Chinese deal sites merge

Gaopeng, a Chinese daily deal site minority owned by Chicago-based Groupon, is to merge with rival FTuan backed by Tencent.

The merger will create a new company that builds on the respective strengths of FTuan in local lifestyle services and products, and Gaopeng in global sourcing and group-buying. The two companies says that consumers will benefit from more choices and lower prices as a result of the increased scale of the combined entity.

The Gaopeng and FTuan brand names will continue to exist in parallel to better serve segmented user needs. Groupon will be a minority shareholder in the new company, as it was in Gaopeng.

Lin Ninig, CEO of the new company, said, “China’s daily deals market is moving from investment-driven to operation-focused, and I believe the merger will position us well to further scale our operations and deliver innovative products to our customers.”

Ninig added that the multi-brand strategy after the merger will enable the new company to serve the segment needs of merchants and consumers in lifestyle e-commerce and mobile Internet.

“The new joint entity will combine the strengths of FTuan and Gaopeng to better serve consumers in the daily deals market in China. We believe group-buying is a natural leverage off our large user base, and an attractive offering that enhances the value of our e-commerce platform to online shoppers in China,” said Wu Xiaoguang, Tencent CEO.

Groupon senior VP of corporate development Jason Harinstein said the merger is part of a strategy to strengthen investment in China.

Analysts consider the merger a good move as Gaopeng and FTuan will benefit from savings in operational overheads and product sourcing.

China’s online group buying market was worth 4.3 billion yuan (US$676 million) last year, according to China’s market research firm iResearch.

GB

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