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2/28/2011
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Groupon Launches Group Buying Portal In China

The daily deal company is partnering with Tencent and Yunfeng on GaoPeng.com, hoping to take advantage of a market that could reach $2.4 billion by year's end.

Groupon is partnering with China's largest Internet service portal, Tencent, and private equity firm Yunfeng to launch GaoPeng.com, a group-buying portal for consumers in China.

The new site, unveiled on Sunday, is now accepting email registrations from local shoppers, and area merchants' daily deals will debut in March, according to Beijing-based GaoPeng. At first, the service will cover Beijing and Shanghai, but the company plans to expand into other major Chinese cities, said GaoPeng, in a statement.

"Groupon is a recognized brand name with excellent operational and sales execution capabilities," said Yun Ouyang, head of GaoPeng, in a statement. "GaoPeng will learn from the international group-buying experience of Groupon while focusing on the local market in China. We are committed to catering to the local and diversified shopping needs of local customers and to the business needs of local merchants. GaoPeng aims to introduce a sophisticated group-buying business model and an international service standard to the market. We hope to work together with other local group-buying portals to jointly develop this emerging market, which will ultimately benefit the consumers and merchants in China."

Internet service provider Tencent created the Tencent Collaboration Fund in January to fund Internet businesses and help accelerate their development and growth, according to the company.

"The Fund will provide capital for the continued innovation of partner companies which will spur the development of more quality services for the Internet users and enhance the long-term value of our platforms," said Martin Lau, president of Tencent, in a statement at the fund's launch. "Through these efforts, we aim to support the development of a healthy ecosystem which benefits the users, innovative companies, our open platforms, and the Internet industry as a whole."

For its part, Yunfeng Capital raised about $1.52 billion in January to invest in Internet, consumer, and new energy firms in China, chairman David Yu said in a statement in January. One of these investments was made in Tencent, Yu told Reuters in January. Terms were not disclosed, however, the minimum investment for the initial phase was $10 million, Yu said. Alibaba Group Holding's chairman Jack Ma founded Yunfeng Capital in April 2010, along with Giant Interactive Group chairman Shi Yuzhu, New Hope Group chairman Liu Yonghao, and China Dongxiang chairman Chen Yihong.

"We are excited to be in China collaborating with a leading Internet company and highly respected business leaders," said Andrew Mason, founder and CEO of Groupon.

Groupon is available in more than 40 countries, said Mason in a company blog. Since opening its doors in November 2008, Groupon has expanded into many parts of the world including Australia, Russia, and Japan. The company has regional offices in both Europe and Latin America, said Mason. The company is speeding-up the hiring of managers who can help it expand abroad, Bloomberg reported on Feb. 16, citing two people involved in the planning.

It's understandable why the company has turned its eyes to the East, even though Chinese consumers already have group-discount options from sites such as Lashou.com and Meituan.com. Last year, Chinese shoppers spent $78 billion in online retail sales, the Xinhua News Agency reported. By 2013, online retail sales are expected to double, according to a January report by Xinhua. Daily deal site transactions could account for more than $2.4 billion in sales by year-end, according to group-buying search engine Tuan800.com, the Wall Street Journal reported.

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