Groupon on Cusp of China Joint Venture

China is the largest Internet market in the world, with roughly 380 million users. The country also has more than 800 million mobile subscribers. But it has tripped up many US companies seeking to do business there — most notably Google of late. AllThingsD is now reporting that Groupon is on the cusp of a joint venture in China with portal Tencent. Tencent owns part of Mail.ru, which shares executives with Russian investment firm DST and is a Groupon (and Facebook) investor.

Remarkably there’s already a Groupon.cn, which is a top-to-bottom rip-off of Groupon:

The existence of this site is a metaphor for both the degree to which China is still largely outside international law and the challenges of doing business in the country. Documents and other evidence have shown that the Chinese government was indirectly responsible for the hacking episode that resulted in Google’s “withdrawal” from the country.

Groupon’s international growth — especially if it does gain a foothold in China — helps “hedge” against any “deal fatigue” or slowdown in the US and sets the table for a potentially very successful IPO — coming soon.

The concept of group buying (“tuangou“) arguably originated in China, though in its original form it was more like flash mobs showing up at local stores.

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