CRI听力:Group-buying Still Enjoys Potential in China Despite Current Downsizing

A recent report from tuan800.com, a leading group-buying service navigation site in China, says that more than 2,000 of the group-buying websites in China closed in the past year. Industry insiders say they were eliminated through fierce competition.

Quan Yunfeng, an exhibitor-participant at the recent China Internet Conference in Beijing, which focused on e-commerce development in the country, calls himself a senior customer of group purchases. From a consumer's point of view, he analyzes why many group-buying websites have now disappeared.

"I think there is still great market demand for online group-purchasing, but since the year before last, an excessive number of companies began to enter the market causing a big bubble in the industry. As soon as the "bubble" bursts, the group-purchase business model will definitely undergo relatively healthy development."

In reality, group-buying websites are now a common weapon in the armory of savvy Chinese shoppers looking to get huge discounts on everything from theater tickets to luxury goods. The concept is simple: The sites secure savings from companies on the proviso they will get bulk orders. But can this strategy stretch to big-ticket items such as cars?

Hai Lan, CEO of auto news website chexun.com, explains.

"But one thing I firmly believe is that along with the decline of the auto industry, once it transforms itself from a sellers' market into a customer-oriented market, there will be bigger chances for group-buying businesses in this area. I think that group-purchases will first take place with some outdated cars that have been replaced by newer models and with the development of new types of vehicles."

Xu Ji, product engineer director at Alipay, an affiliate of China's largest e-commerce firm Alibaba Group, also believes that group-purchase websites still have the momentum to grow, as China just saw its first such website in January 2010.

"It is still a newly emerging business model, so I think we should wait and observe the trend before drawing any conclusions. But I've found a positive trend that now group-buying websites are giving more consideration to the protection of consumers' interests."

But Xu Ji adds that he, as well as many other professionals, will not speculate on the development prospects of the sector.

"I think there's potential for any business endeavor concerning group-buying websites. However, it's hard to predict whether China's group-buying industry should develop according to a merger model of alliances with only one website taking more than 50 percent of the market share or a number of small websites running the entire market."

Earlier, Chinese internet giant Tencent Holdings Ltd. announced that its daily-deal website Ftuan would merge with Groupon Inc.'s China venture GaoPeng to form a new company in a move that is likely to trigger another round of merger speculation in the country's under-pressure group-buying sector.

For CRI, I'm XYee.