Instead of going for a run during my lunch break yesterday I decided to write an article about Groupon China. It was published on the Silicon Alley Insider last night, the original article is here. Make sure to also read the comments under the SAI article, and the update I just added at the end of this blog post.
It doesn’t happen often that a US Internet company enters the Chinese market with a huge budget, so when a company does this the Chinese media follow all the steps this company makes.
The media know that most non-Chinese Internet companies eventually fail spectacularly, so a good story is almost guaranteed. Groupon seems to be doing its best to become part of the infamous group of companies like EBay, Google and Yahoo.
In January stories surfaced saying that Groupon wanted to enter China by investing hundreds of millions of dollars, which is a good way of attracting press. Then rumors about a potential joint-venture with Tencent (one of China’s biggest Internet companies) were reported, and these turned out to be true. Many people including myself thought this would be a smart strategy to enter the market and gave them the benefit of the doubt. But things have changed a lot since.
First came the news that Groupon China’s
Groupon approached us for a nationwide deal to be offered by one of my companies. After explaining to them on several occassions that under certain conditions their business model and the possibilities it offers for us could be interesting (of course also taking into account the terms that makes Groupon successful, i.e. offering a true bargain), they persisted on doing it completely their way without taking into account our interests. So we thanked them for their interest, but no deal. Then they contacted us again for one more discussion on the topic with one of their senior account managers who ‘surely would be able to explain to us why this deal also would be good for us’ and in walked a 28-year old German MBA graduate who did not listen whatsoever to our arguments and just started some uninteresting monologue explaining that the only chance for us to do the deal would be to accept their terms. It was very funny and this ‘ambitious and aggressive’ approach for sure does not work for us, so once again we waved them goodbye. Obviously this approach is not perfect for the European market either. Anyway, after a couple of days we were offered a deal by a local junior account manager of Groupon who had a completely different approach (matching our ‘culture’ of doing business) that also takes into account our interests and we will have some nationwide deals with Groupon after all in the next months.