China’s Nationwide Quarantine Is a Win for Productivity Apps and a Fiasco for Co-working Spaces

For the past two weeks, the ostentatious office buildings that have mushroomed all across China over the past 20 years have been deserted. A truly apocalyptic scenery. The country is under lockdown.

The majority of China’s white-collar workforce has been reluctant to leave their apartments. The losses are piling up. A sudden hiatus was not something business owners were expecting in a country where stability is paramount.

A slew of small and midsize enterprises might be forced to go out of business if this crisis is not under control shortly. Workers are perplexed as the financial hurdles caused by the outbreak could leave them high and dry in a job market expected to shrink. The only feasible solution to the forced home isolation is remote work.

Forced to come up with ways to keep their businesses running, managers resort to the use of productivity apps like Alibaba’s Ding Talk or Tencent’s WeChat Work. These apps provide platforms for companies to facilitate internal communication, hold online meetings, process documents and manage tasks. While for the most part paid, the majority of providers have made their services free of charge due to the increased demand for their products at a critical time.

One product that has especially stood out is ByteDance’s Slack-like Lark. From January 28 to May 1, 2020 Lark will provide users with remote office and video conference services by offering its complete package at no cost at all. The offer includes unlimited audio and video conferencing, approval management services, unlimited online document and form creation services, and 100 GB per user cloud storage space. On top of that, for the next three years, Lark will also provide free services to hospitals, schools and nonprofit organizations in Hubei Province, the epicenter of the coronavirus outbreak.

According to the 2019 China Saas Industry Research Report, the scale of the domestic market for productivity apps has increased from 9.01 billion yuan to 45.95 billion yuan from 2015 to 2018, showing a clear growth trend. In 2020, the market is expected to exceed 50 billion yuan in size.

The recent coronavirus outbreak dramatically increased the penetration of productivity apps on the Chinese market, which in turn will likely accelerate the digitization of local enterprises. It would not only benefit employees by making their work lives less stressful but also allow enterprises to increase the efficiency and cost-effectiveness of their operations.

Some argue that the growing popularity of the work from home practice could be detrimental to productivity. However, a 2015 study conducted at Stanford showed that the productivity of call-centers operated by the Chinese travel company Ctrip increased by 13% after employees were allowed to work from home, results are mainly attributed to a more comfortable environment. Augmented by the capabilities provided by office apps like Lark, which are likely to even further increase productivity, working from home could become a new normal for many Chinese companies sooner than we could expect.

Nonetheless, one business model that could be virtually rendered obsolete with the growing acceptance of remote work is the shared office space. As property prices and thus the average rent skyrocketed in China in the past several years, shared office spaces or co-working spaces have sprung up across all large Chinese cities providing workroom for young tech startups.

Now, with the economic downturn caused by the Wuhan coronavirus expected to hit small enterprises the hardest, co-working spaces could lose tenants. Furthermore, if working from home becomes in vogue it could render such spaces redundant. 

Sensing the threat, shared office spaces are taking measures to expedite the return of tenants to their cubicles. Ucommune, the biggest co-working space chain in Asia, has even released an internal letter (link in Chinese) to clients, urging them among other things to raise the standard for personal hygiene, by regularly washing hands, sanitizing their workspace and limiting their movements within the office compound to decrease the possibility of spreading diseases. The company has also announced that it has hired Wen Zhongguang, the director of the respiratory department of the 304 Hospital of the People’s Liberation Army, as a chief special advisor on medical care to provide real-time guidance for enterprises and employees to oppose the epidemic.

It is still unclear when the Chinese quarantine will be over and if measures taken by Ucommune and other co-working spaces will be sufficient to keep startups from abandoning their desks. However, the revival of productivity apps and the increasing acceptance and legitimacy of working from home in China are facts that should not be overlooked as they could be unobtrusively shaping our future at this very moment.