Tencent shopped again. Lin Nin, CEO of FTuan, a daily deal site in China, confirmed that Tencent invested in the company for an undisclosed sum.

Tencent already had several group buying offerings, including QQTuan and Gaopeng, a joint venture of Tencent and Groupon, along with deal aggregator SOSOTuan. Obviously Gaopeng has neither adapted to Chinese market nor lived up to its parent company’s reputation. With so many group buying initiatives, one just can’t help but wonder what Tencent want to do with them.

And also, Chinese group buying market has already showed signs of declining, according to a research by Tuan800, a Chinese daily deal aggregator, in May there’re over 4500 group buying sites in China but sales fell in 40 major cities month over month. Prior to that, Beijing, Shanghai and Guangzhou had already showed signs of weakness in monthly sales; these three cities are separately the largest, second and third largest group buying market in China.

Market Decreasing Amid Intense Rivalry

To compete against other players amid intensified competition, Chinese groupons have tried everything from “free lottery”(lashou, meituan, nuomi and so on, with awards including house, Apple laptop, cars, life-long water and electricity bill payment) to celebrity spokesperson (Lashou, Groupon.cn, Manzuo, Jumei and so on).

According to Renren. Inc Q1 2011 financial results, net income for Nuomi in the first quarter was US$ 900 thousand, while operating expense was US$ 4.6 million, which means Nuomi earns RMB 1 yuan while spends 5 yuan.

Chinese actor Ge You featuring in Lashou ad campaign

The situation is no better in other sites. For Lashou, the largest Chinese daily deals site in terms of scale, its sales plunged from this April’s US$ 15.77 million to US$ 10.54 million, an astonishing 33.7% decrease month over month. It seems hiring Ge You, one of the most-recognizable screen icon for Chinese people, as spokesperson and rolling out the ads featuring him in every corner of Beijing among other cites didn’t help much.

Ben Jiang

Listener of startups, writer on tech. Maker of things, dreamer by choice.

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43 Comments

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