Groupon’s China Ambitions are Chinese Ambitions

Groupon might be starting small in China, but they are Aiming to be a local brand.

Groupon launched its China site in March, amid a flurry of competition for the local daily deals and group buying approach (some cite competitors numbering in the thousands), but it did so in a smart way from a brand perspective – they launched as Gaopeng.com, which evokes a famous Chinese saying to gather honored guests.

All too often companies plan their launch into emerging markets, hoping to build a business using the same business model and brand which made them a hit in English speaking countries, without realizing the opportunity to adjust their marketing and product or company brand to fit local language and cultural perceptions.

While Groupon has started offering deals in 11 Chinese cities, it is greatly outnumbered by local rival, Lashou.com, which operates in more than 500 cities. It’s clear that Groupon’s business model is one which will thrive in China, as many companies have already proven, the question will remain if Groupon’s attempt at local branding is enough to gain market share in what is already proving to be a competitive online market in this space. Yet, a competitive market does mean growth is limited.

China’s Online Market Continues to Boom

We’re seeing evidence of this fact on many levels. A recent report by McKinsey & Company China highlights the expanding Chinese internet population, with an estimated six million new users jumping online every month, bringing today’s estimated population to between 420-450 million. By their estimates, China could have as many as many as 750 million people online by 2015, and that by 2012, an estimated additional 100 million people could be logging on to the internet via mobile devices, up from 233 million today. China has the largest number of mobile internet users in the world. Yet, despite these high usage numbers, the report also pointed out the fact that the covered “time spent online” metric for China still lags behind countries like the US, and even India.

 
A public offering on Wednesday of Chinese social network operator (and incidentally also the owner of a group buying site) Renren listed on the NYSE and raised USD$743.4 million dollars, despite the company reporting a loss for 2010.

China’s government, purportedly sensing the internet’s rapid growth in the country, also announced publicly the creation of a powerful new agency to supervise the internet, which will have still unclear implications to the current oversight structure of agencies and people involved today, as well as for the citizens and internet companies operating within China. Regardless of the final details and possible implications for the future, this change was announced with a rationale of supporting the fast-growing internet market in China.

LA Times: “Groupon enters a crowded market for deals in China”
Bloomberg: “Renren Surges on First Day of Trading”
ChinaDaily: “New rules to better regulate Internet industry”
McKinsey: “Understanding China’s Digital Consumers”
Source: McKinsey & Company

This entry was posted on Friday, May 6th, 2011 at 4:36 pm. It is filed under Brands, China, Internet and tagged with Brands, China, Gaopeng.com, Groupon, Internet, Lashou.com, Local Branding, McKinsey. You can follow any responses to this entry through the RSS 2.0 feed.