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Thursday, August 25, 2011

Groupon China Is A Disaster

Great list of what Groupon did wrong in China! The basic error I see is not understanding the market.

Groupon has made many of the classic mistakes that American Internet companies like to keep repeating in China, including but not limited to:


1. Picked the wrong partner (see Is Tencent The Wrong Partner For Groupon In China?);

2. Hired too many foreigners as top management. Foreigners are not all useless (writing as a foreigner who likes to think he is useful), but Groupon had far too many;

3. Staffed up way too fast; you can not efficiently hire hundreds/thousands of qualified Chinese employees in just a few months;

4. Focused too much on hiring bankers and management consultants. In China especially group buying is a very dirty feet-on-the-street, local sales game, and that requires a very different skill set than what you will find in your average consultant or banker;

5. Allowed a competitor to register Groupon.com.cn;

6. Have inadequate financial controls that have contributed to the losses and probably enriched some, just not the main Groupon and Gaopeng shareholders;

7. Mishandled layoffs, leading meaning potential Chinese job candidates to believe that Gaopeng is a toxic company.

From:

Groupon China Is A Disaster -- Will The Company Just Give Up? - Business Insider
My guess is the decision to go into China was more about showing the "huge growth" Groupon has for the IPO.  Similar on why Home Depot tried to go into China (growth), and also failed.

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