Groupon coming to China

Lets look at some facts about this business …

Twitter took 3 years to hit a USD$ 1 billion valuation, Facebook with 2 years and Groupon broke the record with a year and a half. Groupon was the craziest Internet companies in history and its simply because it has a damn good business model where revenues come in from almost day one.

There are many Groupon copycats in China. Market resource said there were already over 100 but I think the number exceeds 500 personally. The market is already overheated and going much crazy than anyone had expected, I have staff that do “grouponing” ( tuan gou ) daily looking for good offers and asking everyone at the office to buy along. Even my expat partner is doing the “tuan gou” looking for top spa to take his girlfriend every month. Some have raised a large amount of money from VC and is preparing to forge ahead into every big city in China. The Chinese market is big enough for “tuan gou” style of business given the many cities each company would need to cover so there are many opportunities available especially when the business model is basically about:

1.) Cheap price
2.) Best and variety of offers
3.) Ability to ensure that vendors honors the package

However we cant say that “Grouping” is a copycat business model from the West like YouTube and Twitter as “Group Purchase” ( Tuan Gou ) is hugely popular in China especially in Home improvement/Home decoration market where thousands of people got connected online and buy the same products together in street shops in order to get a good bulk-discount. TG.com.cn is reaping as much as RMB 50 million after-tax income and is already getting ready for IPO next year.

Groupon style represents a new method of the old method in the “tuan gou” system.
There is a news on Donews - http://www.donews.com/original/201010/236202.shtm ( Chinese ) which state that Groupon’s business development director have held several meetings with five popular Chinese Groupon clones, Meituan, FTuan, Lashou, Aibang and QQTuan. The news says Groupon met these clones one by one and the detail of each meeting can not be disclosed due to an NDA signed by each party.

An insider said Groupon’s visit to China this time had two purposes, firstly to understand the local market and local regulation; secondly to look for the right local partner. Groupon will likely follow the same strategy when it entered Japanese market - acquire one local clone.

Which one will be the super lucky clone to be acquired by Groupon?

However if Groupon decides to kick start the business themselves in China and send in a group of Western professionals that will almost equals to digging their grave here in China.

*NOTE : Love this business and was infact looking at it since Groupon started but did not proceed as I still believe in being professional and an expert in a field I'm more familiar with. However I had a friend whom just keeps starting what-so-ever that is hot in the US in China by just mimicking exactly the business concepts. He did pretty well too so far !