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Written by Elizabeth Winkelman

Co-working spaces are abuzz in China. The concept has exploded onto the start-up scene worldwide and is set to revamp the way we work in the future. The concept of co-working is a shift in mindset, where, as part of the sharing economy, people value hiring and sharing over ownership.

According to JLL, a real estate consulting firm, the first Chinese co-working space came out of Shanghai. Yet within a few short years, there are now more than 500 co-working spaces in Beijing and Shanghai alone, not to mention other 1st tier cities such as Shenzhen, Guangzhou and Chengdu. Globally, JLL predict that there will be 3.8 million co-working spaces by the year 2020.

Co-working spaces can be loosely defined as office spaces that offer businesses access to shared resources such as WIFI, printing, meeting rooms yet with flexible contractual arrangements. Many co-working spaces face the need to stand-out in an increasingly saturated co-working space market. These hold events, act as business incubators and provide start-ups with seed funding or mentorships.

So what’s driving the need for co-working space? 

With collaborative business models, advances in mobile and Internet technology are turning traditional office work on its head. China is becoming a leader of the shared economy, even Pony Ma, the founder of Tencent saying that China’s sharing economy is on the verge of a golden age. Industries such as logistics, transportation, lodging and e-commerce are being transformed. China’s total revenue from the sharing economy is expected to reach 633 billion USD this year.

Within the shared economy, collaborative business models opening up new ways for entrepreneurs to engage and work together, flexible working arrangements with low or minimal costs, co-working spaces are booming in China due to the changing nature of work, with a “sharing” economy changing the meaning of “ownership”, according to Claire Stephens, Head of China for Workplace Strategy, JLL. Then, there are the different generation change in values of millenial workers, who favour flexible working hours, work/life balance and wish to explore entrepreneurial endeavours.

It is the force of new technology coupled with Chinese early adopters linking them to online platforms that are “disrupting” the way traditional business is done.  Airbnb, Uber and Didi Chuxing are prime examples. But a key player in this drive for co-work is the China Central government. China is supporting mass entrepreneurship and innovation.  According to a report by law firm Dezan & Shira, the Chinese Central government are, by and large, embracing the “sharing economy” in China, saying that it is significant that China’ National Information Center have published a major report on the future of China’s sharing economy.

Co-working spaces are taken advantage of these policies. China is on track to reach R&D investment of 2.5% by 2020 and there is strong policy push towards start-ups and creating innovation, despite the contradictions of still persisting with the “China Firewall”. For anyone who has come to China on business and had to resort to using a VPN to just access email will agree that there is still a disconnect.

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Connecting Chinese and overseas start-ups

Speaking different languages and addressing different Internet markets are but two major stumbling blocks to overcome when working in China. Bob Zheng, founder of People Squared, one of the original co-working spaces in Beijing, has experienced years of watching foreign and Chinese entrepreneurs within China’s ecosystem. He concedes that integrating Chinese and foreign co-working spaces is often hard: “you know, foreign and Chinese communities don’t talk in China. It’s like you have two communities in one space. It’s a very strange thing. And it’s not clear where everyone stands”.

Other co-working spaces are still trying to make inroads into this space. Austrade has partnered with Shanghai-based co-working space Xnode, which is trying to bridge together top local and China-based startups in one community. Xnode is the designated Landing Pad for an Austrade Australian government program worth 1.1 billion over four years. The program mentors Australian start-ups and connects them to resources — in“landing pads” overseas.