I confess. I love tuangou (团购 Chinese for “group buying”) and frankly, how could you not? A four-course Cajun dinner with wine for two people only cost 116 RMB, one third of its original price. A movie ticket in a downtown cinema can be purchased for less than half what it would cost to walk up to the ticket window. Once you get a taste of it, you just cannot stop. Or maybe it’s just me. I’ve always loved shopping. And sales. And online stuff. Basically, I am a group buy website’s dream demographic – a professional urban Chinese girl with a decent salary and an eye for bargains.
And apparently I’m not the only one. Within the last year, over a thousand Groupon-style websites have opened in China. They provide deals on everything you need in life (and some of the things you don’t need, but want to buy anyway), from delicious meals in fancy restaurants to imported high-end makeup products, to hotel rooms in nice resorts to cameras and electronic equipment.
For me, surfing the tuangou websites is like opening presents at the Christmas, except it happens every day and you can choose what you want and skip the ones you don’t like. So the excitement brings me back to those websites several times a day to seek the most irresistible deals
Recently, I saw that Groupon, the American company who popularized this kind of deal-of-the-day website, would invest in the Chinese market and cooperate with the Chinese company Tencent, who are themselves one of the most popular web portals in China.
It should be great news for consumers like me. After all Groupon is an international company with lots of experience and a reliable reputation. However, in February things started looking bad for Groupon’s China adventure.
First, during this year’s Super Bowl (which my husband tells me is hugely important for football fans, advertising executives, and gambling junkies) Groupon released an unbelievably stupid advertisement which provoked both Chinese nationalists and Pro-Tibet groups. Then, the sudden opening — and even quicker closing — of the joint venture, Gaopeng.com, suggested that the marriage between Groupon and Tencent was less than harmonious. Furthermore, according to Tech Crunch, Groupon will hire 1000 employees by March as well as several consultants and MBA-types who apparently lack sufficient Chinese language ability and experience working in China to alleviate the concerns of JV partner Tencent. The latest news has been that Oliver Samwer, who runs Groupon’s international operations in Berlin, flew to Beijing on this week to clean up the mess. Groupon has had a very bad start indeed.
I argue that Groupon’s problem is its arrogant attitude. It had no sense of political sensitivity of certain issues for Chinese consumers. Its inefficient internal coordination and its lack of effective communication with its Chinese partner put them in an embarrassing situtation. It ignores advice from Tencent, and their management team doesn’t seem to have the experience necessary to really get in touch with Chinese consumers.
As a Chinese tuangou veteran, I suggest that rather than paying expensive salaries to MBAs, they should listen to what their partner say about Chinese market. They should find out what young urban people with money to burn wish to burn it on.
Have you ever seen an old Chinese woman buy vegetables at a morning market? Consumers in China are tough and persistent. We like to bargain and we are good at it. Most of us don’t care about the background of the company. (Even though Groupon is well-known abroad, for Chinese consumers, it is just another group buy website). I personally only care about the best value and reliable service.
Especially after cooling down from the original frenzy one year ago, many consumers, like me, have become very cautious when they purchase group buys because they know that many websites have difficulty ensuring quality control at the restaurants, shops, and salons who advertise these deals. Nowadays, using tuangou has become a very complicated procedure. I first look for the deals that I am interested in, then I make sure the tuangou websites that I purchased from is well-known and has a service phone number to call if there are disputes between the restaurants and me. I also check the restaurant’s reviews on dianping.com or fantong.com to see whether the restaurant’s service and food are consistent. If some restaurants always have deals on tuangou websites, I would pass them up as well, because it it makes me think that their normal business is so bad that they have to rely on cheap food to survive. (Two of the most dangerous words in food service: “Discount” “Sushi”)
As I said, there are many tricks in this newly growing industry, and I am highly skeptical that foreign MBAs who are less than fluent in Chinese will be able to succeed in this already highly developed and competitive marketplace. Guo Quji, one of the founders of Google China, predicted that Groupon China will be a total failure. I am afraid that if Groupon doesn’t change its attitude, Guo’s words may come true.
Until that day comes, I’m going back online and checking out restaurant deals for Saturday night…