CRI听力:Will American Groupon Expire Soon?

Gaopeng, Groupon's China venture, has become a business disaster. Reporters were prevented from entering the company's office as they attempted to report the news of large-scale layoffs. Meanwhile, company employees were told that they were not to give interviews to the press. Why has a company with such a high global reputation adopted such a rude attitude towards its employees and the Chinese media?

An anonymous employee who has recently been laid-off from Gaopeng.com says the company treats their employees with little respect. He says that when Gaopeng poached staff from their competitors, they required them to start to work right away, yet when they fired people, they wanted the employees to leave immediately.

"My department didn't have too many people, only 70, and now they've fired 20 of us. The HR department said they couldn't promise an end to the lay-offs. The whole company is facing difficulties in its capital chain now."

The anonymous ex-employee also reveals the company cut off its internet and telephone connections on the same day that a large number of people were fired in order to prevent employees leaking the information on internet forums or micro-blogs. Facing a wave of questions in the wake of the lay-offs, Gaopeng's COO Ouyang Yun insists that the recent lay-offs are simply part of a normal personnel adjustment.

"It's not due to capital chain problems. It's quite normal for a big company like us to re-arrange our staff. We will reduce the number of staff in Shanghai, but will increase the number in Beijing's office. So this is not a large-scale lay-off."

Some industrial insiders analyze that the American company is not yet used to the Chinese market. It's said Gaopeng had 30,000 employees when it went online in February 2011 in China. To lure more talent, the company offered high salaries during the initial period after its launch, with a sales department manager receiving a base monthly salary of up to 30,000 yuan, or 4,600 US Dollars, and salesmen offered up to 3,000 yuan or 460 US Dollars. The salaries are higher than those offered by local online group shopping companies. At the same time, the total number of group-buying websites in China has climbed to 5300. Most of them rely on venture investment to start the business, but often end up suffering from running at a deficit. Comparatively, the higher running costs of Gaopeng have led to higher risks for the company as a whole.

Qian Xuefeng, CEO of Hanli Investment Company says the Chinese group-buying website market has been overwhelmed by a vicious competition model.

"If all the group-buying websites get a deal at 500 yuan from the same business, such as a restaurant, then if the websites promote the deal at 400 yuan, they will be the more competitive option in terms of price. So far, such a business model is not quite feasible, and of course would be difficult to make a profit. My prediction is that within one or two years, there will be more websites going bust or laying off employees. Some of them will face a more tragic ending than Gaopeng is currently experiencing."

However, Gaopeng's Ouyang Yun disagrees with the recent market prediction that 90 percent of the group-buying websites in China will go bankrupt by the end of the year.

"I don't believe such theories. I think as many as 90 percent of the websites might eventually be elbowed out of the market in the long run, but I don't see it within such a short period of time."

A number of insiders have said that as group-buying becomes group-firing overnight, customers can expect to see American Groupon expire in China sooner than we expected.

For CRI, I'm Liu Min.