Groupon in China: Real Deal or Same Old Story?

Just a day after reports that a Chinese Groupon wannabe called Dianping was revving up for an IPO, we learn that Groupon itself is wheeling and dealing its way into China in a new tie-up whose partners include a fund run by local Internet giant Tencent (HKEx: 700) (English article). Never mind that Alibaba’s Taobao, Dianping and even Tencent itself already host their own Groupon-like sites that will compete with the new site, called Gaopeng.com. The question here is, in this relatively greenfield area in China does Groupon stand any chance of success against the established giants and start-ups? In a word, the answer is no. The Chinese Internet road is paved with ruins from the likes of Yahoo (Nasdaq: YHOO), Google (Nasdaq: GOOG) and eBay (Nasdaq: EBAY), all of whom tried but failed to crack the China Internut. Others like Microsoft (Nasdaq: MSFT) are still struggling after years in the  market. Chinese officials pay lip service to having an open Internet market, but the reality is they stack the deck heavily against foreign firms through various means that favor the homegrown names. I see no reason why this time should be any different. Sorry, Groupon.