Groupon Spars with Tencent; Joint Venture Isn't Inspiring Local Confidence

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There’s trouble in Tencent and Groupon’s China group buying joint venture, Gaopeng.com, according to press reports from China. Apparently the site went up for a day, Tencent balked and pulled it back down. Beyond that, people tell us the operation is pure chaos: Rapid hiring, little due diligence and money being thrown around. The biggest gripe: It’s almost entirely run by foreigners.

It sounds like exactly what you’d expect based on this hiring ad, we printed a few weeks ago. It boasts of near-infinite funds, goals to hire 1,000 people by March and an emphasis on consultants and MBAs– not people versed in the local market. Chinese language skills aren’t even mentioned in the ad.

It’s easy to say this is just another botched joint venture and another arrogant US Internet company swaggering into China, thinking its brand name and wads of cash will bridge cultural gaps. Given the track record of US companies entering China, it’s actually hard to say anything but that. I hope Groupon realizes that it needs Tencent to navigate China a lot more than Tencent needs Groupon to build a big group buying site. Tencent is already hedging its bets with a QQ group buying product and an investment in a Yelp clone called Aibang.com.

If the German Groupon unit running the show doesn’t get the realities of how much it needs the cooperation of Tencent and buy in of locals– the Chicago office needs to step in ASAFP. The market moves quickly in China and you don’t get a second chance once you’ve blown it.  These are problems that near-endless cash don’t solve.

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