THE much-anticipated launch of United States group-buying giant Groupon Inc in China has left some Chinese puzzled and disappointed.
I count myself among them.
At my first visit on the new website, called Gaopeng in China, I was surprised to see that a mere 80 people had signed up to pay 88 yuan (US$13) for a 188 yuan worth voucher for a wine cellar in downtown Shanghai. A coupon for a body-shaping service, which was selling for 38 yuan but claimed to be worth over 1,600 yuan, had drawn only 50 takers.
There were, however, two separate discount offers in Beijing on Groupon - a voucher for an in-house hot spring and a discount coupon for a karaoke club - that sold out with just over 200 buyers each.
Keen to find discount deals at fancy local restaurants and small coffee shops in Shanghai, I constantly check local group-buying websites and have found that more than 10,000 offers sold out before noon for popular eating places like hotpot restaurants and hamburger joints. That's not unusual. And the number of deals Groupon has sold out was miniscule compared to some popular local group-buying websites.
Groupon, which is trying to break into a market where domestic group-buying sites are already popular, said it plans to expand its service to more than a dozen Chinese cities, but no timetable has been released.
Globally, the company operates in nearly 200 cities in 45 countries.
Discount deals, normally valid for only 24 hours, have been offered on hundreds of websites throughout the country since the beginning of 2010.
The group-buying model, initiated by Groupon in Chicago about two years ago, works on the premise that a retailer will offer discounts of up to 70 percent on a meal, a movie, an outing, a massage or some other service. The offer stands on a certain minimum number of takers. In other words, the concept transplants the "economies of scale" model long used in business to the consumer sector.
Gaopeng's success will rely heavily on how well it understands the Chinese consumer mentality. In the largest Internet market in the world, tastes and habits vary from one part of the country to the next.
Gaopeng translates as "eminent guests" - an initial sign that Groupon understands the subtleties of the Chinese culture at least a little.
The new company was co-funded by Groupon, Tencent and Yunfeng Ventures, a private equity firm set up by Alibaba Group chairman Jack Ma and Target Media founder Yu Feng to focus on opportunities in the Internet industry.
The popularity of group-buying websites took off from the start. By one count last September, there were more than 1,000 of the sites in China and the number was expected to grow.
Gaopeng's entry into the market was much anticipated, not because it partnered Tencent, the Internet firm with the biggest user base, but also because industry watchers are always fascinated about whether foreign companies will sink or swim in the Chinese market. The road to success is littered with failures.
Big names like eBay, Google and Microsoft have faced hurdles in adapting their services to a market where local counterparts like Taobao and Baidu have a head start and a deeper understanding of the consumer psyche.
Last December, Groupon acquired three group buying websites in Singapore, the Philippines and Taiwan.
In 2011, just its third full year in existence, it may surpass US$1 billion in revenue amid reports that it will seek to go public in the US.
Earlier this month, Gaopeng announced an online lucky draw, giving people who register their ID card numbers and mobile phone numbers the chance to win an iPhone 4.
That is an unusual, somewhat eye-catching gimmick for a company starting up business in China.
But consumers remain wary.