Did you know that China’s largest retailer is actually JD.com and not Alibaba? Most of the time you would think about Alibaba for e-commerce and retail. But their biggest rival in China is JD.com. Claiming the fastest grower over 2017 by raising its value from $10.7 billion to $20.9 billion in 2018. It was originally founded in 1998 as a retail store selling magneto-optical in Beijing, China, by a man name Liu QiangDong who is also known as Richard Liu.
Before starting JD.com or Jingdong Mall, Liu has had an interest in politics, in which to pursue that interest, he enrolled in the department of sociology in the People’s University of China or now known as Renmin University of China. Liu had also been studying computer programming on the side even though his major was sociology and had manage to earn enough money doing freelance coding to start a business. His first business was a restaurant that ill-fatedly went bankrupt due to money being mismanaged by his staffs. Liu did not take a management role at the time citing his own lack of experience and was left in debt after his staffs made away with the money.
However, he was enlightened by the fact that the restaurant bankruptcy was his fault as he did not establish proper management structures, financial systems and procedures. He discovered this when he was working two years in a health products company Japan Life. It was said that he quickly rose through the ranks. After paying off his debts, he started Jingdong Century Trading. The business was very successful, and he open up 12 more stores 5 years later.
It was during the severe acute respiratory syndrome (SARS) outbreak that Liu started focusing on online business. During the outbreak, customers and staff stayed home out of fear of catching the disease, creating a strange and lasting boost for the online business. Essentially when everyone refused to go out, buying things online became an apparent option. Liu recognised the potential in e-commerce and launched his own retail website in 2004 named JD.com. By 2005 he has closed all physical stores to focus on e-commerce. While the business saw a decline in profits, Liu stuck to it and managed to push his average growth rate to more than 300 percent in the next five years.
JD.com actually struggled to compete with the e-commerce giant Alibaba, who had Taobao for their consumer to consumer (C2C) and Tmall for their business to consumer (B2C) front. In 2014, JD formed a strategic partnership with the web giant, Tencent, giving JD access to Tencent’s WeChat and Mobile QQ platforms. Tencent wanted a stake in China’s second-largest B2C platform to compete with Alibaba in e-commerce.
Liu has been seen as a competitive, focused and detail-orientated person. JD.com went into a price war with leading online bookstore Dangdang, showing JD’s founders fearlessness in competing with giants of the industry. He was reported to have 84% of the voting power under a dual-class share structure, meaning he has veto control over all decisions made in JD. Probably learning from his mistakes in the early days of his first restaurant, he knows all the inner workings of his company. Liu had the foresight in developing his own logistics network, which is bearing fruit now being one of the world leaders in drone, automation and logistics infrastructure.
Liu is number 140 on Forbes list of Billionaires in 2018 and 18 on China Rich List of 2017. His company JD is ranked 3 in largest internet companies by revenue, ahead of Facebook at number 4 in 2017.
by Bob Tan
10 August 2018 16:55