slower. There seems to be some sympathy with Wework’s acclimatisation in China. In June 2017, Singapore started its overseas market layout. In September of the same year, It established a shared office community in Los Angeles. At the same time, it invested in Indonesian shared office Rework to expand into the Southeast Asian market and then settled in New York at the end of March this year.
Wework is ahead, and Urwork is struggling
The reasons for the slow pace of Urwork’s overseas expansion mainly come from the following three aspects.
First, the size gap with WeWork is significant. After years of deep development, WeWork now covers 22 countries, 74 cities, 253 office locations and more than 240,000 members, while Urwork now covers only 35 cities, more than 120 shared office Spaces and only 100,000 members. The main coverage is also in China. The gap between the two is obvious on paper. Although Urwork’s late entry means it is not as big as WeWork, it also makes it harder to shake up weWork’s legacy.
Second, Urwork is far from weWork’s international brand. Has been hailed as a Shared office granddaddy wework has deep in a Shared office industry for many years, not only has established a foundation in its home market, New York, Philadelphia, Washington, Los Angeles and other 24 major cities are already complete layout, and in Asian countries such as China, Japan, Singapore, Israel, north and South America countries such as Brazil, Canada, Britain, Spain and other European countries, Australia and so on already have layout. Wework’s reputation is already established, and the image of an international brand is global, whereas Urwork can only have a domestic reputation.
Third, Urwork is a copycat of WeWork in terms of the whole co-working model, from renovating office environments to collecting rent to creating co-working communities. Wework, a pioneer of shared working, has already mastered the model, and urwork, a copycat, has a long way to go. In particular, In terms of membership, Urwork is a shadow of WeWork, which has 240,000 + members, and can revitalize the community.
In addition, the office conditions of enterprises at home and abroad are already different. First, most foreign office workers are freelancers with high income, which naturally leads to high consumption power. Therefore, Wework also gives priority to individuals. In China, only in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, there are many high-income people with such consumption capacity. However, both of them work collectively in enterprises and have few freelancers. Therefore, Urwork takes enterprises as its starting point at the beginning.
This is why WeWork has entered the Chinese market, but only in Shanghai, Shanghai and Hong Kong, while Urwork has entered the overseas market from Los Angeles and New York, but the difference is that the two companies face different competitive pressures to enter each other’s territory. In terms of brand attributes, WeWork is obviously more famous, so wework can use its brand awareness to open up the market even though wework has no advantage in the Chinese market. On the contrary, It is not easy for Urwork to open up the overseas market with its brand awareness, especially in the US market.
According to the “January 2018 Brand Influence List of Shared Office” released by Miidian Research Institute, Urwork ranked first in the domestic brand index of 228.35, while WeWork ranked second with 215.49, which shows the great brand influence of WeWork.
Therefore, in terms of scale, brand awareness and model, Urwork, a copycat, is lagging behind, and it is difficult to break through the barriers weWork has established overseas.
Domestic competition is fierce, and Youke Works is troubled
VC SaaS monitoring data shows that in 2017, the number of shared office space in China has reached 3459, and among the 3459 shared entrepreneurial space, 520 are national shared office space, accounting for about 15% of the total number. It can be seen that the competition situation of shared office in China is particularly fierce. Although after 3 years of wild growth, a lot of shared office enterprises closed down and left, but shared office is still in the stage of rapid development, after the future shared office industry will move to the head of the pattern.
Online information shows that the top five companies in 2017 are Urwork, P2, Nashspace, DreamPlus and Krypton. The latest top five companies in 2018 are UrWork, NashSpace, We + Cool, Krypton and DreamPlus. Although UrWork is still the leader in the domestic shared office industry, But Nash space, Krypton space and other recent strong growth is also not to be underestimated.
First of all, compared with Nash Space, the operation data released by Nash Space in the first quarter of 2018 shows that by March 2018, Nash Space’s managed operation area has exceeded 800,000 square meters, making it the largest shared office enterprise in China, while Urwork’s managed area is 400,000 square meters. The founders of the two companies are from real estate companies, and their personal connections and real estate experience are equally matched. Although Nash Space is currently only in a few first-tier cities in Beijing, Shanghai, Shenzhen and Tianjin, it still has such a large scale, which shows that it is quite difficult for Urwork to compete with and gain greater advantages in these four cities, not to mention there are many players in these first-tier cities such as Wework and Krypton Space.
Secondly, compared with Krypton Space, krypton Space’s official website data shows that as of April 2018, krypton Space has laid out 40 co-working places in 10 cities across the country, with nearly 200,000 square meters of management area and 30,000 + working places. The gap with Urwork is not too big, especially its mature space occupancy rate has reached more than 95%.
On the one hand, Like WeWork, Krypton Space is a pure direct business model, while Urwork is a hybrid model of direct business and franchise. In terms of profit, the former has a larger profit margin, and the former is easier to manage in terms of enterprise management. On the other hand, Krypton Space is born in the media, so it has more advantages in communication and resource connection, especially for small, medium and micro enterprises, which need media publicity. Krypton Space, relying on 36 krypton, can provide a good media channel for start-ups.
In addition, looking at all kinds of sharing economy, whether the popularity of shared bikes or the mushrooming of shared short-term rental, shared clothes and shared charging banks, the development trend of sharing economy is from first-tier cities to second-tier cities, and shared office is no exception.
Although Urwork acquired Workingdom to strengthen its presence in Shanghai, Krypton Space recently announced its “Make Office Better” plan to open 12 new communities in Beijing and Shanghai in the next 100 days. Nash Space is already deeply engaged in the north and Tianjin, dreamPlus and other companies are also expanding in Beijing and Shanghai. It shows that the share office enterprises in the first-tier cities have become saturated, but in the second – and third-tier cities, there are few shared offices.
Of the reason that there will be many competing for north guangzhou and other first-tier cities, but in the second – and third-tier cities are few, because the second – and third-tier cities housing prices low, rent profit difference is small, but in the first-tier cities have hastened saturated, lower-tier cities and increasingly rapid economic growth, and the second – and third-tier cities also in rapid development, the micro, small and medium enterprises in the enterprise business requirements under the condition of hunger and thirst, In the future, shared office will inevitably sink to the second – and third-tier cities along with shared bikes and shared short-term rents.
Among them, Dream Plus has taken Chengdu as a key target of cultivation, and SOHO3Q will also open up markets in Changsha, Wuhan and other cities. Although Urwork is also actively expanding into second – and third-tier cities, and will make a layout in Lhasa, Xiongan and other places recently, the rapid expansion also means that the cost of the enterprise increases, and the profit pressure is also greater.
From this point of view, although Urwork is leading in the field of shared office in China, it cannot easily share the dividends brought by the sharing economy due to the domestic competition challenges brought by Nash Space, Krypton Space and WeWork China.
Under domestic and foreign troubles, Asian market may be the best choice for its overseas expansion
Competition in first-tier cities is high, and expansion in second-tier and third-tier cities is risky to a certain extent. Therefore, Urwork extends its tentacles into overseas markets, but it is bound to encounter weWork, the original unicorn of shared office, if it extends its tentacles outward. In the case that the brand influence, the community model and the scale do not have advantages, Urwork’s ambition to expand overseas is bound to be obstructed. Moreover, it also needs to stabilize the domestic market, which may be surpassed by domestic competitors at any time. In the face of domestic and foreign troubles, urwork’s approach to overseas expansion might be a good place to start by focusing on the Asian market.
On the one hand, Japan, Korea, India, Singapore and other Asian countries relatively developed economic level, both in micro, small and medium enterprises and individuals have certain consumption ability, excellent guest works have also been testing the waters in Singapore, India, with a certain experience, on the future development direction, can be more walk more safely.
On the other hand, WeWork’s presence in Asian countries such as Japan and South Korea is still limited, especially in the capital cities of Japan and South Korea, where there are more than one or two cities with strong economic strength. This gives Urwork an opportunity to plan its layout. Moreover, its domestic competitors have not made any moves in overseas markets for the time being, giving it the perfect ground to dig deep into the Asian market.
Together, best can works is in the domestic leading, a Shared office market leaders, but after the lost of government subsidies, profitable and has not yet formed, the scale continues to expand, the sea will be a good choice, but domestic competition situation and steep, YouNan disappear within foreign wework strong shake hard, difficult to break, The gap in the Asian market is a good breakthrough for Urwork.
Article/Liu Kuang public account, ID: Liukuang110