Group-buying service Groupon is an “advanced talks” with Chinese Internet firm Tencent. The subject of the talks is a partnership that would let Groupon enter the Chinese market through a co-branded joint venture with Tencent, according to AllThingsD. Tencent operates China’s dominant social network and the QQ IM messenger, which monetizes through sales of virtual goods and currency. It’s not clear if a Tencent-operated Chinese Groupon might somehow involve use of QQ coins.
Tencent is also trying to break into the general ecommerce market, recently launching an online retailer called Peipei that competes directly with Chinese industry leader Taobao, so a partnership with Groupon would make sense. Groupon typically enters international markets by buying local Groupon clones and changing the branding, a method that worked for getting Groupon into Hong Kong (by acquiring uBuyiBuy) and Taiwan (by acquiring Atlaspost). Mainland China is notoriously difficult for foreign firms to succeed in without a local partner, though.
Part of the difficulty comes from how efficiently Chinese firms can clone popular US-based Internet brands, while tailoring them successfully to the needs of Chinese users. There’s already one unaffiliated Groupon clone active in mainland China that actually calls itself Groupon.cn. The Chinese government overwhelmingly favors native-run companies, making it difficult for foreign firms to take action without a local partner. It’s possible Tencent could crack down on Groupon clones where Groupon itself couldn’t.
There’s also an investment connection between Tencent and Groupon. Roughly five percent of Groupon is owned by Mail.ru and Tencent was one of Mail.ru’s major investors before the Russian firm’s recent IPO. Digital Sky Technologies also invests in Groupon and is headed by Mail.ru Chairman Yuri Milner. Tencent partners with foreign firms routinely, especially as a way of bringing new services or content to audiences in mainland China. Tencent will publish Crytek’s freemium MMOFPS Warface and also plans to publish its own QQ-branded Android smartphone.
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One Response to Groupon May Partner With Tencent To Open Chinese Market
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A few points / questions: What does Tencent gain from having Groupon as a partner? Could not Tencent do it on their own and use QQ coins for payments? In other words, why pay / partner when you can do it for free, or at least inexpensively, yourself? Perhaps, the proposed partnership is sufficiently lopsided to make it attractive to Tencent.