Groupon Inc. (GRPN)’s China joint venture has fired a large number of workers for poor performance as the company competes for customers in the world’s largest Internet market, a person with knowledge of the matter said.
The Gaopeng.com site is financially viable and still hiring, said the person, who declined to be identified because the moves weren’t announced publicly. The firings weren’t made out of necessity, the person said.
Groupon, which plans an initial public offering, is making “progress” in China after opening Gaopeng.com earlier this year with investment by Tencent Holdings Ltd. (700), Groupon Chief Executive Officer Andrew Mason said in June. Gaopeng, also backed by Yunfeng Capital, a private equity fund begun by Alibaba Group Holding Ltd. Chairman Jack Ma, offered daily deals for goods and services in 30 cities as of June.
“Groupon’s approach to international expansion is to aggressively create a large presence upfront and refine our strategy as we gain deeper insight into the local market,” Julie Mossler, a spokeswoman for Chicago-based Groupon, said in an e-mailed statement. “We view any adjustments to the business as very typical in order to build a long-term foundation for success.”
Former and current employees of Gaopeng.com say more than 10 offices were closed, and a lawyer representing former Gaopeng employees estimated that about 400 people have been fired, the Wall Street Journal reported earlier. The moves may mark a reversal of Groupon’s China expansion plans, the newspaper said.
Sarah Burton, the national sales director for Gaopeng, declined to comment today on whether any offices were closed or any workers fired.
Gaopeng had hired 3,000 workers in China as of June 10, Chief Operating Officer Ouyang Yun said at the time. The site faces competition from more than 3,000 group-buying websites in a China market that generated an estimated 1.5 billion yuan ($235 million) of revenue last year, according to estimates from iResearch in Beijing.
Groupon plans to raise $750 million in an IPO.
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