Groupon's Chinese site begins offering online deals

Groupon is partnering with Chinese Internet firm Tencent to break into the country's group buying market

Groupon's China site at GaoPeng.com began offering discounted deals to online buyers on Wednesday, as part of the company's push to break into the country's group buying market.

GaoPeng.com currently offers discounted deals in Beijing and Shanghai, operating with the same business model the company used in the U.S. to make group buying popular.

One of the first deals GaoPeng offered in Beijing was a discount at an indoor hot springs resort that was about 75 percent off its original price. More than 1,400 people had signed up for the deal by early Wednesday evening.

Groupon launched its GaoPeng site at the end of February, as a joint venture with Chinese Internet giant Tencent. Tencent is the operator of the country's most popular instant messaging service QQ, which has 647.6 million active accounts. When registering to buy a discount deal at GaoPeng.com, customers can easily sign on using their QQ account number.

Group buying is a form of e-commerce that works by offering attractive deals on discounted products and services like restaurant meals or even photography courses. The discounts, however, are only offered if enough users decide to buy into the deal. Once the threshold is reached, the discount is given to all those who participated.

While Groupon has become the leader of the group buying trend in the U.S., the company is only just beginning to start its operations in China. The country has the world's largest Internet population at 457 million Internet users.

The company will have to compete in a market already filled with rivals that have taken Groupon's business model and made it their own. The country already has 3,238 such sites, all of different sizes and scope, according to Tuan800.com, which aggregates group buying sites in China.

GaoPeng's website so far has little difference with other local Chinese group buying sites, said Hu Chen, a co-founder of Tuan800. This is because the majority of the domestic sites in China were all following Groupon's example when it became popular in the U.S, he added.

"I can already see GaoPeng's efforts to localize the platform," Hu said, noting the choice in the discounted deals, as well as the way GaoPeng has been holding drawings to award Apple iPhones to registered followers of its Chinese microblogs.

"GaoPeng has paid a lot of attention to luring users. In the past two weeks before deals were being offered, the site was always encouraging users to register," he said. "The bigger challenge is how will it establish a good reputation within China's wide-ranging group buying market."

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