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Chinese co-working leader dips a toe in New York waters

UCommune gives globetrotting millennials and entrepreneurs a foothold in US

The UCommune office near New York's Wall Street includes at least one staffer who can assist with inquiries in Mandarin.

NEW YORK -- Chinese co-working startup UCommune made its U.S. debut here in March with a shiny new office just around the corner from Wall Street, though the relatively quiet opening belies the company's plans to make plenty of noise in North America and Asia.

While rapidly expanding American competitor WeWork makes waves in China, UCommune has taken a cautious approach to the U.S. market, testing the waters as a minority stakeholder in a joint venture with local co-working brand Serendipity Labs.

At first glance, the 28 Liberty St. location reveals little sign of the stake held by UCommune, China's biggest office share company. The 34,000-sq.-foot space -- able to host 69 separate offices, including 23 individual rooms -- is replete with such classic American amenities as complementary fruit-infused water in the kitchen and breath mints in the bathrooms.

"People visiting from China want to feel like they're in New York," suggests John Arenas, CEO of Serendipity Labs. Dimly lit, sound-damped conference booths line one stretch of hall that may as well be a portal into an intimate Manhattan restaurant. Frosted glass obscures views into Serendipity's "wellness booths," which are available to rent by the hour for detoxing from the hustle and bustle of the city.

But a few key considerations were made to ensure a familiar working environment for Chinese customers as well. At least one staff member will be able to assist with inquiries in Mandarin. Architectural and design teams put their heads together to create a business-friendly layout for UCommune members. And discussions are underway to stock the snack bar with select Chinese offerings.

UCommune enjoys massive success in its home market, growing to 150 co-working locations in just three years of operation. The company has 65 sites in Beijing alone. With sleek offices in Zhongguangcun -- Beijing's Silicon Valley -- to trendy spaces in Shanghai overlooking the Bund, the brand has earned customers, which it calls members, from across industries. UCommune stands only to gain further from the swell of well-educated Chinese millennials seeking out global companies and a cosmopolitan lifestyle.

The 34,000-sq.-foot office devotes nearly one-quarter of the site to community space designed to spur "serendipitous interactions" among co-workers.

At its helm is Mao Daqing, a former executive from real estate company China Vanke. Less than a year after founding the business, Mao turned the fledgling UCommune's ambitions outward and began seeking a partner to help expand into the U.S. market.

"Part of the thesis for UCommune is they wanted to offer locations outside of China where Chinese companies want to be," Arenas said. "Wall Street is one of those places."

New York's burgeoning markets in financial technology, blockchain and artificial intelligence make the 28 Liberty St. site attractive for Chinese entrepreneurs, startups and even established companies, the Serendipity Labs CEO said.

The two companies also teamed on a cross-selling platform, letting members from either co-working office book space from the other's listings. In a format similar to code-sharing between airlines, UCommune members who want office space in the U.S. now can use the Chinese company's app to rent space across Serendipity Labs' 11 open locations.

If successful, Serendipity could see a big boost in interest from Chinese companies across the board. The company, which tends to cater more to established enterprises and a 30-something-plus crowd, could potentially see more of the startups and millennials of UCommune's customer base headed its way.

Serendipity Labs is in discussions with several Chinese companies interested in renting space.

Omer Ozden, CEO of RockTree Capital, a co-founding investor in the joint venture, heads a campaign to raise $200 million for UCommune's global expansion plan.

Los Angeles, San Francisco and Toronto are being explored as locations for the startup's next ventures in North America. Closer to home, UCommune has already launched projects in Singapore, Hong Kong and Taipei. Southeast Asia also is regarded as "a natural area of expansion for us," Ozden told the Nikkei Asian Review.

Ozden suggests that UCommune's expansion offers not simply a familiar office space for Chinese companies abroad, but a venue for international collaboration among enterprises that want to get "plugged into China."

"I think the whole idea of co-working is collaboration," he said. "We want to help unify and link enterprise, whether it's in New York, San Francisco, Beijing or Shenzhen."

The New York debut follows UCommune's recent acquisitions of three rivals in China -- Woo Space, New Space and WeDo -- that lifted the company's estimated valuation to $1.7 billion. But that growth still pales compared with top competitor WeWork, as the American company was valued last year at an estimated $20 billion.

The two clashed previously, as WeWork filed a trademark lawsuit against UCommune -- then named UrWork -- over its name. WeWork won, and the Chinese company began its rebranding campaign.

WeWork, with fresh funding from Japan's SoftBank Group, has embarked on an aggressive expansion into Asia. The company operates 31 locations in China after opening its first venture in Shanghai two years ago. WeWork this month announced plans to acquire Chinese co-working rival Naked Hub and indicated that it expects to hold 40 locations across China by the end of the year.

"Building on our growth trajectory, WeWork China has entered a new era of expansion and innovation to help drive 'Created in China,'" the Chinese unit told the Nikkei Asian Review. "Our presence in China has always been first and foremost about helping Chinese companies grow and scale in China and around the world."

Ozden seemed undisturbed by the rival's expansion. In China's highly fragmented co-working market, UCommune still stands far ahead of the competition. Ozden suggested that even before the acquisitions, UCommune had more office locations than the next four competitors combined.

"Co-working is a movement," he said. "The more that other groups do well, that's good for us." But considering the struggles of U.S. startups like Airbnb and Uber Technologies to break into China's highly regulated market, WeWork's project carries serious risks. "It's important also to understand the local nuances" of a foreign market, Ozden noted.

WeWork China appears confident that it has all the bases covered. To cater to local needs, the company has made it possible to book space and pay through popular chat application WeChat. It has also partnered with Alibaba's credit scoring platform Zhima Credit, granting discounts or deposit-free office rentals to members with high Zhima scores.

"We never see [other] co-working spaces as our competitors," said a representative from WeWork China. "Our competition is work itself."

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