Other U.S. based Internet firms like eBay, Amazon and Google have also entered the China market, only to struggle to find the success they envisioned. Local competition and, at times, Chinese censorship laws have all been cited as reasons.

But analysts say Groupon may have made one smart move to better position itself in the China market. It is rumored that Chinese internet giant Tencent is Groupon's partner in GaoPeng.com. Tencent is most famous for being the operator of QQ, China's biggest instant messaging client with more than 655 million active accounts. The partnership would give Groupon a backer that understands the Chinese market, analysts say.

Tencent, however, has only responded by saying it does not comment on rumors.