Provingxetentcy: Being Right or Making Money

Andrew Mason has been visiting Beijing and Groupon HQ has finally realized there are some problems in China.

On the Forbes website, Rebecca Fannin reports:

CEO Andrew Mason just arrived in China and hasn’t wasted time shaking things up. Four expatriate executives at Groupon who were recruited from rival site Ftuan just a few months ago will be leaving Groupon China.

Update: Groupon has contacted us and denies the original Forbes report. They say that no expatriate executives have been fired or left Groupon China recently.

This seems to be a belated response to the very obvious problems at Groupon China that seasoned observers have been noting since the group buy website first opened up shop in Beijing and Shanghai:

Groupon China was started and has been managed by a bunch of trendy-looking but ineffectual foreigners who can’t speak Chinese and are completely clueless about China.

Firing four unnamed foreigners is not evidence that anything has changed.

Meanwhile, Bloomberg has this report (which I’d wager a PR company helped put together) talking up Groupon’s Chinese partner Tencent:

“Tencent’s scale and user base gives Groupon an advantage, and China’s group-buying market is still at an early stage and has a lot of upside,” said April Su, an analyst at iResearch in Beijing.…

“We think we’ve found an excellent partner in Tencent and we’ve been very pleased with the progress we’ve made,” Mason told reporters in Beijing today, before leaving Ouyang to field queries on Gaopeng…

Gaopeng is seeking an edge in China with “world-class brands,” like Apple Inc., Ouyang said today.

“Our strategy is very strict selection of the merchant deals,” Ouyang said. “It’s not only about discount service but it’s also about being a city guide, a lifestyle.”

A few problems:

1. Tencent will end up shafting Groupon

If the Groupon model works in China, Tencent has nothing to gain by partnering with Groupon. Tencent has its own Groupon style offerings, and there is no need to make Groupon work for them to profit by the model.

2. Apple and “lifestyle”: Ha ha ha ha ha ha ha

This is too rich:

Gaopeng is seeking an edge in China with “world-class brands,” like Apple Inc., Ouyang said today.

“Our strategy is very strict selection of the merchant deals,” Ouyang said. “It’s not only about discount service but it’s also about being a city guide, a lifestyle.”

So, Apple is going to sell discounted iPads in China?

Yeah right, why would Apple do this when there are already Chinese people willing to sell their kidneys to get an iPad, or get into fistfights at the Apple store just to get hold of one.

Apple and Groupon China? Simply ridiculous. Even more ridiculous is the “city guide / lifestyle” nonsense.

I first worked on city guide / lifestyle print magazines in the late 1990s in China:

There is a small amount of money to be made in city guides and lifestyle guide products in big Chinese cities. There is quite a bit more money to be made in Internet and media products that help position brands as desirable for the new rich and emerging middle classes (e.g. Cosmopolitan China magazine and Vogue China , possibly the P1 social network and the Financial Times‘ FT Rui magazine).

There is also money to be made and a huge user demand for Dianping, which is like the Yelp of China that offers real, honest user reviews of restaurants.

But, based on my personal experience since 1997, every foreign-funded company I have ever encountered in China talking about making money from local vendors based on a “lifestyle” proposition has about a year or so before bankrupting itself or being run out of town.

3. iResearch

A final note: I don’t know if Groupon is paying iResearch, but iResearch has a reputation in China for doing “research” for companies who pay them. Somehow, the companies always end up looking very good in their research reports.

It’s all pre-IPO spin. Groupon China is simply a way to bleed cash.

Update Apologies to anyone offended by the original title. It’s a reference to my previous post about Groupon. But since nobody got it, the headline has been changed.

The college rules are not fair. Universities are bringing in massive amounts of revenue thanks to the talent of football and basketball players. The fans will pay to go see them, they will buy the players' jerseys or school apparel, they will pay to park and pay to eat in the school cafeteria.

All the while, the players don't see a penny of that money.

I am a college kid. My parents pay a lot of money for me to put my school's name on my resume, hoping it will mean something to my future boss. They pay a lot for me to eat sub-par food (my school eating facilities committed many health violations including having rat feces beside the storage of food and a grasshopper in a student's sandwiches, the list goes on) and live in a 17x20 foot room with two other kids.

Every college student worries about money. My school's campus is located in an area known as Little Italy so once or twice a month my friends and I go to a cheap restaurant to get a break from the cafeteria. We ask for the bread provided to the table to be wrapped up because our cafeteria only provides bread sticks.

To be honest, if people were willing to pay a lot of money for my stuff, I'd do it in a heartbeat. We're immature college kids, I'd love money to take that girl on a date or buy that expensive bottle of vodka I had last week (I don't condone underage drinking, but it happens pretty often in college believe it or not).

Just look at the ESPN documentary Fab Five. The school provided nothing to them, but reaped the benefits. And then Chris Webber gets in trouble for trying to get money. I'd love to be given a car. Asking any college kid to turn that down is stupid. The people providing these things to college kids should be punished not the student.

I sympathize with these kids who are criticised for breaking the rules that don't favor them (rules are rules but come on).

The actions of the North Carolina football players are asinine. The recent report that 12 players accumulated $13,000 in parking tickets is jaw-dropping. My college does not have a good football team.

Most of them are still cocky and mostly just hang out amongst themselves, and you could tell most are not the smartest kids you'll ever meet. But it is up to the coach to keep these kids on the right track. Parking tickets are easy to avoid, just park in the right spots.

The North Carolina kids showed a disrespect to the law by parking in fire lanes and handicapped spots. The coach didn't know about this?

These kids need to be taught discipline. Adding on to this situation was the group of players (most of whom still got drafted into the NFL) who got suspended this season. If it was up to Butch Davis, do you think they would have been suspended?

Probably not because it hurts the team. The kids show a disrespect to the law for parking tickets, just imagine what will happen when they are actually getting paid for real. The crimes could escalate and this is not what college football is all about.

I get it that Terrelle Pryor broke the rules, but making an extra buck and showing a disregard to the law are much different.

Butch Davis should take the brunt of the criticism. Letting his players get out of control is unacceptable for a man who is supposed to be a positive influence in their lives. This was over a three and a half year period so it wasn't just this year when a group got suspended.

If coaches lose their jobs for being ignorant to players getting money, then being ignorant to players breaking petty rules should be a red flag for any program. I hope North Carolina puts pressure on Butch Davis to resign, just like Jim Tressel was pressured to do by Ohio State.

Say whatever you want, Davis deserves it more than Tressel.

Comment, argue, let me know what you think. Thanks for the read

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Provingxetentcy

Thursday, June 23, 2011

Being Right or Making Money

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