Finding space to expand in a new world order(2)

Changing Culture

A small but efficient office at a business center has also become a more popular choice among Chinese companies, who used to regard their workplace very seriously.

"Twenty years ago Chinese companies used to buy their offices and say: 'Look, this is my office' as evidence of their success to clients. But it's becoming more and more impractical, especially with rocketing prices in the commercial property and the changing needs for the size and location of office space," said Leijten.

"Clients are not impressed just by big desks any more. They attach more importance to real performance."

As a result, business centers with small units in good locations have become more popular among service providers, such as Bie Junlin, who runs Shanghai Qiu Duan Trading Co, a service provider for high-end construction projects.

"We are a small enterprise. Being able to focus on our business is essential to us," Bie said.

"Business centers suit our needs and budget perfectly. It's also convenient to be situated in a central location, especially with access to some of the largest trading and exhibition centers in the city," he added.

The changing attitude also applies to Chinese companies going overseas.

With a changing economic landscape and bigger focus on efficiency, extravagant spending in setting up an overseas presence is being replaced by limited investment and a flexible setup.

"In this way, the going-overseas decision can be made more quickly because the opportunity cost is much lower," Leijten said, adding that Regus business centers are also the choice of Chinese companies such as Baidu Inc when expanding overseas.

According to Leijten, who has more than 20 years of experiences in the service industry and who before joining Regus worked at Air France and KLM Royal Dutch Airlines, 70 to 80 percent of Regus' clients in China were foreign companies 10 years ago. "But now we're tipping over to the Chinese side. Now it's 50-50 between foreign and Chinese companies.

"Most global fortune 500 companies use Regus across the world, including many locations in China. The share of internationally operating Chinese companies using Regus worldwide is still behind those from developed countries. I expect this to change in the near future."

Decentralization

The Chinese economy is experiencing its lowest expansion rate in years, but Leijten views the slowdown as a result of less infrastructure investment and construction. However, domestic consumption and the service sector are on the rise, therefore business expansion is still on the cards for many companies.

Regus currently operates in 1,500 locations in 600 cities worldwide, but has a presence in just 60 locations in 17 cities in China.

"That's not a lot for the world's second largest economy. We need to grow," Leijten said.

Regus' expansion will be in line with the decentralization strategy adopted by domestic and foreign companies.

"In first-tier cities, multinational companies are retreating from the CBD to areas further out where there is an increasing supply and more reasonable prices. This will become a bigger trend in the years to come," he said.

In Shanghai, where Regus set up its first business center in the 420-meter landmark Jinmao Plaza, the company is distributing more services across wider areas of the city, such as in Yangpu, Putuo, Minghang and Hongqiao districts, where Leijten said he sees an increasing demand.

Tier two and tier three cities are also the focus for future expansion, as startup companies grow fast and foreign companies also send more of their people around the country, he said, adding that he was in Ningbo recently to cut the ribbon for the opening of his company's latest branch.

"The domestic market is developing quickly and Chinese companies are also expanding to more cities to stay close to their customers," Leijten said. "There are 132 cities in China with a population of more than 1 million so the potential is huge."

Challenges

Although it is a popular choice for more and more businesses, the flexible working environment provided by Regus business centers is sometimes misused.

In 2012, an organization called World Luxury Association was exposed by the Chinese media as being involved in fraudulent activities, using sham publicity to make illicit profits.

Registered with a Regus business center in Beijing, the group claimed on its websites its Regus' business address as its own address to impress clients, Southern Weekly reported.

"We do not check the criminal records of our clients. That is not our job. But we comply with the legal requirements of any landlord. We keep a copy of our tenants' business registration' or identification documents," Leijten said.

"Regus has a specific clause in the service agreement with the client that states that our clients must comply with the law or Regus can terminate the agreement immediately."

In his six years of working with Regus in China, Leijten said he had seen thousands of companies but only encountered one or two cases where a client was involved in unlawful practices.

"The concept of flexibility and being able to start up your business more quickly is key for 99.9 percent of our clients. They have a sincere intention to grow their company and create a successful business," he said.