The Wall Street Journal reports on the challenges facing group buying website Groupon as it enters the China market:
China has more Internet users than any other nation, but the market is tightly regulated by the government. And as fragmented as the online local deals business can be in the U.S., local competitors say it’s even more so in China where everything from household income to tastes in food vary widely from city to city.
Groupon, which sells daily coupons for discounts on meals, spa visits and other local products, launched Gaopeng.com in partnership with Tencent Holdings Ltd. and private equity firm Yunfeng Capital on Monday. The new site’s name appears to be taken from a Chinese phrase meaning “cherished friend sitting around the table.”
The Chinese website of Chicago-based Groupon will be up against hundreds of Chinese group-buying and local-deals websites—plus related services provided by Taobao, the online marketplace of Alibaba Group.
Google Inc., eBay.com Inc. and Yahoo Inc. have all launched operations in China and have struggled because of strong competition from local companies, which have proven to be adept at localizing foreign business models to suit the preferences of Chinese users.
Last week, People’s Daily reported negatively on Groupon’s bumpy start in China:
Discount website Groupon has buyers in markets across the globe rushing for great deals, but this time it may have itself been too hasty in launching a bid.
After its China portal www.gaopeng.com went online on Feb 15 it was pulled out of service in less than 24 hours – by Groupon’s own joint venture partner Tencent, according to Chinese media reports.
The Chinese version offering Groupon’s famed deal of the day business model is now expected to be formally unveiled with Tencent this week.
But even the domain name has been subject to conflict.
The young US company headquartered in Chicago found that ideal names for its business in China – groupon.cn and groupon.com.cn – have both been registered by a Chinese competitor, so its joint venture turned to gaopeng.com for its domain.
