Chinese group-buying sites face accelerated closures

Closures of group-buying Web sites in China on the rise, with more than 1,000 closures this year alone, reports reveal.
Written by Ellyne Phneah, Contributor

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.

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