Groupon's Chinese venture, Gaopeng, isn't doing well.

Why?

TechRice offers several reasons. Here are the big ones:

Groupon's partner, Tencent, became a competitor. Tencent is the Chinese social network juggernaut, and owns 40% of Gaopeng. The only problem is, Tencent built its own daily deals site, QQ Group Buy, and invested in another daily deals site. Whoops.
Growing too fast led to mistakes. When Groupon went to China, it brought in a lot of foreigners and poached from competitors by doubling employees' salaries. But by all accounts it grew too big too fast, which led to a lot of screw-ups, or worse. For example, daily deals site have been doing raffles to sign up users. When Gaopeng did this, it came out that all the winners of one raffle were Gaopeng employees. Ouch. When Groupon decided to right the ship by firing a bunch of people, that only made it worse as apparently the layoffs were handled poorly and indignation spread on social networks. "To be fair, Gaopeng certainly attracts an added level of scrutiny from domestic media (perhaps even seeded by competitors). But it should be prepared–welcome to China," TechRice writes.
It's not easy for foreign competitors in China. For example, Groupon's local competitors are said to have signed an "embargo alliance" against Groupon. And as Tencent shows, even your partners can screw you.

Source:businessinsider