Chinese group-buying sites face accelerated closures

Summary:Closures of group-buying Web sites in China on the rise, with more than 1,000 closures this year alone, reports reveal.

Closures among Chinese group-buying Web sites have hit a high in September as complaints from users about poor service lower consumer enthusiasm on these bargain shopping platforms.

According to Reuters, data on lingtuan.com revealed that 700 mainland group-buying Web sites closed between August and September, bringing the total number such closures in 2011 to more than 1,000. The Chinese group-buying navigation site added that 419 Web sites shut down in September alone.

Since the first launch in March last year, 5,700 group-buying sites had sprouted across the mainland. "The group-buying market is entering a cold winter...and it's just the beginning," said lingtuan.com, citing a high level of poor service complaints as reasons for the closures.

An analyst also added that a lack of investment, keen competition and poor management were also contributing factors, the South China Morning Post reported on Friday.

Group-buying site tuan800.com reported that in September, there were large scale layoffs by well-known Chinese sites Wowo and Tuanbao, which are clones of Chicago-based Groupon. It said Wowo might cut 70 percent of its workforce, while Tuanbao, which reportedly invested US$78.35 million in advertising, would cut its headcount by half.

Groupon in August said it was cutting some underperforming staff at Gaopeng, a Chinese joint venture with Tencent.

In an April report, however, market players told ZDNet Asia that the online group-buying market was a sustainable business if these sites continued to produce innovative ideas and consistently meet the changing needs of consumers.

Topics: CXO, Browser, Software

About

Elly grew up on the adrenaline of crime fiction and it spurred her interest in cybercrime, privacy and the terror on the dark side of IT. At ZDNet Asia, she has made it her mission to warn readers of upcoming security threats, while also covering other tech issues.

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