Groupon enters into China, teams with Tencent

Daily-deals website Groupon goes live in China on Monday, bringing its popular brand of Internet retail to the world's most populous nation.

GaoPeng.com, funded by Groupon, the Tencent Collaboration Fund and Yunfeng Capital, will begin accepting email registrations from local consumers, with daily deals promoting local merchants to debut in March.

However, analysts cast doubts over how successful Groupon can be in China given the numerous group-buying websites that are already active in the country.

Discounts will always be popular but the question is, will Groupon be more popular than the other websites, said Paul Wuh, a Hong Kong-based analyst with Samsung Securities.

There are many entrenched companies already offering this product, Wuh said.

Taobao, China's largest consumer e-commerce website, launched a group-buying website last year, while other sites such as Mei Tuan and Man Zuo have also sprung up. Popular portal websites such as Tencent's QQ and Sohu.com have also launched group-buying websites.

China had almost 19 million group-buying users at the end of 2010, according to government statistics.

Wuh said the move is generally positive for Tencent as it signals that China's largest Internet firm is further expanding its operations its core revenue driver of games.

Groupon had been widely reported to be scouting out locations and workers in China, seeking the global expansion its plethora of rivals have not embarked upon.

Groupon, the two-year-old start-up that has met bankers about an initial public offering and which sources say rebuffed a $6 billion advance from Google Inc -- has seen phenomenal growth.

It has grown to about 50 million users from 3 million across 500 cities in 40 countries over the course of 2010.

But the competition is intensifying, with the likes of LivingSocial expanding in the same space and a plethora of websites springing up globally that specialize in deals for niche markets.

Groupon recently completed a $950 million round of financing on its way to pondering an IPO, which sources have said would be one of the largest technology IPOs of 2011.

Its venture capital backers and late-stage investors include Andreessen Horowitz, Battery Ventures, Greylock Partners, Kleiner Perkins Caufield & Byers, Mail.ru Group, Maverick Capital, Silver Lake and Technology Crossover Ventures.

(Reporting by Edwin Chan and Melanie Lee; Editing by Kazunori Takada)