In the US, Yelp has long held a chokehold on online reviews of local services, even if Foursquare may be starting to make mobile in-roads. In China, there’s a similar dominant player atop the local reviews ladder: Dianping. Founded by Tao Zhang in 2003 – yes, that’s a year before Yelp was born – the Shanghai-based company boasts more than 50 percent of China’s online reviews market, and it is also one of the top players in the group-buying sector.

Beyond providing user-generated reviews of restaurants, bars, spas, and other service providers, Dianping lets businesses offer discounts and deals to users in a Groupon-like way. In that way, Dianping serves not only as a consumer-facing product, but also as platform through which businesses can conduct marketing and customer loyalty campaigns. For Dianping, community is also vital. The service hosts forums on which its users interact and arrange meet-ups.

When I met Zhang (pictured above) in his Shanghai office last week, he told me that the combination of services represents inevitable convergence, rather than divergence. He doesn’t see Dianping as a mix of, say, Foursquare and Yelp and Groupon. Instead, the company focuses on helping users find good merchants, and enjoying benefits along the way.

“We are still a single service company,” Zhang said. He calls Dianping a “local platform.” However, competition is so intense on multiple fronts for Dianping – on mobile, in group-buying, and in reviews – that it is important to be an “holistic service,” he said. “You can’t just do one business and survive.”

In the US, Zhang says, the situation might be different because each player in each vertical – Yelp, Groupon, Foursquare, to name a few – is so strong, to the point where they can resist overtures from the likes of Google and Facebook. In China, however, companies always have to look over their shoulder in case Baidu, Tencent, or Alibaba decide to muscle into their space.

Zhang, who has an MBA from Wharton and worked in the US as a consultant between 1994 and 2003, sees the Internet business divided into four key sectors:

  1. Content discovery (Google, Baidu)
  2. Communications (Facebook, Tencent)
  3. Ecommerce (Amazon, Taobao, eBay)
  4. Services (Yelp, Groupon, Dianping)

Dianping is in the services space, he says, which has tough problems to solve, connecting the online world with the offline (or what used to be called “real”) world. Every sector within the space – whether it be restaurants, hotels, or car rentals – has different needs. In China, which lacks a fully developed retail and services infrastructure, especially outside of the major cities, the online-to-offline

Mobile is crucial to the space, he says, because people can now have the Internet with them wherever they go, which assuages the difficult-to-bridge online-to-offline problems. “Mobile is critical,” Zhang said. “For us, mobile is the most important thing.”

Dianping is about to release version 5.0 of its iPhone app, which (unusually for China) has a clean UI and a new “shake” feature, much like that of Shakey Shakey Food God, which I wrote about a few weeks ago. Its iPad app has a cool feature in which a user can draw with his or her finger a circle on the map to select a specific area in which to search for services. Once the circle has been drawn, recommendations pop up within the selected area. It’s only a matter of time until Yelp copies the feature, and that will be a good thing. I wonder if they might also try their hand at group-buying.