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Rumor: Gaopeng Slashes Workforce by One-Third

Sina Tecj, 8/25/11, Groupon and Tencent's (0700.HK) group buy joint venture, has reportedly laid off one-third of its workforce and closed 50% to 80% of its offices, according to the Financial Times. The cutbacks, say both current and former managers of the site, are due to a delay in additional funding from Tencent.

The joint venture is experiencing cash flow problems due to a combination of rapid expansion and clashes at the management level, according to managers at the company. One manager said that while they were pushed to deliver rapid growth, no one placed any emphasis on profitability, leading to serious problems in the company's operations.

Gaopeng CEO Ouyang Yun said in June that the company had hired 3,000 personnel and expanded to 50 cities, but last week the company announced it would cut its workforce to 2,000 and close 20-41 offices nationwide.

According to sources close to the company, Oliver Samwer, head of Groupon's international operations, was a driving force behind Gaopeng's rapid expansion strategy. Three of Gaopeng's four managing directors - Mads Faurholt-Jorgensen, Raphael Strauch and Frederico Pericini - were appointed to head Gaopeng's branches in Beijing, Shanghai, and southern China, respectively, but regional offices subsequently competed for large enterprise contracts, driving down profit margins. A fourth managing director, Christian Macht, is currently implementing cost-cutting measures, while Faurholt-Jorgensen and Pericini have left the company along with chief marketing officer David Tang.

Tencent was unavailable for comment.

Keywords: HR Raphael Strauch Frederico Pericini Christian Macht David Tang Internet Tencent 0700.HK Groupon Mads Faurholt-Jorgensen Gaopeng Ouyang Yun Oliver Samwer e-commerce group buying funding JV


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