According to people familiar with the matter, Gaopeng, the joint-force of Groupon and Tencent in China, has fired one thirds of its Chinese staff (including both execs and rank and file employees) while shutting down nearly 50% to 80% of its China branch offices. Gaopeng former and present General Manager pointed out that the significant downsize was resulted from Tencent’s delay in funding the joint-venture.

Actually, Gaopeng was seeing tough cash problem just couple months of its debut in China due to rapid expansion and management infighting, managers at the company disclosed.

Ouyang Yun, chief operating officer of Gaopeng, once said during an interview that the company had hired 3,000 employees and expanded to 50 cities. While last week managers at Gaopeng were told to cut down headcount to 2000 and between 20 and 41 branch offices would be closed due to money shortage.

Tencent declined to comment.

Although Tencent was criticized for reluctant to pour money into the beleaguered joint-venture, there might be a reason for its indifference. According to anonymous Gaopeng staff, Tencent has been nursing a grievance against some of Gaopeng’s strategies, for instances, vast majority of Gaopeng execs are foreigners with little knowledge regarding China market, some of their approaches also seemed to be unacceptable to Tencent. Just a wild guess, could this be the reason for Tencent’s hesitation?