Groupon's Gaopeng.com to lay off one-third of staff and close half of its offices

Gaopeng.com, a joint venture between mainland web portal Tencent (0700.HK) and US-based group buying site Groupon, will reduce staff by up to one-third, and close the majority of its China offices, the Financial Times reported, citing an anonymous source familiar with the matter. The development comes just weeks before a planned US IPO for Groupon. The source said the cutbacks were due to a shortage of free cash due to lack of investment from Tencent.  The JV was launched relatively late on the mainland after many other Chinese companies started similar websites, but it expanded rapidly, hiring 3,000 employees in 50 offices over the course of a few months. That workforce is now to be reduced to 2,000, and 40 offices will close. Internal sources cite operational problems, rapid growth and internal sales competition for large accounts as contributing factors to the JV’s poor performance. Two managing directors and the chief marketing officer have recently left the company. “Gaopeng is optimizing its business to meet the growing demands of the Chinese market,” said company CEO Yun Ouyang. “We are aligning our operations to focus more on middle- to large-sized cities where group-buying markets are more developed. Additionally, as a part of good business management, we are streamlining underperforming employees.”