You may not like it, but we all use them. Whether it is in a text message, an instant chat, or a casual email, emoticons appear in written communication to indicate the tone, humor or feeling of a message. As communication moves away from personal interaction to a text-only environment, emoticons fill the void left by the absence of the tone of voice and facial expression that add connotation and intent to a message. The word emoticon is a portmanteau of “emotion” and “icon.”
Emoticons clearly are instruments of communication, but what are they, exactly? Are they words? To use the dictionary definition, an emoticon smiley face fulfills only part of the definition of a word: It is a unit that functions as a principle carrier of communication, but it doesn’t consist of morphemes and cannot be spoken. Emoticons are not words.
Are they symbols? Emoticons have a complex associated meaning separate from that which they symbolize. Also, the meaning of an emoticon is derived from the context in which it appears. Yes, emoticons are symbols, but what kind of symbol?
According to Dennis Howe, author of the Dictionary of Computing, emoticons are glyphs. A glyph is a pictograph. The term dates to the turn of the 18th century and is taken from Greek via French for carve, or hollow out. We are most familiar with the word hieroglyph, literally “sacred carving” used to describe ancient Egyptian or Mayan writing. The word glyph is widely used in archeology to describe pictographic language.
More recently, glyph is used in computer terminology to refer to an image in a visual representation of characters. Glyphs are part of a written medium that contributes to meaning but they do not necessarily make up words.
Scott Fahlman is the individual who first suggested the use of emoticons in text-only communication on a listserv for Carnegie Mellon University back in 1982. “I had no idea that I was starting something that would soon pollute all the world’s communication channels,” he has written since.
Cracking the China code; Groupon, the world’s fastest-growing company, struggles to break into the world’s fastest-growing economy.(Company overview)
Crain’s Chicago Business August 22, 2011 Byline: STEVE HENDERSHOT Groupon and China would seem like a natural match: World’s fastest-growing company, meet the world’s fastest-growing economy.
Chicago-based Groupon Inc. spent much of 2010 expanding overseas. The result was that 58% of the company’s $1.52 billion in revenue in the first six months of 2011 came from outside the United States. China seemed a logical fit, not only because of its growing economy, but also because collective buying is an established phenomenon there, providing a built-in audience for Groupon.
But Groupon was slow in building a Chinese presence, and by the time its site, GaoPeng.com, launched there in February, the market was cluttered with more than a thousand rivals. GaoPeng now hovers on the outskirts of China’s top-10 daily-deal sites. The site attracted 2.4 million visitors per day in May, according to iResearch Consulting Group of Beijing, which ranked it in the top 10 in terms of traffic. GaoPeng ranked sixth in the number of deals offered but only 12th in revenue among deals sites in June, according to Dataotuan.com, a deal aggregator based in Shanghai.
The Chinese daily-deal market “is like the Oklahoma land grab, and Groupon is quite late to the party. They came in and expected prime land by a babbling brook, but they just got the panhandle,” says Scott Silverman, Beijing-based regional director for the Asian operations of San Francisco ad agency Godfrey Q & Partners LLC.
Now Groupon is struggling to catch up. As it prepares for an initial public offering it hopes will raise $750 million, the promise of a strong performance in China is central to the notion that Groupon can sustain growth (from $30 million in revenue in 2009 to $713 million last year and about $1.5 billion in the first half of 2011).
Timing, though, is just one of the factors Groupon must overcome to succeed in China. The company also must navigate a series of partnerships in China (and in Europe), then determine how best to tailor its business model for success. Groupon officials decline to comment, citing the Securities and Exchange Commission-enforced pre-IPO quiet period.
Here’s a look at Groupon’s strategy in China–what’s worked so far, what hasn’t, and what the company has to do to become a leader there.
A MEANDERING PATH TO A COMPLEX PARTNERSHIP. Groupon announced last August that it was expanding through acquisitions into Japan and Russia, the same week that the Chinese economy surpassed Japan’s as second-largest. Groupon said at the time that its entrance into Japan “reaffirms our global expansion into Asia,” but the absence of a corresponding move into China raised eyebrows.
That delay may have been due to negotiations with prospective Chinese partners. Groupon attempted to purchase a stake in Beijing-based deal site Lashou.com last fall, but its bid was rejected in November. Lashou was valued at $1.1 billion in a $110-million fundraising round completed in April. The company was China’s leading deals site in May, with a 14.4% marketshare, before falling to 10th in June. Its revenue decline was mostly due to a lower average deal price that month, as Lashou still ranked third in deals offered and sold.
Then, in January, Groupon announced a joint venture with Shenzhen-based Internet company Tencent Holdings Ltd., which operates a popular instant-messaging service called QQ. Groupon and Tencent each own a 40% share of GaoPeng, which launched Feb. 27.
“Groupon has done a smart thing in allying with a local partner in Tencent, who has excellent reach among the Internet audience,” says Mark Natkin, managing director of Marbridge Consulting Ltd., a Beijing market research firm.
Mr. Natkin, though, worries that Tencent isn’t as committed to GaoPeng’s success as Groupon is. Tencent has invested in numerous other daily-deal sites, including QQ Tuan (which shares a brand name with Tencent’s messaging service) and Ftuan–sites that ranked first and sixth, respectively, in Dataotuan’s marketshare analysis in June. GaoPeng says QQ Tuan isn’t a direct competitor because QQ Tuan is a deal platform without its own dedicated salesforce, but the arrangement is still troubling to Mr. Natkin, who expects that within six months just two or three daily-deal sites will emerge and lead in China. “The challenge for any foreign Internet firm coming into China and partnering with a domestic company is structuring that partnership in a way that the benefits are equitably divided on a long-term basis.” Rivals say building a strong relationship is especially relevant for Groupon and Tencent, whose attention is focused on maintaining a large audience even as its core messaging business faces competition from Shanghai-based Sina Weibo, a popular microblogging site similar to Twitter. in our site groupon houston
“Tencent’s business is being rocked (by Weibo), so they’re doing many experiments like GaoPeng. But they’re not betting on GaoPeng in the same way Groupon is,” says Jack Jia, a partner at GSR Ventures Management Co., an investment firm with offices in Beijing and Palo Alto, Calif. GSR Ventures is an investor in Lashou.
Groupon and Tencent together own 80% of GaoPeng. The remaining 20% is divided evenly between private-equity firm YunFeng Capital and an entity called Rocket Asia. YunFeng was founded by Alibaba Group CEO Jack Ma; Hanzhou-based Alibaba’s subsidiaries include the Chinese online retail giant Taobao, which operates its own deal site.
A LACK OF LOCAL PERSPECTIVE? Rocket Asia is owned by Oliver, Marc and Alexander Samwer, brothers whose German daily-deal site, CityDeal, was purchased by Groupon in May 2010. The Samwers are known for cloning popular websites and running the copycat businesses in Germany, a strategy they’ve employed with such sites as eBay, Facebook and eHarmony. EBay ultimately acquired the Samwers’ clone, a tactic Groupon replicated when it bought CityDeal. In the process, Groupon CEO Andrew Mason fell in love with the Samwers.
“We realized that they were among the best operators we’d ever met,” Mr. Mason gushed on Groupon’s blog.
Soon, the Samwers were placed in charge of Groupon’s international expansion, including China. And while GaoPeng’s CEO, Yun Ouyang, came from Tencent, other members of Groupon’s management team in China, including regional managing director Mads Faurholt-Jorgensen, weren’t Chinese.
According to GSR Ventures’ Mr. Jia, the expat approach hasn’t worked. The GaoPeng team’s lack of cultural awareness, coupled with its commitment to scaling its U.S. model rather than modifying it, led to poor product offerings, he says. In contrast, Lashou’s success is based on adopting most of the Groupon model and then making culture-driven adjustments:
– Lashou caters to men in their 20s and 30s, the core dealbuying demographic in China.
– Groupon lures popular businesses to its site by attracting competitors until eventually the market-leading business feels obligated to offer a deal. But in China–particularly the restaurant industry–businesses are more likely to identify competitors based on proximity rather than style of cuisine. Lashou created its strategy accordingly. see here groupon houston
– Groupon has a large salesforce in Chicago that books deals around the country. But regional linguistic differences in China are so dramatic that central call centers don’t work, Mr. Jia says. So Lashou established regional call centers. Food tastes also vary by region: For example, lamb chops are popular in Beijing but are considered “barbarian food” in Shanghai.
“Groupon made a lot of the textbook mistakes that Western companies make in China,” Mr. Jia says. “People assume going to China is like going to Europe, where you just repeat what you do (in the U.S.). But China is a fundamentally different market, and you need to create a unique spin on how you execute that same business idea.” The Samwers’ critics are trying to push them out the door via the rumor mill.
According to a June 10 report from TechCrunch.com, a San Francisco-based tech industry website, the Samwers had left Groupon, and the base of Groupon’s international operations had shifted from Berlin to Chicago. (This was just eight days after Groupon filed its Form S-1 with the SEC; the filing stated that the Samwers are “extensively involved in the development and operations of our International segment.”) Although Groupon officials decline to comment, a representative did confirm that the company’s base of international operations, including China, remains in Berlin, with the Samwers in charge. The representative also refuted a June article in Forbes that claimed Mr. Mason had fired several expatriate managers as part of a move to shift Groupon’s international headquarters to the U.S.
Rumor and fact can blur in China, and despite Groupon’s avowals, the shake-up story is well-known in Beijing and in the tech industry here. Messrs. Silverman, Natkin and Jia had all heard and say they believed the rumor. In fact, each took it as a sign that Groupon was getting its act together in China.
The latest rumor is that GaoPeng has run out of cash in China and is cutting staff in secondary markets and also slashing its advertising budget. Beijing Business Today didn’t identify its source regarding the marketing cutbacks, but Mr. Natkin says a search on Beijing-based ad network Baidu Inc. showed no results for GaoPeng under either “group buy” or “GaoPeng.” Chinese media including the 21st Century Business Herald also have reported that GaoPeng is making substantial staffing cutbacks in Shanghai, as well as in many smaller Chinese markets. Groupon says any staff departures are due to normal attrition and denies that the cutbacks are due to a shortage of cash.
MAKING ENEMIES. If true, those rumors represent a shift for GaoPeng. In January, a Groupon recruitment notice posted at a Chinese university boasted “near to endless funding” and that “compensation is highly, highly competitive,” according to TechCrunch. Lashou CEO Wu Bo said 60% of his employees had been contacted by Groupon-affiliated recruiters, according to multiple Chinese media outlets, and that those recruiters were offering to double and triple his employees’ salaries. In response, Chinese business publication Sohu reported that other daily-deal sites, including Lashou, agreed to blacklist GaoPeng employees from future employment.
That seems like an extreme tactic to use against a fringe competitor, but Mr. Jia says Chinese rivals are watching GaoPeng. “(GaoPeng’s) revenue doesn’t justify it, but with the way they spend money, it’s seemed like the emperor is coming. It’s created a lot of backlash.” Reports of outsize offers also call Groupon’s international spending into question. Groupon still isn’t profitable: It reported a net loss of $225.2 million for the first half of 2011 despite $1.52 billion in revenue for that period. Its North American operation fared a bit better than its international counterpart in the first quarter of 2011 (the most recent quarterly data available). The North American unit took in $279.9 million and posted a loss of $21.8 million. International revenue, by contrast, was $346.8 million, with a loss of $76.5 million.
Groupon’s tough sledding in China also owes to the company’s Super Bowl commercial in February, which poked fun at strife in Tibet. Tibet is a sensitive subject in China–the Chinese Communist Party has controlled Tibet since 1951. When Groupon responded to the ad’s poor reception by pushing donations to the Tibet Fund, it upset the Chinese government.
“Is Groupon failing because of a Super Bowl commercial? No,” says Mr. Silverman of Godfrey Q. “But it’s another reason to guffaw, to chuckle at Groupon’s expense. The Chinese (business community) likes to see foreigners come in here thumping their chests and then not get anything.” GROWTH TAKES TIME. FOR ALL THE HANDWRINGING OVER GAOPENG’S SLOW START, AFTER THREE MONTHS (THE MOST RECENT DATA AVAILABLE) IT HAD SURPASSED THOUSANDS OF COMPETITORS TO REACH THE FRINGE OF THE TOP 10. THE SITE HAS BEEN LIVE FOR ONLY SIX MONTHS.
“GaoPeng may just need a little more time to become better known in the market,” cautions Mark Natkin of Marbridge Consulting in Beijing.
And there are local traits that should give Groupon an opening: “Chinese customers are very price-sensitive,” says Will Tao, an analyst at iResearch. “They care less about brand loyalty.” For a company whose business is built on the premise that it can offer an endless barrage of deals that are too good to pass up, that means there’s hope.
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