More Staff Cuts at Groupon China?

A couple weeks ago, Chinese tech media reported the Groupon China (Gaopeng.com) had made significant cuts — 25 percent of its staff — and rumors were flying that the company was out of cash. Groupon’s head of PR in the UK contacted Penn-Olson with regard to the July cuts, clarifying: “We’re not laying anyone off in China, but terminating some employees for underperformance.”

But today, Chinese media are again reporting that Groupon China has cut staff. According to Sina Tech, nearly 100 Groupon China employees received sudden employment termination notices from the company late last week, and that was just in the Shanghai office. Nationwide, they estimate that as many as 1,000 employees may have been cut over the past week. But the Global Times cites a laywer for some of the laid-off workers who says that “at least 350 workers” were laid off, so 1,000 may be a bit high. In a separate article, Sina Tech reports the layoff numbers as being “over 400.”

That Sina Tech report and the lawyer quoted in the Global Times, Zhao Zhanliang, both also said that 13 Gaopeng.com branches had been shuttered completely.

However, most of the cut employees were offered two months’ severance pay, according to former Groupon China worker known as “Ace” who spoke with a reporter. This agreement came, however, only after a number of them showed up at Groupon’s offices on Monday demanding a fair severance package after their sudden and unexplained firing late last week.

“Ace” — a source in the article posted on Sina Tech — says he was called into the HR office and directly asked to sign termination papers, format his computer, and delete his fingerprint from the system. The whole process took less than ten minutes, and no reason for the sudden termination was given.

Groupon’s spokespeople in China have thus far refused to comment on these reports, but we’ve reached out to Groupon UK and US PR representatives to see if they can offer any confirmation or clarification.

If the reports are true, this is certainly a dismal sign for Groupon’s future in China. Tencent, Groupon’s local partner in the Gaopeng.com joint venture that is Groupon China, could certainly help out, but they don’t seem to be, for reasons that remain unclear.