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11 Nov 2011 00:00
Groupon has admitted it inadvertently sold fake Tissot watches through its Chinese joint venture.
Groupon’s bid to expand into the Chinese market hit a hitch after it discovered it had linked up with a company selling counterfeit luxury watches.
The daily deals giant has pledged to refund all customers who bought the Tissot watches.
Hundreds of people bought the watches through the Groupon deal, which offered buyers a watch for just 690 yuan ($107), a quarter of their normal retail price.
Groupon’s joint-venture Chinese operation, Gaopeng.com, said that, after an investigation, it discovered the merchant “had given us fake agent qualification documents”, according to Reuters.
“We are outraged. We hope to protect the interests of consumers and Gaopeng through legal methods,” the company said.
The incident highlights the legal challenges Groupon faces in China, which is notorious for counterfeit goods.
Groupon, which last week made a successful initial public offering (IPO) valuing the company at more than $11.4-billion, is struggling to crack China, where local daily deals operators dominate.
Lashou, the country’s leading daily deals website, filed in October for an initial public offering on Nasdaq and is planning to raise up to $100-million to expand its marketing and delivery systems.
Meanwhile, shares in Groupon soared more than 50% in New York last week, as the online discount firm became the biggest internet flotation since Google.
The listing was reportedly close to being cancelled in September, as Groupon founder Andrew Mason rounded on critics who raised concern about the company’s cash burn—it has lost $238-million over the past nine months—and the scale of the competition.
Groupon pushed ahead, but yesterday’s $12-billion valuation is below the lofty price tags that had been bandied about prior to the listing, with some estimates claiming that the business was worth up to $25-billion.
The road to Wall Street has been a tumultuous one for the Chicago-based company. Selling online discounts for everything from foot spas to nouvelle cuisine, Groupon has faced months of criticism from regulators and analysts, raising doubts as to whether the company would go public at all.
But behind the scenes, investors scrambled for its shares, which were 10 times oversubscribed.
Its tiny float represents just more than 5% of the company’s stock, which has helped to drive up demand and price.—
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