The tin line between failure and success

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The March Newsletter of the China Speakers Bureau is now online, with the latest news about our speakers and an overview of the corporate failings in China over the past month, while their markets keep on growing. We look over Groupon, BestBuy, Mattel's Barby, Home Depot, Apple and many more. When you have not yet subscribed, you can look at it here.

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If I were Groupon - Marc van der Chijs

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China Internet veteran Marc van der Chijs has a thorough look at the already sorrow state of Groupon's effort to enter the China market, together with the domestic giant Tencent. Things go from bad to worse. After Van der Chijs describes what has happened till now, he concludes:

If I were Groupon, I would seriously reconsider their current China market entry. If they want to enter fast they need Tencent, there is no way around it. But if they give themselves a bit more time there are other ways. They made the mistake of mainly hiring foreign managers and focusing in their recruitment drive on consultants and investment bankers with MBAs. That may work in the US, but that’s not what you need to be successful in China.

Marc van der Chijs by Fantake via Flickr

The article was original written for the Silcon Valley Insider. Last night Van der Chijs wrote is last update, and things look even worse now:

Last night an article on the Marbridge Daily named the 2 managing directors for Groupon in Beijing and Shanghai. From their LinkedIn resumes (see here for Mads Faurholt and Raphael Strauch) it looks like they both got their first real jobs in 2007 and have zero operations or China experience. They seem to be very smart, ambitious and aggressive guys, which is perfect for the European or US market, but less so for cooperation with a leading Chinese Internet company. 

More background in his original article.

Marc van der Chijs is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference, do get in touch.

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Is Groupon conquering China? No way - Paul Denlinger

Paul Denlinger

"From the perspective of those who have experience with the brutally competitive Chinese market where virtually no non-Chinese companies have succeeded, Groupon's management seemed to make all the wrong moves." Paul Denlinger tells in the Business Insider why Groupon is on the wrong track in China.

Instead of hiring local Chinese who had rich experience in the local Chinese market, it instead went to Harvard recruiting MBA graduates. From what everyone had seen, Groupon was setting itself up for a fall in China. 

But then, Groupon announced that it would partner with Tencent to develop the social buying market. Tencent, based in Shenzhen, has long been the instant messaging and virtual currency leader in China, with more than 600M registered users in China.

The not-yet closed deal is an effort to let Groupon look nice for a possible IPO, focuses on the US market, rather than on a good China strategy. Tencent is a huge company, but has a bad reputation on e-commerce.

Another unmentioned player is Alibaba/Taobao, led by Jack Ma, which is the undisputed leader in e-commerce in China. For many in China, Jack Ma is a marketing genius, regularly inviting former US presidents and business leaders to major marketing events in China at the company's headquarters in Hangzhou. In addition, he has a close and cordial relationship with China's premier Wen Jiabao. For the Chinese government, Taobao's business platform has the advantage of being able to provide important leading information about the state of China's exports, in a way which is even more accurate and reliable than the government's own Bureau of Statistics. Without a doubt, Taobao/Alibaba would take a dim view of Groupon and Tencent's attempt to elbow in on their e-commerce space. Jack Ma has a famously long memory, and while he may not seek to hit back at Tencent and Groupon immediately, he may well wait for the right opportunity.

More in Business Insider.

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Paul Denlinger is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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Groupon might have a chance in China - Sam Flemming

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The group buying company Groupon from Chicago has set its eyes on China, after successes in 29 countries, including Europe and Japan. Groupon might actually have a chance to win, says CIC founder Sam Flemming in CNBC, although IT companies from the US have mostly failed in China and group buying was actually invented in China as tuangou.
In CNBC:

Tuangou flourished in China partly because haggling is part of Chinese culture, and partly because of scale: there were 420 million Chinese online as of June, 2010, up by 36 million from the end of 2009, according to the China Internet Network Information Center. Chinese netizens also spend a lot of time on internet forums, chatting with others who are interested in the same issues or products. There are, for example, 700,000 people talking about cars in online car-related communities; they post 13 million comments about cars each month, according to CIC Data, an Internet consulting firm that tracks China’s blogs, online bulletin board sites and social media for companies. In North America, you just don’t have the same size or scale of pre-existing online communities, says CIC founder, Sam Flemming.

“In China, this grew out of something customers were already doing. Chinese Netizens had already organized themselves online around brands, products and services – then they recognized they have the collective power to do different things: complain a brand not offering good service, or get 55 people together and get a discount,” says Flemming.

What American companies do better than Chinese is making money on the internet, says Flemming in CNBC.

Still, there appears to be a huge demand for Americanized version of tuangou; at least 50 Groupon clones have popped up in the last few months. Shtuango.com may be making money, but it’s nowhere as successful as Groupon.

“We’ve seen this both with tuangou and with online social games, like Happy Farm; both were developed in China, but made a lot more money in the U.S., because American companies figured out how to monetize it effectively,” says Flemming.

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Sam Flemming by Fantake via Flickr

Sam Flemming is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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