No Bargains in China for Groupon.com?

By George Chen
February 7, 2011
As the world’s No.1 daily deals website Groupon.com, which Google once tried to acquire for $6 billion, prepares for the launch of its China portal, it has apparently run into trouble finding the right URL to bring its service to the hundreds of millions of potential Chinese consumers.
Chicago-based Groupon.com has opened an office in Shanghai and hired a team to help it launch its China portal as soon as possible, according to people involved in the plan. However, even before getting the wheels properly in motion, it has encountered in an unexpected and uncomfortable  hurdle – both Groupon.cn and Groupon.com.cn, its first and most obvious choices for a local web address, have already been snapped up by a Groupon.com copycat.
According to cnnic.net.cn, China’s internet watchdog and web domain regulator, both addresses are owned by Chinese national Ren Chunlei. Local media described Ren as the CEO of Groupon.cn, which claims to be China’s No.1 group purchase site.
A quick visit to Groupon.cn shows that it’s almost identical in layout to the front page of Groupon.com, although the two sites have no official connection. They are two independent companies – one a U.S. company headquartered in Chicago, the other a Chinese company based in Beijing. The domain Groupon.com.cn takes you to the same Groupon.cn site.
In the “About Us” section, the Chinese copycat apparently makes no effort to hide the fact that it started its online daily group purchase business in China using exactly the same business model as Groupon.com. “On Feb. 18, 2010, taking Groupon.com as a reference and combined with our own experience, we decided to launch the group purchase project,” the company says.
In December, Groupon.com acquired three deal websites in Asia – Hong Kong-based uBuyiBuy, Singapore’s Beeconomic and Taiwan’s Atlaspost — expanding its reach across East and Southeast Asia. Now you can access the three local sites, already part of Groupon.com’s global online shopping network via the three local domains: Groupon.hk, Groupon.sg and Groupon.com.tw.
One natural scenario could be that Groupon.com acquires the Chinese imitator and obtains ownership of the two Chinese domains, but people familiar with the situation said this was unlikely given the potential valuation of such a deal. On the other hand, Groupon.com has a China partner – Tencent, which runs China’s most popular instant messaging provider QQ, so it doesn’t make much sense for it to acquire or tie-up with another Chinese company.
Protection of intellectual property rights (IPR) has grown to become a core issue in U.S.-China economic relations, and Chinese President Hu Jintao vowed to make more progress in the field during his recent state visit to the United States.
Groupon.com is actually not alone. In the wake of the rapidly growing popularity of the world’s No.1 social networking site Facebook.com, more than a dozen copycats emerged in China, including renren.com, now the No.1 social networking site in a country where access to Facebook is blocked by the government. Fortunately, Facebook successfully registered the Facebook.cn domain as early as in 2007, showing that the U.S. internet giant certainly remains interested in the Chinese market.

groupon

By George Chen
The opinions expressed are the author’s own.

As the world’s No.1 daily deals website Groupon.com, which Google once tried to acquire for $6 billion, prepares for the launch of its China portal, it has apparently run into trouble finding the right URL to bring its service to the hundreds of millions of potential Chinese online consumers.

Chicago-based Groupon.com has opened a China representative office and hired a team to help it launch its China portal as soon as possible, according to people involved in the plan. However, even before getting the wheels properly in motion, it has encountered in an unexpected and uncomfortable hurdle — both Groupon.cn and Groupon.com.cn, its first and most obvious choices for a local web address, have already been snapped up by a Groupon.com copycat.

According to China’s internet watchdog and web domain regulator, cnnic.net.cn, both addresses are owned by Chinese national Ren Chunlei. Local media described Ren as the CEO of Groupon.cn, which claims to be China’s No.1 group purchase site.

A quick visit to Groupon.cn shows that it looks very similar in layout to the front page of Groupon.com, although the two sites have no official connection. They are two independent companies — one a U.S. company headquartered in Chicago, the other a Chinese company based in Beijing. The domain Groupon.com.cn takes you to the same Groupon.cn site.

In the “About Us” section, the Chinese copycat apparently makes no effort to hide the fact that it started its online daily group purchase business in China using exactly the same business model as Groupon.com. “On Feb. 18, 2010, taking Groupon.com as a reference and combined with our own experience, we decided to launch the group purchase project,” the company says.

In December, Groupon.com acquired three deal websites in Asia — Hong Kong-based uBuyiBuy, Singapore’s Beeconomic and Taiwan’s Atlaspost — expanding its reach across East and Southeast Asia. Now you can access the three local sites, already part of Groupon.com’s global online shopping network via the three local domains: Groupon.hk, Groupon.sg and Groupon.com.tw.

One natural scenario could be that Groupon.com acquires the Chinese imitator and obtains ownership of the two Chinese domains, but people familiar with the situation said this was unlikely given the potential valuation of such a deal. On the other hand, Groupon.com has a China partner — Tencent, which runs China’s most popular instant messaging provider QQ, so it doesn’t make much sense for it to acquire or tie-up with another Chinese company.

Protection of intellectual property rights (IPR) has grown to become a core issue in U.S.-China economic relations, and Chinese President Hu Jintao vowed to make more progress in the field during his recent state visit to the United States.

Groupon.com is not alone. In the wake of the rapidly growing popularity of the world’s No.1 social networking site Facebook.com, more than a dozen copycats emerged in China, including renren.com, now the No.1 social networking site in a country where access to Facebook is blocked by the government.

Fortunately, Facebook successfully registered the Facebook.cn domain as early as in 2007, showing that the U.S. internet giant certainly remains interested in the Chinese market.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: Screenshots of the two websites, Chicago-based Groupon.com (left), and Beijing-based Groupon.cn, as seen on Feb. 7, 2011

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