China group buying website closures accelerate: report

HONG KONG Fri Oct 14, 2011 1:34am EDT

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HONG KONG (Reuters) - The number of closures among group buying websites in China hit a high in September as poor service complaints from users reduced consumer enthusiasm for the bargain shopping platforms.

More than 700 mainland group buying websites closed in August and September, bringing total closures this year to more than 1,000, according to data from Chinese group buying navigation site lingtuan.com, adding that 419 websites shut down in September.

Since the first mainland launch in March last year, 5,700 group-buying sites had sprouted, it said.

An editorial on lingtuan.com said: "The group buying market is entering a cold winter ... and it's just beginning." It cited a high level of poor service complaints as a reason for the closures.

Citing an analyst, Hong Kong's South China Morning Post reported on Friday that a lack of investment, keen competition and poor management were also factors.

Group buying site tuan800.com reported that September saw large scale layoffs by well-known Chinese sites Wowo and Tuanbao, which are clones of Chicago-based Groupon.

It said Wowo may cut 70 pct of its workforce, while Tuanbao, known to have invested 500 million yuan ($78.35 million) in advertising, would cut its headcount by half.

In August, Groupon said it was cutting some underperforming staff at Gaopeng, a Chinese joint venture with Tencent Holdings Ltd. Gaopeng, has a small slice of the Chinese group buying market, trailing more popular players such as Lashou, Meituan, Wuwutuan. ($1 = 6.382 yuan)

(Reporting by Sisi Tang and Donny Kwok; Editing by Chris Lewis)

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