Home Groupon’s Chinese Joint Venture Closes 10 Offices, Fires Hundreds, “Changes Strategy”

Groupon’s Chinese Joint Venture Closes 10 Offices, Fires Hundreds, “Changes Strategy”

Groupon’s Chinese joint venture Gaopeng is not doing so well. It has apparently closed 10 offices and fired at as many as 400 employees over the past three months.

Executives of the Chicago-based daily deals company, which is planning an IPO at some point, say changes are part of a shift in strategy and that that the company will now concentrate on middle-tier and upper-tier cities rather than the smaller cities in more distance reaches of the country.

Focusing on a larger city means the company will be participating in commercial exchange where the market is more developed and the people are more affluent. Beijing, Guangzhou, Shanghai – that’s where people spend the extra income. You have to wonder why Groupon even went to the lower tier cities. Though 87% of China’s population lives in so-called “third-tier cities,” things are already cheap there and it’s not particularly clear how effective the online sales methodology would do in cities where mass retail is not a Western invention.

This is not the first time Groupon has tripped up in the world’s largest consumer market. Remember Chinese bloggers’ response to that offensive Super Bowl ad? Yeah. Read some of the Chinese responses in that link.

All this being said, Groupon may be wise to backtrack and focus on the low-hanging fruit. It may have seemed like easy cherry-picking in the lesser developed markets, but it seems they went into it too fast, before the market had a need to be ready for daily deals.

According to reports, Groupon invested $8.6 million for a 40% stake in the GaoPeng joint venture in January. Chinese social networking behemoth Tencent Holdings Ltd. and private-equity firm Yunfeng Capital are principal investors in the strategy.

It does seem that Groupon can’t catch a break in the US, either. The company faces a lawsuit from a group of employees who claim that the company failed to pay them overtime.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.