The move comes right after the public backlash over Groupon's Tibet ad
After much speculation about the prospect of a Groupon China, the group-buying giant has finally landed. Reports emerged Thursday that Groupon is finally opening its first Groupon China office with 120 employees to start with, but has plans to expand its headcount to 1,000 in the next three months.
Danny Yeung, CEO of Groupon's Hong Kong branch, made the announcement Thursday, stating that Groupon has entered into a "joint venture" with another company and will begin servicing Chinese subscribers "very soon." Yeung declined to state which company Groupon has partnered with, but in January, Chinese blog DoNews.com reported that Groupon was partnering with Tencent and the two companies will be 50/50 shareholders.
Tencent is the third largest public Internet company in the world and made headlines last week when it acquired a majority stake in online social gaming company Riot Games for $400 million. Neither Groupon nor Tencent could be reached for comment.
Groupon's new Chinese unit will be competing in a very crowded space, as China already has a vibrant group-buying market. China's collective-buying movement began long before the U.S. caught on. Initially, the movement began as a collective of people who banded together at a specific time and place and then marched to the store where they wanted a deal. The spending power of the group meant they had the leverage to demand steep discounts.
Sites like Lashou.com, Youa Tuangou, and Meituan.com currently serve up the discounts in China, so Groupon will be relying purely on its brand to cut through the noise and dominate the market in China the way it has everywhere else.
It's worth noting, however, that the move comes shortly after Groupon got into hot water for a Super Bowl TV ad that appeared to mock the human rights crisis in Tibet. Andrew Mason has since apologized for the ad's apparent insensitivity, but Groupon's move into China isn't likely to help the situation.
Image source: mayoseitzmediamonitor.com