Groupon Faces Fierce Competition in China

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Groupon clones are nothing new here, but the group-buying site might have been unprepared for how cutthroat its entry into China earlier this year might be.

To help get a better bearing on the market, Groupon partnered with Tencent -- China's second-largest Internet company -- and the pair launched But competition in China is fierce. There's even a Beijing-based copycat that usurped Groupon's English name. Though that may be the least of their problems.

While Groupon -- the Chicago-based one -- has caught on in China, consumers there aren't like consumers here. 

"The consumer [in China] doesn't really care who is who," Edward Yu, chief executive of Beijing-based Analysts International, told the LA Times. "As long as the browsing experience is good, the price is good, they don't care who is providing the service."

Also, unlike here, Groupon isn't the biggest name in the group-buying game. Gaopeng currently offers deals in 11 Chinese cities, while, operates in more than 500 cities.

China's Ministry of Commerce has called for the industry to be regulated more tightly -- there are horror stories of deals not being honored since they were fraudulently offered in the first place -- but apparently some of the deals are so appealing that customers don't mind the risk of being stung. The LA Times spoke with one young woman who was able to book a large karaoke room "for hours" for only $3.

Looks like Groupon will have to work harder and strategize effectively to stand out.

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