Oct 27, 2020|
JD CEO Richard Liu: JD’s Conviction is Technology-Driven Value Creation
by Ella Kidron
In the span of just a few short months, JD has been quite active in the capital markets. On June 18th, JD completed its secondary listing on the main board of Hong Kong Stock Exchange (HKEx) raising more than HK$ 30 billion to invest in technology. On September 11th, the Shanghai Star Market made JD Digits’ (JDD) prospectus public, revealing that over 72% of the capital raised in the IPO would be used to invest in technology. And on September 27th, the HKEx published JD Health’s prospectus, in which JDH focused on the creation of an “Internet + Healthcare” ecosystem.
As Chinese publication Securities Daily (证券日报) writes, JD broke away from the bounds of retail early on, and has since expanded into digital technology, logistics, health and other areas. Taking all of these pieces one at a time, all of this activity may seem sudden. But as the saying goes, “Rome wasn’t built in a day”, and the same is true of JD’s business. The driving force today, as it was in the early days of the company, has been JD Founder and CEO Richard Liu’s steadfast conviction to technology-driven value creation.
Back in 2004, less than a month after JD had moved online, its website was hacked. The hacker had written in big letters, “JD’s network manager is a big idiot.” Securities Daily writes that it is because of this joke by the hackers that technology became a major obsession for Liu. Shortly after that incident, JD quickly recruited its first programmer and started to write its own e-commerce program.
Four years later, JD’s daily average order volume had increased from over ten orders to over 5,000, and JD’s website underwent a large-scale transformation. In 2008, JD’s technology team rented a villa in the outskirts on Beijing, and did nothing but write code from morning into the wee hours of the night in order to design a backend system to support an order capacity of 100,000 orders. Yet, in November that year, as soon as JD’s new system went online, the system immediately exceeded 10,000 orders.
In 2013, having had several years of e-commerce experience well under its belt, the company name was simplified from JD Mall (京东商城) to just JD (京东). Its positioning was to rely on technology to provide supply chain service, e-commerce, finance and logistics platforms – all efforts were inseparable from technology.
Fast forward another four years to 2017, when Liu said that the company would focus on three things, “Technology! Technology! Technology!” He said, “From the beginning, JD has not only been an e-commerce enterprise. Within the last ten years, we have done industrial internet in the retail industry.” Jon Liao, chief strategy officer of JD.com, explained that the logic of JD is simple – to use its accumulated retail industry ability to reconstruct other industries’ value chains. Using Internet technology to reshape many industries can be seen as a common thread in JD’s business. All of which stems from Liu’s fundamental belief in and commitment to technology.
Lei Xu, CEO of JD Retail, has expressed that retail has always been an industry that interacts with the development of technology, especially online retail. Therefore, technology-driven retail innovation drives the business, and the whole shopping process, adding to the overall upgrading of the user experience.
At the same time, Shengqiang Chen, CEO of JD Digits, has said that that it is necessary to establish technology leadership at all costs. JDD’s R&D professionals currently account for 70% of its staff. According to the company’s prospectus, the vast majority of JD’s revenue comes from technical services.
JD Health has spoken extensively about the creation of an “Internet + Healthcare” ecosystem. At the same time, JD Logistics has developed 30 highly intelligent Asia No. 1 logistics parks, which rely heavily on advanced technology including AI, 5G, cloud, IoT and more.
In the first half of 2020, JD invested RMB 7.54 billion yuan in technology R&D, making it one of the largest investors in tech among Chinese enterprises for several consecutive quarters. The company currently has over 18,000 R&D employees. Patent applications for 2019 exceeded 3,651.
Sep 27, 2024|
Leveraging AI to Drive Innovation, Reduce Costs, and Create Jobs: Insights from JD.com’s Chief Economist
At the 2024 FORTUNE Global 500 Summit in Guangzhou on September 26th, Dr. Shen Jianguang, Chief Economist of JD.com, shared how the company utilizes AI to transform its operations across retail, logistics, and more, while driving significant workforce expansion. “By integrating advanced technologies throughout our business, JD.com has more than tripled its workforce in the past six years from 180,000 to 620,000, all while increasing salaries,” Dr. Shen explained during the panel discussion titled “‘Changes and Opportunities’—Chief Economists’ Perspectives.”
AI tools have enabled JD.com to boost efficiency and elevate the customer experience. For example, JD’s AI-driven digital human livestream hosts have helped over 5,000 brands increase off-peak hours’ sales conversion rates by 30%. Additionally, AI-powered customer service representatives offer more personalized support, and logistics couriers use AI to deliver packages faster and with greater sustainability.
JD.com’s customer service representatives
“The competition in China is so fierce, and that’s what drives innovation—you have to innovate to survive,” said Dr. Shen, underscoring the role of innovation in reducing costs and increasing productivity. This is especially crucial in China’s e-commerce landscape, where consumers are becoming more price-conscious. “Consumers are looking for the ‘extreme quality-to-price ratio,’ meaning they want high-quality products at lower prices,” he added. At the same time, Dr. Shen noted a growing trend in rural and lower-tier markets, where significant growth opportunities are emerging.
Dr. Shen also discussed China’s recent economic stimulus packages. “Policy initiatives are important. When people perceive a shift in policy, the market responds,” he said, referring to the government’s subsidies for home appliance trade-ins introduced earlier this year. This program has stimulated demand for affordable, high-quality products, as reflected in the increased sales of subsidized items.
Guangzhou, the host city for the summit, launched a new round of consumer goods trade-in subsidies on September 1st, positioning online platforms like JD.com as essential providers of seamless trade-in services. Over 800 home appliance brands have partnered with JD.com in Guangzhou, offering more than 8,500 products. Additionally, JD.com is working with its brand partners on a Customer-to-Manufacturer (C2M) model, leveraging consumer insights to drive innovation for more tailored products.
JD.com provides one-stop trade-in services for home appliances and home goods
The panel discussion featured Dr. Shen alongside Minggao Shen, Global Chief Economist at GF Securities, and Robin Xing, Chief China Economist at Morgan Stanley, with FORTUNE Editor-in-Chief Alyson Shontell moderating. The panelists agreed that while AI is still in its early stages, its potential is vast. With China’s stimulus policies and a functioning capital market, the private sector is well-positioned to unlock considerable industrial and social value.
JD.com ranked #47 on the 2024 Fortune Global 500, moving up five spots from the previous year. Guided by its mission to “Make Lives Better through Technology,” the company remains committed to cost management, operational efficiency, and enhancing user experiences, while continuing to invest in employee development and upskilling to foster both business growth and workforce advancement.
(vivian.yang@jd.com)
Apr 1, 2024|
JD Chief Economist: Tech-Driven Supply Chain Revolutionizes Gen-Z Consumer Engagement in China
At the inaugural FORTUNE Innovation Forum in Hong Kong on March 28th, Dr. Jianguang Shen, chief economist of JD.com, highlighted the transformative impact of tech-driven supply chain solutions in meeting the dynamic needs of Gen-Z consumers in China.
“Gen-Z consumers are very discerning and pragmatic,” said Dr. Shen. “They don’t care if the brand is local or global.” Dr. Shen began by discussing the increasing sophistication of younger Chinese consumers. “The rising popularity of local products can be attributed to China’s supply-side reform, which has enabled brands to provide lower-cost products with higher quality,” he said. Shen also emphasized the strategic advantage that brands can achieve by leveraging advanced digital supply chains, which offer deep insights into consumer behavior, thereby tapping into substantial market opportunities.
Joining Dr. Shen were industry leaders including Angela Wei Dong, Global Vice President China at Nike; Pontus Erntell, President and Chief Sustainability Officer at IKEA China; and Doreen Wang, CEO of Kantar China and Global Head of BrandZ. Together, they shed light on the shifting preferences of China’s youth towards quality, sustainability, and enhanced social engagement in their retail experiences, especially amid economic headwinds, prompting brands to adapt swiftly.
Drawing examples from JD.com’s platform, Dr. Shen discussed the rising popularity of eco-friendly mini refrigerators among Gen-Z consumers. These products, aligning with Gen Z’s penchant for tech-savvy and environmentally conscious offerings, underscore the necessity for brands to evolve and align with consumer preferences.
Furthermore, Dr. Shen discussed the positive impact of a new government policy encouraging trade-in of consumer goods, which is expected to boost consumption. Leveraging JD.com’s robust supply chain capabilities, customers not only can easily trade in old appliances for more modern and eco-friendly goods but also benefit from a suite of JD’s attentive services such as doorstep pickup, installation, and recycling.
The conversation also touched upon the strategic collaborations under the Consumer-to-Manufacturer (C2M) model between JD.com and numerous brands, aiming to streamline the journey from product ideation to distribution. This collaboration has welcomed over 4,000 brands to JD.com’s C2M platform, drastically reducing product research and market introduction times by 80% and 70%, respectively, thereby fostering a mutually beneficial ecosystem for brands, retailers, and consumers.
Dr. Shen concluded by emphasizing JD.com’s commitment to technological innovation, with its deployment of AI-driven chatbot customer service, highly automated warehouses, autonomous delivery vehicles, and integrated retail solutions that bridge both online and offline domains. These innovations are designed to meet the dynamic preferences of consumers, enhancing the overall shopping experience and setting a new standard in consumer engagement.
Super Buyers Drive Up Big-Ticket Auctions on JD during Singles Day Promotion
