The not-so-surprising news in Asia these days is the stratospheric rise in office and retail rents as the region’s economies resume robust growth after the horrors of the global financial crisis. In Hong Kong this week, for example, retailer Episode gave up the prime 10,000-square-feet of space it had been leasing in Central district for more than a decade. The rent had surged almost 70% to HK$2.4 million (US$308,160) – a month.
It’s not really bad news for Hans Leijten, Regional Vice President for East Asia at Regus, which bills itself as the world’s largest provider of workplace solutions. The company operates 40 business centres in Greater China, including 12 in Hong Kong, and plans to more than triple that number to 150 by 2013.
“The fixed costs that you have to put in your own office are getting bigger and bigger, and this is tying up your money as well as flexibility,” he says. “People will look for much more cost-efficient solutions, much more tailored and much more flexible.”
Leijten spoke to CFO Innovation’s Cesar Bacani about the alternatives to conventional office space, the economics of business centres and the rise of mobile workers in Asia.
There seems to be this perception that companies that hold office in business centres are somehow less committed because they have not taken the trouble of taking out a long-term lease or buying their own office space.
No, actually no. We have clients that stay with us three-four years or longer. We typically find solutions to a variety of customer groups. It could be a start-up company, though start-ups are only one small segment of the business we do.
It can be a company that started a branch office, but has no idea of how business would go and so they decide: Let’s take six months in an office like the Regus solution. After a time they can assess the success of their business, and ask themselves: Do we stay in this environment? While they grow, they stay with Regus. At a certain point in time the predictability in their business grows so they might go to a traditional solution or conventional solution.
So the typical trajectory would be: Come to Asia, set up temporarily and when it’s successful, then you establish your own headquarters?
Not really. Two-thirds or more of our customers in China have their registration with Regus. You conduct business in China, you need to have a one-year lease, that’s a legal requirement, so people register with us and establish their company and have the flexibility to grow that company here. At a certain point, if they are at a stage where they are more secure about their size or have a different plan, then they move to a different location.
What does it mean when you say they register with Regus?
In China, if you start a company, you need to get your business registration and your company license. You need to start with the bank. You need to register with the tax bureau, the district government, the industry and commercial bureaus where you file your business activity. You need an address for that and a physical location for that, and that can be with Regus, just as much as in any conventional solution. We provide the relevant documents as far as we can provide them and help them as registration agents.
VIRTUAL OFFICE
China would seem to be a unique place to do business. Is it easier to set up in other places in Asia?
In Hong Kong, you can [set up] a virtual office, which is basically your address and your telephone number. You can print your business cards and you can register your activity on the basis of a virtual office. We see that Hong Kong has a lot of virtual offices, much more than in China.
If there’s a drop-in client, then your receptionist will have to tell him or her: Oh, they’re not really physically here, it’s a virtual office and you need to call them up?
Correct. And that is the reason that China says: We like to have physical office space because then people visiting; especially authorities, would know where to find you. Hong Kong is more liberal.
How much would it cost to set up and maintain a virtual office?
There are different products and different addresses. If you go to IFC [in Hong Kong], it’s a more expensive location. If you go to a less impressive address, it can be cheaper.
You pay a monthly fee, and that’s it. If you want additional services, you call into the centre and ask for help with some faxes or do some photocopies. Then you’d be charged for the work. But in principle, if you have a virtual office, you can pay a monthly fee. Top of my head, in Hong Kong, you need to spend about HK$15 [US$1.90] per day or thereabouts, that will be the cheapest. It can go up to HK$20-25 depending on the address and the package.
You can choose to package in physical access to the office for five days’ a month, for example, if you want to receive guests or do some business in the centre. .
2012, May 24 
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