In an open letter to his employees last May, JD.com chairman and chief executive officer Richard Liu reaffirmed for them the importance of their mission statement: powered by technology for a more productive and sustainable world. Breaking down the mission statement, Liu said that a more sustainable world referred to their role as partners, sharing business success, providing a platform for fair and balanced development for employees, protecting the ecological balance and being grateful and responsible corporate citizens, achieving a balance of people, planet and profit, and “to do our part for the sustainable development of the world.”
As a leader, Liu has always been forward-thinking. He has been praised for having little corporate ego, and in Fortune’s profile of him as one of the world’s greatest leaders they stated he “has few of the trappings of a celebrity CEO.” It is this lack of self-conceit that has enabled him to envision with clarity the future of his company, as well as his role within it and what led to the recent leadership restructuring that will better situate JD.com for the future. By appointing Lei Xu, the former chief executive officer of JD Retail, to the newly created position of president of JD.com, Liu was able to delegate the day-to-day operations of the JD.com empire, allowing him more time to devote toward where he can make the biggest impact such as formulating the company’s long-term strategies, contributing to the revitalization of rural areas, and mentoring younger management.
Much of the success of JD.com can be attributed to Liu’s ability to predict the direction in which things are trending and make bold decisions toward pursuing them. In the early 1990’s while Liu was attending Renmin University, he began to teach himself computer programming in his spare time. The market reforms of the era meant that soon computer programmers were in high demand and short supply and Liu was able to amass considerable savings due to his newly acquired skill.
It was in part due to these savings that he was able to first open “Jingdong,” a 4-square-meter booth in an electronics bazaar in Zhongguancun. The stalls in these markets on Beijing’s “electronics avenue” were more often than not in the business of getting rich quick, as vendors would stock counterfeit and poor quality products for customers to haggle over. Liu on the other hand was interested in building a business that would last, and knew that in order to do so he would have to build trust with those who shopped with him. He became the first person in the bazaar to put visible price tags on all of his products, indicating that while his prices were firm, he could also guarantee that the goods in his store were of the highest quality and verified in authenticity.
Although unaccustomed to this way of doing business, Liu’s customers quickly came to appreciate his straightwardness and dedication to providing them with products that would serve them well. His customer base grew rapidly, and after just five years he had grown his business into a chain of electronic stores across three major cities in China. However, after beginning to sell his products online during the SARS epidemic of 2003, Liu quickly realized that the internet was where his business could grow with exponential potential, and by 2004, he had made the decision to move his entire business online. Although e-commerce was certainly a rising industry, when Liu moved his business online (ultimately becoming JD.com) the internet was far from the online shopping destination it is today. Amazon had just achieved profitability in the United States but in China consumers were still wary of purchasing items off of the internet, and Liu worked tirelessly to personally gain the trust of his customers. He single-handedly managed the customer service questions received so he could be fully aware of the needs of his shoppers, and would often hand-deliver the items himself.
Since moving his business online, Liu has continued to use his foresight to make decisions for his company that positioned it to become the largest retailer in China. In 2007, he started the process of moving the company’s entire logistical network in-house, a massive undertaking of building infrastructure such as warehousing, delivery routes and hiring roles such as warehouse managers and delivery drivers. At the time, many opined that this would cut too greatly into margins and hold the company back, but in fact has been the reason the company has been able to evolve past the e-commerce roots that it was created for in the first place. The flexibility of managing their own logistics meant that JD.com was able to grow into new areas quickly and with efficiency, expanding into new sectors such as groceries and pharmaceuticals.
Formulating long-term strategies
Liu has always had high-reaching aspirations for his business, and by creating the role of president to manage daily operations he has better positioned himself to focus on the trajectory of JD.com’s many endeavors. In 2020 Liu announced an update to the company’s strategic positioning, from that of an e-commerce business to a supply chain-based technology and service company. This transition can be considered the pinnacle of everything Liu had been working toward prior, and indeed it was in great part due to his investment in the company’s logistical network that it has been able to do so. JD Logistics recently went public on the Hong Kong Stock Exchange as they have begun to offer their logistical expertise to other businesses. The success of their own internal system has allowed them the ability to help merchants maximize efficiency, utilizing technology such as bit data to make accurate inventory predictions and optimize warehouse layouts.
JD Health, the healthcare arm of JD.com that was instrumental to much of China during the coronavirus pandemic, also made its debut on the Hong Kong Stock Exchange. Again utilizing their advanced and widespread logistical network, JD Health has been able to completely reconstruct the medical supply chain, allowing them to better support the daily needs of those in both the urban and more rural areas of China. The app that was launched in 2020 provided millions of people with access to telehealth during the coronavirus pandemic, and Liu has been confident in the company’s place in the future of healthcare for the country.
Finally, Liu recently oversaw the transferring of JD.com’s cloud computing and artificial intelligence operations and assets to the subsidiary JD Technology, solidifying their commitment to remaining on the cutting edge of developing technological solutions to the world’s problems. This action, in-tandem with Liu’s heightened ability to continue making big picture decisions such as these, the company stands well-positioned to continue their mission.
Revitalizing rural areas
Having grown up in a rural village near a lower-tier city, Liu has long-sought to find ways to improve the lives of those who live far from the conveniences that come with the first and second-tier cities. His village lacked electricity and even running water, and his poor farming family subsisted almost exclusively on corn or sweet potato for the majority of their meals. It was only on very special occasions such as during Chinese New Year that he would accompany his grandmother to the market where they would purchase the fattiest cut of pork they could find, saving as much of the residual fat as possible to cook with. In comparison, the village head had multiple slices of pork hung beneath his roof at all times of the year, and as a child Liu dreamed of becoming a village head himself, not so that he could have as much pork as he wanted, but so he could figure out a way to make sure everybody in the village did as well.
As Liu aged he outgrew his dream of becoming village head, but his commitment to improving the lives of those in the rural areas of China has remained steadfast. Remembering that he and his family would often have to travel miles to purchase the goods they needed, Liu knew that there was a strong demand for products in places that were often neglected such as third and fourth-tier cities as well as rural communities like his, and much of his logistics system infrastructure development has gone towards developing new routes and methods to reach them. JD.com has built the largest drone delivery system, infrastructure and capability in the world and they have utilized them to continually improve their delivery capabilities to rural areas. They have also lent their logistics expertise to farmers, helping them increase their revenues by helping them improve their logistics, supply chain, marketing and digitalization.
Moving forward, Liu also intends to continue to promote the development of the countryside economy, utilizing JD.com to ensure sustainable business for people in those areas. As of the end of the third quarter of 2020, JD.com had helped 110 impoverished counties put more than 3 million local commodities online, achieving $15.5 billion in poverty alleviation-related sales and directly driving more than one million impoverished households to increase their income. Additionally, the company’s social e-commerce platform Jingxi has helped tens of thousands of farms sell products to consumers across China, selling out over one million local specialites.
Mentoring younger management
Liu knows that building a truly great business means creating one that has the ability to outlast you while continuing your legacy, and he intends to continue to focus on helping to develop the next generation. As JD.com’s business continues to rapidly develop, its demands for talents have continued to increase and has over 350,000 employees to this day. Last December, the company announced that it would provide 15,000 jobs for students graduating from college in 2021, and 50 percent of the job positions available in 2022 are in research & development.
As Lei Xu moves to president of JD.com, Lijun Xin will take his prior position as CEO of JD Retail, and Enlin Jin was also appointed CEO of JD Health. Liu will continue to mentor them as well as those in lower executive roles in executing his vision, helping to carry on his legacy and solidifying JD.com’s place in the future.
“JD has a sound management structure with a large number of excellent business leaders, who, represented by Mr. Lei Xu, have strong belief in JD’s long-term business philosophy, proven leadership capability and extensive industry experience,” said Richard Liu.“Looking to the future, the correct long-term strategic design, the growth and development of young talents, and the healthy and coordinated development of various business units will continue to be the driving force for JD in doing the hardest and most challenging, but right and most valuable things for the industry.”