Groupon, a Chicago-based online website, wants to expand its business to one of China. Teaming up with its Chinese partner Tencent, they launched their site Gaopeng.com to its Chinese internet users. Based on the fact that China has over 420 million internet users, this seems to be an ideal joint venture with vast potential growth. Yet, Groupon appears to have trouble even before launching its site.
Here are three major issues that have been reported in recent news:
1. If you are one of the 111 million viewers who turned in to watch the Superbowl, then you have already seen the Groupon's controversial Superbowl ad about Tibet. Whether there was hidden political agenda involved or not, one blogger claims that "Groupon's Tibet Super Bowl ad offends everyone". (In Groupon's defense, as explained in its company blog, the commercial is a "a parody of a celebrity-narrated, PSA-style commercial that you think is about some noble cause, but then it’s revealed to actually be a passionate call to action to help yourself.")
2. Groupon China's marketing director Ren Xin resigned before the official site launch. This raised speculations about the prospects of Groupon's progress in China. It seems to directly dispute the bold statement that Groupon wants to assemble a Chinese team with its $950 million spending.
3. Lastly, when Groupon and Tencent finally launched its website, Gaopeng.com, it went offline in less than 24 hours. Sarah Lacey of TechCrunch states that Groupon and Tencent are facing gripes because the management team consists mostly of foreigners.
Not only is Groupon facing internal conflicts within the company, but also enters a competitive market where several Chinese websites (i.e. Tuan800.com, Lashou.com, Goutuan.net) have already gained major presence among local consumers.
If Groupon doesn't succeed in China, then it has wasted almost $1 billion on a sheer bubble. Is this a right move for Groupon? I hope we won't look back to this day and regret Groupon's rejection of Google's $6 billion bid.
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