Groupon teams with Tencent for China unit

Faith Merino · February 28, 2011 · Short URL:

Groupon announces its new Chinese division: GaoPeng

After weeks of speculation, the facts emerge: Groupon CEO Andrew Mason announced Monday that Groupon has teamed up with Tencent Collaboration Fund and Yunfeng Capital to launch in China. The site will begin offering deals in Beijing and Shanghai in March. 

"As the pioneer of the space and the market leader in over 40 countries, we’re pleased to share our learnings with the GaoPeng team and bring a Groupon-quality customer and merchant local e-commerce experience to Mainland China," Mason wrote.

Reports of Groupon's China venture have been bubbling on the Web for weeks, with reports emerging earlier this month that Groupon would be opening its doors in China with 120 employees and plans to leap to 1,000 in its first three months. Danny Yeung, CEO of Groupon's Hong Kong branch, made the announcement some two weeks ago, stating that Groupon has entered into a "joint venture" with another company and will begin servicing Chinese subscribers "very soon." He declined to state, however, which company Groupon had partnered with. 

Chinese blog reported in January 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 earlier this month when it acquired a majority stake in online social gaming company Riot Games for $400 million

Reports surfaced not long after to point to friction between the two companies, as the hiring was apparently a mess and there was little cultural attention being paid to the fact that the Chinese unit was being overseen almost entirely by foreigners, which was becoming an issue.

Groupon also faces the glitch of trying to establish its presence in an already crowded Chinese market, where group-buying platforms originated long before Western countries caught onto the phenomenon. In China, the concept of group-buying got its start years ago in the form of in-person group gatherings, in which gaggles of people would swarm on a business to demand price cuts on goods. 

Furthermore, sites like, Youa Tuangou, and 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.

Groupon currently operates in more than 40 countries and reports emerged Friday that the company's 2010 revenue was an eye-popping $760 million. 

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