by Vivian Yang
Dr. Jianguang Shen is vice president of JD.com and Chief Economist of JD Digits, the digital technology subsidiary of JD.com. He joined JD.com in 2018. Being the first and now the only chief economist in China’s internet industry, his views and work present unique value.
In Dr. Shen’s view, digital transformation is an irresistible trend in China and around the world, and the coronavirus outbreak is only accelerating this process. In the post-coronavirus era, the next wave of the country’s economic growth will rely on the implementation of industrial digitalization and the development of the digital economy.
A veteran macro-economist
Dr. Shen focused his career on mainstream economic institutions before his path crossed with the Internet world. After obtaining his Ph.D in Finland, he was the chief economist of Mizuho Securities Asia, and before that, he worked as a senior economist of the IMF, the Central Bank of Finland and China International Capital Corporation Limited (CICC), respectively.
He met Shengqiang Chen, JD Digits’ CEO two years ago, and over a conversation, he became intrigued by the idea of combining his economics expertise with deep-mining of the big data on JD Digits, the fintech and digital powerhouse of the country’s largest retailer. Dr. Shen joined JD in2018.
At JD, Dr. Shen also heads JD’s Research Institute, a think tank that provides cutting-edge research, data, and industry analysis for all sectors. The team is composed of over 20 full-time research staff, half of whom hold doctorate degrees. Their research areas include macro-economics and analysis on industry policy and regulations. At the same time, there is a dedicated research team focusing on industrial digitalization. Their work provides valuable insights for JD’s strategy and has positioned the company as a thought leader in the industry and beyond. Over time, Dr. Shen and his institute’s work have received increased attention from policymakers, industry experts, international organizations, and the media.
The “B2B2C” model
Digitalization is a key part of Dr. Shen’s research. He has been an advocate for industrial digitalization as he believes that it will be the main driving force for China’s future economic growth.
“Most digital companies today focus on consumer services, known as the ‘2C (to C)’ business, whereas growth in the future will depend on the development of ‘2B (to B)’ business, which means there will be more business opportunities in providing digital services to enterprises,” said Dr. Shen.
According to him, real fintech should be developed in accordance with the basics of finance. The role of technology is to enhance financial institutions’ ability and efficiency. Emerging technologies like big data, AI, cloud computing, blockchain and IoT have proven their effectiveness in improving some essential functions of financial services such as application scenarios development, customer acquisition and operations, risk control, R&D, and more.
This explains why JD Finance has changed its name to JD Digits, which implied to change its positioning from a tech-driven finance services provider in competition with other banks to a fintech provider in support of traditional financial institutions. Through providing technologies, JD can help banks improve their services, which will then benefit their customers. This is referred to as the B2B2C model.
JD Digits’ new logo with colors representing JD elements (red) and innovative technology (blue)
Seeding technologies into more industry soils
In November 2018, JD Finance officially rebranded as JD Digits. With fintech at its core, the company hopes to leverage its digital capabilities to connect more with the real economy.
Fintech and mobile payments are among the technological areas where China is leading the world. In addition to the finance sector, these technologies have great potential to be used in many industries to help enterprises improve operational efficiency, Dr. Shen explained.
“JD has vast data, traffic, and a client base accumulated through running its retail operation. The big data and AI convergence powered by JD Digits will create more growth opportunities in new territories.” So far, JD Digits’ technologies has found its footing in smart cities, AI robots, digital marketing, and other areas.
“If you think of the second curve growth or even explosive growth, all the technologies we are building now are laying the foundation for the future,” said Dr. Shen.
The Chinese government has been promoting the construction of “new infrastructure”, which is expected to become a new driver for the economy. This initiative highlighted seven construction fields covering 5G, data centers, cloud computing and more. Dr. Shen believes that fields should actually be more expansive.
“All the infrastructure, construction and investment that work on transforming traditional manufacturing and service sectors online should constitute the new development goal, and the construction of new infrastructure is an impetus for the digital economy. ”
JD Digits’ intelligent city project in Nantong of Jiangsu province
Making digital economy fairer and more inclusive
China’s digital economy has been rising at an over 20% growth rate annually in the past four years. “From a national strategic view, data has become so important to the extent that the Chinese government has listed it as a production factor, juxtaposed with labor, capital, land, and more,” said Dr. Shen.
Given the favorable policies from the government, the highly competitive market environment, and the high acceptance level by the people, China is advancing fast in developing the digital economy.
Dr. Shen called for supports on low-income people amid COVID-19 on the WEF’s briefing with global economists
At the same time, Dr. Shen puts emphasis on the role of the digital economy in driving China’s high-quality economic growth, especially in promoting environmental sustainability and social inclusiveness. Creating a fair and inclusive process for more real economies in their digital transformation are key values JD Digits can bring to society.
Take small loans for small businesses and farmers as an example. In the past, traditional banks could not provide this service as the cost for manual audit was not cost-effective to make it a viable business. But nowadays, with big data and risk control technology, banks can manage operational costs at a low level regardless of the size of the loans, so they are able to expand their lending businesses, and more people who need small loans can benefit.
Digital technology also plays a unique role in poverty alleviation. The internet, big data and AI technologies make products from impoverished areas more accessible to customers. This not only develops more income for people in underdeveloped areas but also helps local businesses to better understand market needs. Based on this direct and precise information, they can be smarter in developing their production plan, brand proposition and industrial structure.
Dr. Shen pointed out that JD’s large business scale and advanced digital capabilities empower it to make greater contributions in many ways. Through providing cutting-edge digital technologies and services to its business clients and individual customers, JD Digits is transforming its role as a trusted partner in the rising tide of the digital economy that promises more inclusiveness and quality growth. This is the logic and vision for JD Digits’ future development.
(vivian.yang@jd.com)
