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Rumor: Gaopeng Makes More Layoffs

21st Century Business Herald, 8/05/11

Gaopeng, the group buy joint venture between Groupon and Tencent (0700.HK), has been continuing to lay off personnel, according to numerous sources within the company, who claim that there are fresh departures each week. One Gaopeng middle manager told journalists that the latest round of layoffs have been ongoing since July.

Gaopeng has had several rounds of layoffs in the past several months, according to a former senior HR manager, who said that the first round, aimed at sales personnel, started in April and continued into May. In June, all departments including sales were ordered to meet 5% staff cut targets.

The aforementioned middle manager said that every department has made cutbacks, and that Gaopeng has branches in approximately 40 cities after closing branches in several third-tier cities. The source said that the Shanghai office, which was staffed by a number of earlier hires like himself, had been reduced to less than 20 people. The majority of foreign staff hired by Groupon's international operations in Germany have left the company, due to the company's poor performance and a lack of responsibilities.

The source added that group buy businesses can no longer make a profit, worsening Gaopeng's situation. "Foreigners don't understand a number of things about China's group buy market, for example they don't understand why a company would operate with hundreds of thousands of RMB in losses in order to gain popularity in the market."

Editor's Note: For more information on this topic, please see "Rumor: Gaopeng Cuts Workforce in 2nd-, 3rd-Tier Cities," MD 7/27/11 issue.

Keywords: Internet Tencent HR 0700.HK Groupon Gaopeng e-commerce group buying JV

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