Gaopeng: Groupon China to launch next week

Groupon’s Superbowl ad is about to be old news as the company moves into final launch stages for Groupon China’s joint venture with Tencent, Gaopeng.com (高朋网), which by many reports will be up and running next week.

ChinaInternetWatch reports that a writer at Jinghua newspaper managed to open an account on gaopeng.com, but there were still no products available yet.

After the reporter registered, he received a note saying that “This website will be officially launched next week” signed by “Team Gaopeng.”

Can't get more official that than.

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FT followed-up and found that the Gaopeng.com domain name was “registered by Ouyang Yun at Shenzhen Tencent Computer System. Mr Ouyang is deputy general manager of Tencent’s strategy development department.”

The site was briefly up last week, showing the Groupon logo, but it was quickly taken down. Local regulators told FT that the site does not yet possess a valid license.

The site is advertising that it will offer up to 30 percent off products, but it’s unclear if it will only start in Beijing, where it's main office is based, or if Gaopeng will cover cities across China.

The competition between Groupon websites is not about the products they provided but the resources they have.— Kai Hongyan, marketing manager of 58tuangou.com website

According to ChinaInternetWatch’s sources at Tencent, “Groupon China will focus on travel, food and Tencent’s virtual currency. And, yes, one product only every day.”

The main difference between the China and U.S-based versions of the site will be that for Groupon China, a user can “raise a group buying request with desired price for a product; and, merchants can follow this demand and make a deal when the total users for this product reach a certain number.”

Although this will be a China-based site, Gaopeng is headed by two people from Groupon’s German office, leading some to worry they they’re not bringing on enough people with experience in the Chinese market, which could lead to a number of problems down the road.

Gaopeng.com isn't in for an easy ride

“This is not a virgin land where they can just send a few low-ranking executives and a half-baked business plan, and hope to dominate the market very soon,” writes blogger Sherman So on technode.com.

China has seen a number of group buying sites develop in the past few years, so although Groupon is bringing an international brand name to China, it’s walking into an already cramped market space.

According to Tuan800, an online group coupon aggregator site, more than 1,000 group buying sites have been set up.

Dianping.com and RenRen, both major online players, have already launch 团购网 (tuangou wang), group shopping sites, but they're not alone in taking advantage of the tuangou wang trend. Other major portal websites such as Sohu, Sina and QQ.com have launched group purchasing deals for Chinese netizens.

“Groupon will soon join its peers as one more Western Internet companies failed in China,” writes So. “Thinking about it, that is not too bad. At least it is among some of best-known names in the world, such as Yahoo, Google, eBay, etc.”

Tuangou wang fighting for survival

Groupon will soon join its peers as one more Western Internet companies failed in China. Thinking about it, that is not too bad. At least it is among some of best-known names in the world, such as Yahoo, Google, eBay, etc.— Sherman So, technode blogger on Groupon China's launch

Since the barrier to entry for group online buying sites is quite low in China -- People.com.cn reported that building up a Chinese groupon clone costs no more than RMB 10,000 of initial capital investment -- it's no wonder the landscape is already full of competitors. 

With little investment required, many of the mainland group buying sites being slapped up online are almost exact copies of the original U.S.-based Groupon site, with minor innovations for local consumers.

The only difference now seems to be who can provide the most attractive deal to the customers, and Goapeng's 30 percent might not be enough.

“The competition between Chinese groupon websites is not about the products they provided but the resources they have,” says Kai Hongyan, marketing manager of 58tuangou.com website. She predicts that in the next one to two years, a number of Chinese groupon sites will die off and only a few larger ones will remain.

Some people are already taking advantage of the deluge of sites, creating aggregator group buying websites, such as Letyo.com, which in addition to compiling deals from the dozens of tuangou wang, the platform allows customers to vote for the best deals, capitalizing on the social networking nature of the sites.

Voting often serves as a way to weed out small and medium sized groupon sites, giving the larger sites more room to thrive.

A long way to go

The fierce competition is not the only concern regarding Chinese group buying sites. The biggest problem they face is the quality of the services provided by the merchants they work with.

Beijing Consumer Council has reported that they receive dozens of complaints regarding group buying  services/products in each month.

The main complaint? False advertising by merchants on the sites. With such a large number of Internet users in China moving to tuangou wang, numbers can also backfire on the companies.

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Netease recently reported that Nuomi.com had to compensate its customers RMB 500,000 because one of the merchants disappeared after the deal was sold out.

“It’s important to work with high quality vendors,” says Jeff Moger, CEO of Enjoy China that runs a similar online platform, enjoymeitian.com. “We say no to vendors all the time if we don't think they are a good vendor, with quality service.”

Although tech commentators are quick to point out the faults in how Gaopeng (高朋网) is starting up, local competitors still seem to have a long way to go on their own.