Groupon China Launching Soon: Who will be the Winner?

Danny Yeung, CEO of Groupon Hong Kong told Bloomberg that Groupon will “very soon” start service in China.

The expansion is made possible through a joint venture with Tencent. Groupon has already hired about 120 employees in China and is looking to hire up to 1,000 employees in the next three months.

“We want to dominate the market in China,” said Yeung, who is going to play a role in Groupon China’s operations.

Personally, I can’t wait. It’s exciting time ahead to witness how Groupon will fare in China. One of its biggest success drivers would be Tencent, which has deep knowledge in the Chinese Internet market. On a fair note, Tencent would love to break into the e-commerce market through this Groupon partnership. It’s a win-win situation. Both companies understand that it is better to earn a slice of China’s e-commerce market than having nothing at all.

There will be resistance. Jack Ma, Chairman of Alibaba Group will fight to ensure Alibaba owns every piece of China’s e-commerce market. Last year, its group-buying site Ju Hua Suan, had more than 5 million users who bought from the site, which recorded $30 million in sales. The highest transaction recorded in a single day was about $4.6 million, which happened before Christmas on 21 December 2010.

Groupon.cn, which claims to be the largest group-buying site in China is also a strong competitor. The Groupon clone has so far recorded more than 7 million users and helped users save over $1 billion through its service.

E-commerce in China has grown rapidly and is a lucrative industry to be in. A recent report by iResearch stated that e-commerce now contributes 35.5 percent of China’s US$7 billion Internet economy. With Groupon China entering the market, it will intensify competition and improve overall services. The customers are the big winners.