Groupon launches China site at Gaopeng.com

Groupon has long been expected to launch in China as it looks to tap into the country's group buying market

Groupon has finally launched its China site at GaoPeng.com, following weeks of reports and speculation on how the U.S. company was going to enter the country's burgeoning Internet market.

The site was operational Monday morning, although it currently offers no discounted deals. Users can only sign up to subscribe to the site's email newsletters. The site advertises discounts that run from 50 to 70 percent off. In English, its name can be translated as "friend in a high place."

The company is hoping to tap the new e-commerce trend in China known as "group buying", which it helped popularize in the U.S. Group buying works by offering a range of discounted deals on restaurant meals to even clothing and health spa services. Customers can only obtain the deals, however, if enough users buy in. When the threshold is reached, the deal is given out to all those who participated.

China, with its 457 million Internet users, represents the next major market for Groupon. But competition is already fierce among local rivals. The country has more than 1,700 group buying sites. Even the China-based domain name Groupon.cn is already being used by another group buying site.

Until now, Groupon was quiet about its plans for China. The company had set up an office in Beijing that has been actively recruiting employees. There was also speculation that it was facing trouble trying to launch its services in the country because GaoPeng.com went online earlier this month, but then abruptly shutdown the next day.

Several Chinese group buying sites have also said they will not re-hire any employees who have gone to work for Groupon. The competitors allege Groupon has been poaching their staff through headhunting firms. Groupon has not responded to the accusations.

Other U.S. based Internet firms like eBay, Amazon and Google have also entered the China market, only to struggle to find the success they envisioned. Local competition and, at times, Chinese censorship laws have all been cited as reasons.

But analysts say Groupon may have made one smart move to better position itself in the China market. It is rumored that Chinese internet giant Tencent is Groupon's partner in GaoPeng.com. Tencent is most famous for being the operator of QQ, China's biggest instant messaging client with more than 655 million active accounts. The partnership would give Groupon a backer that understands the Chinese market, analysts say.

Tencent, however, has only responded by saying it does not comment on rumors.

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