China group buying sites fight Groupon's alleged poaching

Local companies will refuse to hire back workers if they leave for Groupon, one staffer said

Group buying sites in China are vowing not to re-hire employees who go to work for Groupon, as a way to prevent the company from poaching their workers, according to a staff member at one Chinese group buying site.

Groupon has yet to officially announce any moves into mainland China. But the Web has been stirring with reports that the company is actively hiring workers to lead a Chinese version of its deal-of-the-day site.

Groupon has employed ten head-hunting firms to hire workers from other group buying sites, said Xu Yan, a marketing employee at Ftuan.com, a popular group buying site in China. Groupon is "competing unfairly" in hiring, he added.

Chinese media reports said 20 leading group buying sites, including Ftuan.com, had adopted the strict measure as a way to fend off Groupon's entry into China. Several of the sites, such as Lashou.com, Manzuo.com, and Kutuan.com, did not return phone calls to be interviewed.

Groupon also did not respond to e-mail messages or phone calls.

Other group buying sites in China have not taken such a strict stance against Groupon. "We are open to hiring anyone. We just want the best," said Wang Wenshuo, the director of operations for Shuangtuan.com.

Still, Groupon will face many difficulties if it wants to enter the China market, Wang said. "We aren't really worried about Groupon," he added. "The China market is very different. The culture and the Internet habits are all different. So it will take longer for them to adapt themselves to fit China."

Group buying sites work by offering discounted deals on a variety of products, including restaurant meals and movie tickets. Once enough people buy into the deal, the discount is then given to all those who participated.

China's Internet market, with more than 457 million users, is already crowded with group buying sites that use business models similar to Groupon's. Last year, the first of those sites was launched in China, and the number has grown to more than 1,000, according to Chinese research firms.

The explosion in group buying sites has led more than 18.7 million Chinese Internet users to frequent the sites, according to the China Internet Network Information Center.

China's Tencent, one of the country's largest Internet companies, reportedly is in talks with Groupon to launch a China venture. Tencent, which is most popular for its instant messaging service, has said it does not comment on rumors.

China represents a major potential market for Groupon. But other overseas Internet companies, such as Google, Amazon and eBay, have struggled to succeed in the country. Local Chinese firms have risen to become dominant in China's Internet market.

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Michael Kan

IDG News Service
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