Gaopeng, the Chinese subsidiary of Groupon has been drastically cutting staff in tier3 cities with people from operating and administration division were affected, and the layoff plan will be expanded into tier2 cities as well, according to people familiar with the situation.

 

Since its founding in the March of this year, Gaopeng, the joint venture of Groupon and Tencent, has opened branches in 127 cities in China with an aggregate of over 3000 headcounts. People who were affected by the layoff accounts for 25% of its total workforce.

 

After the fast and irrational growing, now it’s time to slow down a little bit. Kaixin and Meituan were reportedly closed dozens of branches in tier2 and tier3 cities before due to rising costs and disproportionate revenue. According to grouping buying aggregator Tuan800.com, as of this June there’re 4678 daily deal sites in China, up from last month’s 4510. And we can expect more layoffs due to blind expansion in their early stage, intensive competition as well as the fact that it’s getting harder to raise money for group buying service now since investors are getting more cautious about group buying.

 

55Tuan which raised US$ over 200 million in series A failed to find an IPO underwriters, a Hong kong-based investor who familiar with the situation disclosed. A bunch of banks including Credit Suisse, Goldman Sachs, Merrill Lynch and Deutsche Bank rejected 55Tuan during its search for an IPO underwriter in the past two months. According to 55Tuan founder Xu Maodong, the company now has over 5,500 staff in more than 150 cities in China.