Sep 9, 2020|
JDD Leaders Series: CEO Chen Shengqiang: Driving the Industry Transformation with Digital Technology
by Ella Kidron
At the 2020 China International Fair for Trade in Services (CIFTIS), JD Digits CEO Chen Shengqiang shared his vision for smart cities in an address entitled, “’Intelligent City’ Empowers Digital Government Services and the Digital Economy” at the Forum on Trends and Latest Developments of Digital Trade.
Chen explained that the construction of a digital government and a digital economy are inseparable. It is not simply a “government affairs cloud”, but rather a means to pursue security, stability and better social governance, as well as, importantly, to promote industrial growth and the improvement of people’s livelihoods.
In the speech on September 5th, Chen cited the story of Wang Guanghui, an ordinary grower in Beijing’s Fenghe Commune. Wang grows vegetables with an annual output of more than 50,000kg. In early 2020, impacted by the epidemic, Wang found his vegetables unmarketable. This is where the intelligent city platform of the Beijing Economic and Technology Development zone came in to match Wang’s resources with the consumer needs of residents in the area, helping Wang to generate an average income of more than RMB 20,000 yuan per month so far.
Chen explained in his address, “You may think that this is e-commerce, but in fact it is not. It is an intelligent big data management platform built during the epidemic which integrates policy transmission, enterprise and civilian services, data analysis, monitoring and early warning, command and dispatching, and auxiliary decision making.”
During the epidemic period the platform not only facilitated enterprises and residents reporting of information and epidemic prevention needs, but also used big data to support several other aspects of epidemic management. To that end, he introduced the “One Core, Two Wings” concept. The intelligent city is not only the foundation of “One Core, Two Wings” but also the base and digital cornerstone of intelligent city construction. “One core” refers to the modernization of city governance, while “two wings” are the development of service industry AI and industrial development and lifestyle service industry. The three support, interact and coordinate with each other.
JDD’s “One Core and Two Wings” Concept
Intelligent City is among many key initiatives using digital technology to improve efficiency of management and execution that JDD has contemplated and brought to life under Chen’s leadership. He is a pensive thinker. JDD Vice President Yerun Xu said of Chen, “His way of thinking is very advanced. He is a thinker. He likes to contemplate problems.” He is also a numbers maven, having started as an accountant.
From Accountant to CFO to CEO
A native of Sansha Town, Xiapu, Ningde on the southeast coast of Fujian province, Chen joined JD as its very first CFO in April 2007. At the time, Xu Xin, a female venture capitalist, and Today Capital had just invested US$10 million in JD, and was focused on helping founder and CEO Richard Liu and the budding team to find professional talent. When Xu Xin presented Chen to Liu to become Finance Director, he was hesitant about paying the former accountant a salary of RMB 20,000 yuan, which at the time was double Liu’s own salary.
Xu Xin pleaded with Liu, however, offering to pay half of the RMB 20,000 yuan for the three-month trial period. Once Chen joined, Liu asked Xu Xin to help him find more professional talent like Chen. Even as an early company, Liu felt it was critical to provide a clear picture to his investors. In 2007, JD hired PWC to conduct an audit, despite that fact that it would cost several million yuan and JD’s annual sales were only several hundred million yuan at the time. To keep investors informed in the early days, Chen would summarize the previous week’s data in a report to Liu on Mondays, and Liu send a weekly report to investors.
In an interview for the book, A JD Story, which accounts JD’s early history, Chen said he believed is greatest contribution came in October 2010 during one of JD’s business analysis sessions. In the session, Chen shared a review he had done of the workforce. Looking at the company’s development trends, he realized that simply adding more bodies and more manpower would “ruin” JD. There had to be operational efficiency, but this required data analysis, not just instinct.
At the time, all of JD’s data had been manually recorded. Chen and his team built an analysis framework based on a series of inputs so that the company could have a holistic view of and compare differences in operational efficiency, both from a vertical and horizontal perspective. Chen’s ability to not only contemplate problems, but also seek them out proactively, is something that stands out to his team members. Cao Peng, another manager of JD Digits said in an interview that one thing he learned from Chen is, “You can’t just do a good job of the tasks given by your boss. You have to see what the company lacks. You have to find things to do yourself.”
At the end of 2013, when JD was preparing to list on the NASDAQ, JD brought in now-retired Sidney Huang as CFO, giving Chen a chance to tackle a new challenge. He and Liu talked in New York about the prospect of building a finance business. Chen told Liu, “If this fails, it will be my fault, but if we succeed, my core team must achieve financial freedom.” After JD’s listing on the NASDAQ, Chen said of Liu, “He trusted me and I returned his trust.”
From Financial Services to Digital Technology
JD Finance was set up to be an open, cross-category financial platform which leverages JD.com’s advantages in industry ecosystems and supply chain. It’s first proprietary offering was a supply chain financing service, Jiangbaobei, that provided loans to suppliers. It later expanded to cover 11 different business areas.
In 2016, JD Finance completed its Series A financing with a valuation of RMB 46.7 billion yuan. Then in 2018, the company completed its Series B with a valuation of RMB 133 billion yuan, an increase of 185%. Also in 2018, the company announced a major upgrade of its brand, becoming JD Digits. Beyond simply being a new company name, JD Digits indicated the company’s drive towards integrating advanced digital technologies across multiple sectors.
What began as a fintech company, moved into areas such as urban computing agriculture, campus series and digital marketing. At the 2018 JD Discovery Conference, a large-scale technology conference dedicated to promoting the company’s recent achievements, Chen said, “While fintech continues to be the core business of the company, we are intensely developing digital technology to serve a wider range of industries. From this perspective, the business expansion will follow our main principle which means that data-related business remains our primary focus.” He added that digital technology should be used as a tool which draws upon existing knowledge to implement big data and technological resources to realize a truly digital economy.
Shengqiang Chen speaking at a JDD event in Shanghai
This forward looking approach to business is a common thread in Chen’s story. In an address to employees at an annual meeting, he said, “Strategy means always waiting at the next intersection for others, rather than going with the wind. Strategy is about solving the problems at may be faced in the future in advance when things are good and you are strong, so as to prepare advance and be vigilant.”
On Talent: The “Stage” is Yours for the Taking
Part of that strategy is cultivation of his talent. At the very beginning of JD Finance, Chen took his team of ten to Silicon Valley to observe and study. In his address at the annual meeting this year, Chen emphasized that the “stage” is open to everyone. “Young people mustn’t hold the view that they are young and experienced… As long as anyone has a young heart, an entrepreneurial heart and the heart to continuously breakthrough, the company will give you opportunity.”
Shengqiang Chen speaks to employees at the JDD Annual Meeting in January 2020
Another way he helps foster talent is leading by example. Even as someone who has professed to not be front of social gatherings or giving speeches, he faces each one with extreme diligence. Former colleagues of Chen recall multiple times where he sat or stood dressed in a simple, well-fitting suit, editing his speeches up to the very last minute before going on stage. This is not because he does not know what to say, but rather because he places great importance on the value of each and every word. He has a keen sense of judgement, and discussing problems with his team, he is known to frequently ask, “What is your underlying logic?”
Digital Technology – A Direction, A Change Agent
In closing Chen said, “Facing the future, we firmly believe that digital technology will drive unprecedented changes in the industrial ecosystem, and JD Digits is destined to be a driving force in this change… We will tell history that we have not only been here, but we have changed, and our change will also change the world.”