When a foreign company makes its first tentative steps into the Chinese market, it will need somewhere to base its operations, even though it might be apprehensive about signing a long-term contract to rent an office. To meet the needs of companies that require short-term office solutions, a large number of serviced offices have sprung up across the country offering products that focus on flexibility.
A serviced office is to a regular office what hotels and serviced apartments are to a home.
Unlike regular offices, serviced offices come fully furnished, and with all the equipment required to start work immediately. A serviced office also comes with support staff who help run operations. It is all designed to allow a company to have an office without going through the rigmarole of setting one up, allowing it to concentrate on its core business from the start.
Companies are attracted to serviced offices because they offer very short-term leases that can last as little as a month. Another plus is they allow companies to rent as little space as required.
“It is very difficult in China to rent small portions of Grade A office space in a standard commercial building. Landlords are often unwilling to split the space up into pieces less than 120 square meters,” said Thierry Mochetti, general manager for Hong Kong and China at Regus, an international serviced office provider with locations in five Chinese cities.
Although most companies that take serviced offices are new to China, they can also be useful solutions to companies who already have operations in the country.
For example, a company might want to rent a temporary office while its main space is being refurbished, or a firm based in one Chinese city might want to open a branch in another city without committing to a contract that lasts years.
If even a serviced office requires too much commitment, then a virtual office may be the answer. When a company rents a virtual office, they are not renting actual space in a building, but rather, they are buying the right to use an office building’s facilities as and when the need arises. Companies that need conferencing facilities in a number of locations would be able to use a virtual office’s address which received their mail, and have a receptionist who will take calls in their name.
“The virtual office product is really great, and it is really easy to sell because it is very affordable,” Moschetti explained. “If, for example, you want to do business in Dalian, it gives you your first presence where you can meet your clients. It is also easy to upgrade it to a more permanent space if you need to.”
Mochetti said that some companies rent virtual offices in as many as five different places when they first come to China so that they have a place to work wherever they end up doing business. He is also seeing Chinese companies, who often have smaller budgets, entering Europe and America and using virtual offices there as a place to meet clients.
The virtual offices let them meet clients at addresses that would have been too expensive for them otherwise.
Anken is a serviced office provider with a renovated warehouse in Shanghai that is offering flexible workspace from a different angle. Instead of emphasizing the privacy of their spaces and providing closed-off cubicles leased by the square meter, they rent out individual desks in a large open space that encourages socializing between users.
“We’re trying to make something that is attractive to small to medium-sized businesses. We’ve tried as much as possible to minimize the budget and expenditure to create an open environment where it is very easy to meet people,” said David San Roman, a partner at Anken.
Central to Anken’s philosophy is the idea that, while companies give up some privacy by sharing an open office space, they benefit by being able to network with fellow tenants at neighboring desks.
“The main advantage [of a serviced office at Anken] is that it is easy to meet people here. The man at the desk behind me could come and look at my stuff when I’m not here, but I’ve got nothing to hide,” said one Anken tenant, who asked not to be named.
But the flexibility of serviced and virtual offices does come with a cost. One concern for potential tenants is that by sharing an office, they will end up diluting their corporate identity. This should not be a worry for most small companies, though.
“Yes, you have to share all the common areas, like reception, in a serviced office,” Mochetti said. “But think about what happens in a commercial office. Unless you take out an entire floor, you share all the space, not just the common areas.”
On a short-term basis, a serviced office, with its all-in-one price, can be attractive, compared with the cost of renting and setting up a regular office in a commercial building. Just like staying in a hotel, however, renting a serviced office only financial sense within a certain time frame.
It may be a convenient option during a company’s initial relocation to China, but as the stay becomes longer, it is usually cheaper to switch to a conventional office space. If a company is planning to stay in China for a few years, it would be prudent for it to invest in setting up its own office.
After all, there is nothing quite like having a place to call your own.