Jan 13, 2021|
Digest: JD’s C2M is Gaining Speed in China’s “Factory Revolution”
by Vivian Yang
China Entrepreneur Magazine published its first cover story in 2021 on January 5th, focusing on the topic of Chinese factories’ “C2M” movement, and recognizing that the Customer-to-Manufacturer model is becoming an important force in driving the digital transformation of factories, with COVID-19 being an accelerator of this trend.
The article, having been widely reposted and discussed on multiple media platforms, argued that e-commerce companies like JD.com and other main players on the market which have accumulated years of data, traffic, consumer’s insights and marketing means are in a race to use C2M to engage factories in China and transform them for flexible manufacturing.
“A factory revolution is happening,” said Zhenhong He, president of China Entrepreneur Magazine. “E-commerce companies, manufacturing enterprises and tech companies are the three main forces amid the race to grab factory resources in China right now.”
Behind the race for factories is a RMB 40 trillion yuan available market. Data of the National Bureau of Statistics shows that China’s total economic output in 2019 was close to RMB 100 trillion yuan, in which the industrial sector contributed 39%, or near RMB 40 trillion yuan. However, internet technologies have a very low penetration rate so far in this market, presenting an enormous opportunity for a “factory revolution”.
A study on innovation conducted by Clayton Christensen (1952-2020), the late Harvard Business School professor and the founder of the theory of “disruptive innovation” shows that only 5% of new products developed by most companies will achieve market success, while the R&D expenditures on new products can take up 50% of these companies’ total budget.
The 5% vs 50% finding resonated strongly with Dr. Bowen Zhou, chair of the JD Technology Committee: “If a company does not develop new products, it will lose market and die; but if they go for innovation, the chance for success is merely 5%. This is the deepest pain point of innovation.”
According to Zhou, JD’s technologies will help its partners to shorten more than 80% of the time to market for their new C2M products.
“We aim to build a C2M technology that is fully powered by AI, including using AI to understand customers’ potential demands, simulating users’ reactions through a neural network, and simulating the evolution of the C2M products through another neural network,” explained Zhou.
In the eyes of Dr. Jianwen Liao, Chief Strategy Officer of JD.com, C2M is the ultimate model of a mature supply chain. “Changes are happening every year in the retail industry, but the supply chain will remain unchanged. Looking across the world, most of the leading retail companies all have strong abilities in integrating the supply chain.”
Today, JD Retail manages more than 5 million SKUs and operates over 700 warehouses, with inventory turnover rate as low as 34 days, a remarkable supply chain efficiency given its scale, and the rate continues to improve.
The report noted two characteristics of C2M supply chain innovations: one is to organize products’ design and manufacturing based on consumers’ demands; the other is to minimize the intermediaries between manufacturers and end users. Zhou said that JD keeps leveraging its technologies in AI, 5G, IoT, Cloud and more to build intelligent C2M factories which can effectively connect the whole chain of production, circulation and services.
JD launched its private label brand Jing Zao in collaboration with partnered manufacturers in 2018, followed by a series of initiatives in 2019 including detailed guidance for brand partners on making products with reverse customization, customized C2M services for customers’ clothes orders, a dedicated C2M online channel for direct-from-factory products and more.
Among the total of 6.7 million manufacturing factories cross China, their level of digitalization is less than 20% at present. With the growth of their digitalization, more small and medium-sized factories will be able to connect with greater market demands, which will in turn create more opportunities for the development C2M model, the report said.
Nov 7, 2024|
CIIE 2024: JD.com to Expand Imports of Specialty Brands, Strengthen Healthcare Partnerships, and Enhance Logistics
At the 7th China International Import Expo (CIIE) on November 5, JD Super, the supermarket division of JD.com, announced a major initiative to broaden its selection of imported specialty. Over the next three years, JD Super plans to introduce over 1,000 new international brands to meet the increasing demand for high-quality, diverse imported goods.
Meeting the Growing Demand for Quality Imports
According to JD Worldwide’s “White Paper on 2024 China Cross-Border Consumption Trends,” more than 80% of Chinese consumers are interested in imported products, with many prioritizing authenticity, quality, and fast delivery. In response, JD has significantly expanded its range of international offerings. During the ongoing Singles’ Day Grand Promotion, sales of cross-border products have surged, with more than 600 brands experiencing a sales increase of over 100% compared to last year.
Strengthening High-Quality Food Partnerships
Demonstrating JD.com’s commitment to sourcing high-quality products, JD Super signed a new procurement agreement at CIIE with Huadong Foods and Teys, a major Australian beef brand under Cargill. Under this agreement, JD Super and Huadong Foods will procure $50 million of Teys beef throughout 2025. This partnership underscores JD’s strategy of collaborating with trusted suppliers to provide high-quality, affordable beef to Chinese consumers.
Delivering Authentic Global Goods Efficiently
JD Logistics has built a robust logistics network that spans bonded, direct mail, and overseas warehouses, facilitating fast deliveries of imported items across categories such as electronics, fashion, beauty, food, and baby products. In many major cities, delivery times have been reduced to under 48 hours.
For instance, JD Super’s partnership with Raub of Malaysia enables the import of Musang King durians, which are harvested at peak ripeness and air-shipped with cold chain logistics for delivery within 24 hours. Additionally, JD.com also secured an early supply of Chilean cherries, available since October, which can be delivered in as little as 30 minutes in many areas through JD NOW, its on-demand retail service.
JD.com’s “JD National Pavilions” program, which features over 150 country-themed flagship stores from more than 70 countries and regions, continues to be a cornerstone of its import strategy. Supported by embassies and reputable organizations, this initiative offers Chinese consumers access to premium products and cultural experiences from around the world. In April, JD launched the JD National Pavilion of Mali, introducing popular items like shea butter and garnering over 40,000 followers.
Expanding Healthcare and Logistics Partnerships
JD Health is also making strides at CIIE by strengthening partnerships with leading global healthcare companies, including Merck, Bayer, and Roche. As “China’s premier online health access point,” JD Health is committed to integrating digital and physical healthcare resources to improve access and convenience for patients.
Key collaborations include initiatives with Haleon to promote brain health and anti-aging for the “silver economy,” with MSD China on a digital diabetes management model, and with Teva Pharmaceuticals to provide patient education for conditions such as tardive dyskinesia (TD) and Huntington’s disease (HD).
On the logistics front, JD Logistics announced plans to double its overseas warehouse space by 2025 and expand its network of bonded and direct mail warehouses. JD Express now serves over 60 countries, enhancing cross-border delivery efficiency and supporting both brands and consumers.
Through these efforts, JD.com reaffirms its commitment to sourcing and delivering authentic, high-quality imported products to Chinese consumers, supported by an advanced supply chain that ensures a superior shopping experience.
(vivian.yang@jd.com)
How JD Medicine Procurement Helps SME Drug Stores Leapfrog
