Groupon China Off To A Bad Start
It doesn't happen often that a US Internet company enters the Chinese market with a huge budget, so when a company does this the Chinese media follow all the steps this company makes.
The media know that most non-Chinese Internet companies eventually fail spectacularly, so a good story is almost guaranteed. Groupon seems to be doing its best to become part of the infamous group of companies like EBay, Google and Yahoo.
In January stories surfaced saying that Groupon wanted to enter China by investing hundreds of millions of dollars, which is a good way of attracting press. Then rumors about a potential joint-venture with Tencent (one of China's biggest Internet companies) were reported, and these turned out to be true. Many people including myself thought this would be a smart strategy to enter the market and gave them the benefit of the doubt. But things have changed a lot since.
First came the news that Groupon China's marketing director resigned even before the company got really started. A suspicious timing to leave a business in my opinion. Then came the Superbowl Groupon ad that was very politically insensitive, to say it mildly. Although the ad does not seem to have had direct repercussions, at least not ones that are visible to the public, I am sure Tencent was less than pleased. Yesterday another episode in the Groupon China saga was played out: their new Chinese site gaopeng.com came online and after a couple of hours was taken offline again.
According to an article in the Chinese press the Tencent part of the join-venture took down the server because they did not agree to the foreign side's decision to put the site online so quickly. Things seem to be getting out of hand fast, and there seems to be a stand-off between the foreign (mainly German) Groupon China managers and the ones appointed by Tencent. Groupon wants to move as fast as possible, but Tencent wants them to slow down.
I guess they have different incentives: Groupon wants to get their Chinese operations up and running to justify a higher IPO valuation, but Tencent knows that in order to win in China being too fast may not be the best strategy. Throw in some culturally ignorant non-Chinese managers and you have a recipe for disaster.
Oliver Samwer, who runs Groupons international operations from Berlin, is flying to Beijing today to talk to Tencent's CEO about the latest problems. A bad sign that this is now already necessary. Like Sarah Lacey wrote on TechCrunch, Groupon needs Tencent a lot more than that Tencent needs Groupon. I hope Oliver Samwer realizes this, and that he also knows that being to aggressive often leads to failure in China. Reading between the lines of the local Chinese press stories, I would not be surprised if Tencent doesn't really want to work with Groupon but that their common investors (Naspers / DST) have been pushing this deal.
If I were Groupon, I would seriously reconsider their current China market entry. If they want to enter fast they need Tencent, there is no way around it. But if they give themselves a bit more time there are other ways. They made the mistake of mainly hiring foreign managers and focusing in their recruitment drive on consultants and investment bankers with MBAs. That may work in the US, but that's not what you need to be successful in China.
You need to hire top local entrepreneurs and offer them the chance to help set up a new big business, with good salaries and even better option packages. They should also make the Groupon China operations independent from the rest of Groupon's operations: if the China management needs to report to headquarters and has to follow global guidelines the company is doomed. This will take a couple of months to set up, but in the long term chances of success will be a lot higher.
I hope Groupon can solve its problems and will do well in China. With the amount of money they want to spend they should be able to pull it off, but they will first need to clean up the mess they created.
Questions and Answers
The US company Groupon is to launch a Chinese version of the discount website famous for its "deal-of-the-day" business model in a joint venture. It will formally join forces with Tencent, an internet giant in China, this week.
Today epathChina published comments that the joint venture of the United States group buy site Groupon in China, GaoPeng, is expected to take longer time to achieve profitability.
Andrew Mason created a concept that the web history would never be able to replicate in the same manner ever. It is the fastest growing company in the online space and seems to retain the power too. Discount deals are a thing of the present and have a bright future ahead too, and Groupon has gone the extra mile to make you ‘come on' and ‘act now' on deals on offer. Quick profits, humongous sales, and brilliant bridge between the shoppers and brick and mortar businesses, Groupon per se!
Fast growing eCommerce business trend in every country. start cloning groupon websites and following the same business strategies to money. Now days instant websites also available in the market for grouponclone script.
Groupon has begun to launch the e-commerce group purchase service to the UK users, so it started a more direct competition with Amazon and eBay.
In USA, one of the leading brands that offer diverse and high quality products promoting proper hygiene is Difresh USA. If you are looking for the best opportunity to grow and have the opportunity for a new business Difresh USA can help you for they are looking for Exclusive Local Distributors
Getting clean and refresh doesn't sacrifice the place where you are for it should be a habit. Having a healthy body will allow you to do things right and good. And no matter where you are you should practice a healthy and proper hygiene even in little things you do.
Maintaining a healthy and proper hygiene badly needs products that are truly effective and could truly answer our need for this. No matter where we are and at anytime we want to get clean we basically need these products right away and only Difresh USA can supply these in a very easy way
The key reason why some firms thrive while some implode during an financial recession is still a puzzle to many people business-owning business owners. Some wrongly assume that all businesses should suffer via recessionary cycles. But the truth is that some companies are usually essentially recession-proof, and it is not necessarily because they are much larger, better known, or a lot more generously capitalized.
Companies like Arch Coal (ACI) and Massey Energy (MEE) watched his or her stock climbed.
Oracle CEO Larry Ellison wanted to contend against Google's Android software in the smartphone industry prior to determining rather to sue his possible rival for copyright and patent infringement.
Oracle and Google kicked off a high-stakes jury trial in San Francisco on Monday, with Oracle arguing that Google ran roughshod above its intellectual home rights since the research large was afraid of getting still left driving within the cellular advertising and marketing organization.
Convincing visitors to share your website posts on social media sites is not actually challenging.
Twitter has submitted a lawsuit against "five with the most aggressive instrument providers and spammers" in a federal court in San Francisco, opening a new front in its fight against spam, it said Thursday.
If you've got been doing Search engine optimisation for a while, you probably feel you might be rating in all of the search engines that matter.
Discuss this Article
