Groupon China launches after rumors of a bumpy start

Gaopeng.com, the joint venture from Tencent and Groupon, which offers group buying deals to Chinese consumers, has officially opened. The venture supposedly got off to a clunky start, with reports saying the site went live in mid-February for a day before being hastily taken offline, but now Groupon has officially launched the site.

Groupon is betting on having a strong local organization which it can leverage when trying to penetrate the notoriously difficult—but tantalizingly lucrative—Chinese market. Not only is Groupon partnering with two major Chinese investors, Tencent Collaboration Fund and Yunfeng Capital, but it is rumored to have a thousand employees working on Gaopeng.com by March.

There’s no word if Groupon’s army in China is in place, but in mid-February there was rumors of trouble. The report detailing Groupon’s effort said that the operation was chaotic, and, probably most importantly, not run by the Chinese. Tencent, China’s largest Internet company, is also rumored to be thinking about launching a group buying service of its own. And, Groupon’s aggressive expansion into China is seriously ticking off its Chinese clones, the local group buying sites such as Lashou, Manzuo and Ftuan. The companies are already working the market and are supposedly setting up an anti-Groupon union, banning Gaopeng.com employees from working with the Chinese sites ever again.

Granted, all this is hearsay so far, and some do believe that Groupon can succeed where many others, like eBay, have failed. For one, group buying is already a familiar concept in China, so it should be easier for Groupon to make its foray into a market where it doesn’t have to start from scratch in explaining its benefits for consumers or local businesses. Secondly, Tencent and Yunfeng Capital (founded by China’s leading e-commerce site Alibaba’s chairman Jack Ma) are excellent partners for Groupon.

Whatever the case, Groupon needs to play its hand very carefully if it wants to take on the Chinese market and come out on the winning side. Like the Hong Kong-based Samsung Securities analyst Paul Wuh said, “Discounts will always be popular but the question is, will Groupon be more popular than the other websites.”

Based in Beijing, China, Gaopeng.com is now accepting email registrations from Chinese consumers who will be notified on daily deals from local merchants, such as restaurants, gyms, home electronics retailers and so on. The service is initially covering Shanghai and Beijing before expanding to other major Chinese cities.

[Photo credit: futureshape]