Can Groupon Conquer China?

Give Andrew Mason this. The founder of what some have called the fastest-growing company in history has guts.

First, he walked away from a $6 billion deal with Google to sell his company late last year. Now, he’s getting the deal-a-day site ready to compete in China, a market where Facebook and Google are largely nonentities, and western investors are more likely to invest in native Internet companies than foreign players.

The Wall Street Journal reports that Chicago-based Groupon is ramping up its sales team to take on the world’s most-populous country, and its second-largest economy.

Groupon is running want ads looking for employees on University web sites and through headhunters touting its plans to open in China and looking for workers, the Journal reports.

But just because the coupon site builds a China presence, though, doesn’t mean customers will come. Some of the most important Internet companies in the West are bit players at best in China.

And Groupon recently stepped in it when it came to cultural sensitivity with a Superbowl advertisement that seemed to make light of China’s occupation of Tibet. For many Chinese, the Tibet occupation is a hyper-sensitive subject. As Teresa Novellino pointed out in Portfolio.com: “Some Chinese viewers took to message boards to scoff at the company’s “Free Tibet”-style message. "Are they oblivious?" asked one observer,” following the commercial.

But making a dent in the Chinese market could be a huge win for Groupon. With 450 million users, many of them connected to the Internet by mobile phones, China is the nation with the largest Internet population. And unlike the U.S., which has 70 percent plus Internet penetration, there’s still plenty of room for China to grow.

And Groupon may be different from such Internet companies as Facebook and Google.

It may be viewed more as a retail brand than an Internet one, in which case, Groupon could have a great chance in China. For retailers and restaurants, China has been a fantastic market—it’s the fastest-growing market for KFC, for instance.

The Middle Kingdom has also been a growing and important market for manufacturers. For General Motors, China is as important to future growth and plans for resurgence as the core U.S. market. The automaker has aggressively marketed itself in China, and is one of the most popular foreign car brands in the world's fastest-growing car market.

So the question will be whether Groupon is viewed more as an Internet firm to be shunned or as one of the Western brands that have gained popularity in China?

That’s an open bet, but so far the gambles made by Mason, a 2003 graduate of Northwestern University, have paid off.

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Kent Bernhard Jr. is News Editor of Portfolio.com