Groupon’s China Firesale

  • Posted by
  • on April 19th, 2012

Pando Daily has a summary of what looks to be the final deal for Gaopeng, Groupon’s ($GRPN) disastrous China venture. In Groupon’s China Effort Takes Another Slap in the Face the Pandos write that:

It has been well established that Groupon sucks in Chinabadly. Now, as if we needed it, we have further confirmation. Gaopeng, the daily deals company’s joint venture with Chinese Internet giant Tencent, is going to merge with a similar service FTuan before the end of next month.

Chinese tech blog Tech Node reports that the move shows Tencent is asserting its control over the money-losing venture. As it happens, Tencent is also an investor in FTuan, which effectively competes with yet another Tencent-owned daily deals service called QQ Tuan, which leverages the company’s 700 million instant-messenger users. Like Gaopeng, FTuan’s fortunes have been waning in recent months, with the service slipping out of the country’s top-10 deals services last October.

Tencent has apparently been dissatisfied with the way Gaopeng is being run, so it will transfer its stakes in the Groupon-led effort to FTuan, leading some Gaopengers to worry about losing their jobs in the likely event of downsizing. At last year’s TechCrunch Disrupt Beijing, Tencent founder Pony Ma was less than glowing about Groupon. In response to Sarah’s question about the company, Ma said “I don’t want to speak ill of a partner…” before going to say that in general it has proven that the Chinese market is vastly different than America’s.

Last July Groupon valued Gaopeng at 500 million dollars in a transaction to buy out much of the Samwer brothers’ stake. How on earth did they arrive at the valuation, and which accountant signed off on that absolutely ludicrous number?

Follow me on Twitter @niubi or Sina Weibo @billbishop.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Digicha Blog