By staff reporter ANAÏS CHAILLOLEAU

LAST month I was invited out for a Korean barbecue by a 23-year-old Chinese friend of mine, Huang Xuesong. I gladly accepted the invitation and we had dinner together. After a good meal, it was time to pay the bill. As I rummaged in my bag for my purse, my friend stopped me: “No, it’s okay. I’ve already paid over the Internet,” he said. I wondered how this was possible. He continued to explain: “I bought the dinner on a group buying site. The prices there are really attractive.”

That was how I discovered the popular concept of tuangou in China, meaning “group buying.” Its principle is very simple: The sellers promote products online at a very low price, but the final offer is decided according to the final number of interested buyers, thus creating a win-win result for both sides – the sellers increase their sales volume and promote their products while the consumers benefit from significant discounts.

An advertisement for group buying in Beijing’s 798 Art Zone.

A New Shopping Fad

This group buying mode is not popular in Europe, but has taken off in China, especially among people aged between 25 and 35. Wang Wenjie, 31, said, “I buy set meals at restaurants about twice a month. Prices for group buying online are really favorable, with a discount of 30 to 50 percent. My parents know about the concept of group buying but don’t know how to use it, so they are really happy when I take them out to eat well for less.”

According to statistics from the China Internet Network Information Center (CNNIC), around 80 million Chinese people have used online group buying, with total business transactions amounting to RMB 34.8 billion, and the market continues to expand. According to a report from Tuan800, a professional site for group buying services in China, in 2012, total business transactions via group buying in China hit RMB 21.39 billion. During the first half of 2013, the group buying industry recorded a turnover of RMB 14.13 billion. The report also shows that the total trading volume for group buying in 2013 exceeded RMB 30 billion.

Fast Development

The idea of collective buying online was born in 2000 in the U.S. when Microsoft launched Mercata. On this site, the price for a product fell as the number of buyers increased. But the trial ended in dismal failure; Mercata was closed after less than a year in operation.