Layoffs and Closings for 55tuan; Group Buy in China Hurting

55tuan, one of China’s largest group buy sites, has become the latest to fall victim to large scale office closings and layoffs. Following in the wake of Groupon and the copycat site Groupon.cn, over the past few weeks 55tuan has closed its offices and/or laid off workers. Workers were cut in ten major cities (Nanjing, Jinan, Qingdao, Chengdu, Harbin, Dalian, Shenzhen, Tianjin, Wuhan, and Chongqing) and a total of 35 offices nationwide — many in those cities — were shuttered completely, and all workers were laid off. Shenzhen, for example, lost seven 55tuan sales offices and a communications office.

Early this week, disgruntled laid-off workers of the company even took to the streets in some places to protest the sudden and brutal layoffs, and customers were also decidedly unhappy, saying that coupons they had purchased from 55tuan were not being accepted by retailers, presumably because 55tuan’s offices had closed and would not honor whatever agreements they might have made with the vendors. And to top it all off, those vendors are also pissed at 55tuan because of as-yet unfulfilled agreements that have been ruined by the office closings, threatening that the company needs to fulfill its promises or forget ever coming back to sell in their area.

Of course, it’s possible that 55tuan fully intends to honor its promises but hasn’t had time to do so yet, given the holiday and the paperwork nightmare that I can only assume comes when you shut down dozens of offices more or less at once.

Former 55tuan workers protest their office closing

This round of layoffs was particularly brutal because for many employees, it came right before a seven-day national vacation that’s meant to be a time of celebration and fun. Instead, workers at 55tuan branches like the office in Shaoguan (in Guangdong) received email notices in the middle of the night before the first day of vacation saying that their positions had been terminated. Within a few days, the entire office had been cleared out.

These layoffs are the latest sign that China’s formerly red-hot group buy market is turning ice cold. Even having a significant market share — 55tuan had the second-largest market share in China in just August of this year — doesn’t help if you’re not making any money. This problem seems to have been compounded by the fact that many group buy sites went on massive hiring sprees and expansions that they apparently had no way of financing. How else can you explain the repeated brutal layoffs at Groupon China (regular staff cuts, says Groupon PR, but come on) or the over 80 percent slashings at groupon.cn?

Groupon China and the groupon.cn clone are, of course, smaller players in China’s group buy market, but 55tuan is — or perhaps we should be saying was — one of the big guns. These layoffs certainly don’t bode well for the rest of the marketplace, and nor does cooling consumer interest in the group buy model in general.

We told you back in August that winter was coming. And while there might not be wight walkers killing people yet (kinda scary, possibly NSFW), it’s definitely looking a lot like snow in the Chinese group buy landscape.

(Note: I’ll stop with the Game of Thrones references whenever group buy in China becomes easy and profitable. So, get used to it, people!)

[Via Sina Tech]