Liu Qiangdong Talks About the Beginning of JD.com And The Plans For Expansion

Richard Liu is the founder and chief executive officer of JD.com, an e-commerce platform headquartered in Beijing that is leading the global industry in logistics and infrastructure capabilities. JD, a member of the Fortune Global 500, is China’s largest online retailer, biggest overall retailer, and biggest internet company by revenue. Liu built the JD brand from the ground up after starting the first brick-and-mortar store in Beijing in 1998 and eventually taking the store online and changing the landscape of retail around the world. With a dedication to quality and service, Liu continues to build the JD empire with a focus on investing in the company’s technological advancement.

Born on March 10, 1973, in the Jiangsu province town of Suquian, Liu attended the Renmin University of China and graduated with a degree in sociology. He then earned an EMBA degree from the China Europe International Business School. Liu grew up as China was beginning economic reforms, filled with explosive growth in the decades of his youth, yet his hometown and family remained poor throughout most of his young life. When Liu was accepted into university, his entire village pitched in to help send him to school. “They donated a total of 76 eggs and 500 yuan to send me off for the opportunity that changed my life," he once penned in a company blog post. “To understand the culture of giving in China, one must understand its history.”

Liu has since donated time and an expanse of resources to his alma mater with the hopes of giving back to the communities in which he was once so engrained. Engaged in politics and sociology from an early age, Liu Quingdong also showed great interest in computer programming and new technology with a promising future, and in 1998, he opened a 4-square- meter store selling computer accessories in and around Beijing. The early success of the business, Jingdong, was due to Liu’s attention to quality and customer service, as the region of storefronts in Beijing’s tech hub was usually reserved for knockoffs and a barter system. Liu’s innovative concept sold real products for real prices, and his good reputation led to the expansion of a chain of 12 stores throughout Beijing, Shanghai and Shenyang.

In 2003, the SARS epidemic plagued China, forcing Liu to close his storefronts due to the threat of staff and customers staying indoors. Out of necessity, his online store was reborn as JD – a concept similar to his brick-and-mortar operation with the same focus on quality and service. The early success of JD led Liu to understand the possibility of online retail, realizing that logistics costs were lower and e-commerce was truly the way of the future.

With the success of JD online, new products were being added every year. It’s been said of these first years in business that Liu was so dedicated to his concept that he was out delivering all of the packages purchased from his online store himself. Early success led to innovations in logistics, proving to be a task that no other company in the country had really undertaken, providing smart logistics operations for a population of one billion Chinese people. These early investments and dedication to sophisticated data-driven technologies and proprietary solutions helped carve out JD as the global leader in smart supply and logistics, with customers around the country enjoying same- and next-day delivery – a level of service unmatched globally. The company also boasts a leading delivery time outside of China’s borders worldwide. Liu has reported that an order in Beijing can be fulfilled in as little as three hours, while 57 percent of orders are delivered in six hours and 97 percent are delivered in ten. He has also noted that JD could manage delivery to Washington within 10 to 15 days.

To date, JD has one of the largest fulfillment infrastructures of any e-commerce company in the world. The company currently operates 20 “Asia No. 1” logistics parks, which are counted among the largest and most automated smart fulfillment centers around the world, all while leveraging a network of over 550 warehouses covering a cumulative 12 million square meters.

Plans for JD’s growth are vast and vary between regions. In Southeast Asia, for example, the team behind JD’s expansion is looking for local partners while working to avoid excluding acquisitions. The expansion will take several steps, according to Liu. The first step is to bring the best products to China, and then to Southeast Asia, followed by the Middle East, Europe, and the United States.

“Our ambition is to expand our supply chain ability to the whole world – to connect any brand, any goods, and any consumer globally,” Liu said in an interview at a business event in Aspen, Colorado.

JD has teamed up with Walmart to set the pace for the global scale, as Liu agreed to buy the U.S. company’s online operations in the country. In return, the Arkansas retailer bought a chunk of stake in the business. Walmart also co-led a $500 million fundraising effort in August for a JD affiliate that connects fleets of motorbike delivery staff with merchants in hundreds of Chinese towns and cities. Liu has said that JD’s partnership with Walmart was meant to connect the two global powers, while the work with another titan investor, Google, will be “mostly focused outside of China,” as the platform’s services are largely blocked or unavailable in China.

Additionally, Liu is in the process of opening more offices and warehouses across Western Europe, forming a marketing strategy for the region throughout 2019. On the topic of expansion, Liu believes that the rhetoric between U.S. and Chinese companies has followed a narrow storyline: American companies have a difficult time when it comes to breaking into the Chinese market, but he believes that those roles have reversed, and it’s harder now for Chinese companies to expand in the United States. This strategy must come with a winning marketing maneuver that is specific to the region, says Liu, and the right teams that know the market must be in place.

Speaking on his journey and JD’s vision for the future at the 2018 World Economic Forum Annual Meeting in Davos, Liu pointed to specific moments in his quest to create JD and the crucial moments that forever changed the global retail landscape. To achieve JD’s global vision, Liu said, JD must facilitate the exchange of popular foreign brands between counties, bringing popular American brands to China while taking “superior Chinese brands” to overseas markets.

Liu Qiangdong Talks About the Beginning of JD.com And The Plans For Expansion — UPDATE

On May 19th, 2020 — JD.com’s annual Employee Appreciation Day — Liu Qiangdong sent an open letter to all 260,00 employees of his company. In it, he provided his employees with an in-depth look at not only what JD.com has accomplished so far, such as their successful endeavors in providing aid for those affected by the coronavirus pandemic and their extensive supply chain network they have built, to who they intend to be next as they continue to plan for international expansion and embrace the technological advancements that mark the advent of a new era. Liu heralded the company’s new mission statement to mark their 17th year in business: “Powered by technology for a more productive and sustainable world.”

Liu stated that JD’s vision is to become the most trusted company in the world. They are working toward their dream to become an internationalized company with each intentional step taken, from entering markets such as Indonesia and Thailand, to actively developing their cross border business, international business group, international logistics, international payment systems. They have also put a plan in place to adjust their processes, systems, and staff to gradually build their international management system and have committed to making international business a strategic business for the next three to five years at a corporate level.

Liu pointed out that since the era of the internet started, the first half involved innovation coming from other countries and then being adopted by Chinese companies, whereas the latter half has seen more opportunities for China to bring some of the greatest innovations to the world. Their work so far in becoming an international brand has proven to show successful results, as JD.com’s outbound e-commerce platform saw sales growth of over 300% and the number of users increase by 256% in the first half of 2020 in comparison with the previous year, with the top five markets leading the growth being the United States, Taiwan, Japan, Canada, and Hong Kong.

Even with these massive gains, nobody could have predicted the novel coronavirus pandemic that has completely shifted this year’s trajectory, with Liu comparing it to the difficulties the company faced when it first moved online during the 2003 SARS outbreak in Beijing. This time though, the company faced the challenge not as a small start-up forced to innovate in order to adapt to a new scenario, but an industry leader able to make an impact not only on their customers but the world as a whole.

Internationally, JD.com donated 80,000 disposable medical masks, 200,000 surgical gloves, 20,000 thermometers, 15,000 protective gowns and 50 ventilators to Chile, and 150,000 Covid-19 test kits, 5,000 sets of medical protective clothing, 5,000 pairs of goggles and 20 ventilators to Uzbekistan. The Chilean ambassador Luis Schmidt Montes said of the donation “We are grateful for Mr. Qiangdong Liu and JD.com’s kind donation. Help from Chinese enterprises and people will speed up Chile’s epidemic control efforts. To Switzerland, JD.com donated 800,000 KN95 protective masks, 800,000 disposable medical masks, 800,000 surgical gloves, 20,000 pairs of goggles, and 10,000 protective gloves. These donations were symbiotic in nature, as JD.com has suppliers of popular foreign goods in the countries such as Chopard from Switzerland and wine from Chile.

Although international expansion and relations are still a vastly important factor in JD’s business, since earlier this year when Covid-19 first began making its way through China, Liu and JD.com have played an instrumental role in their own country. They donated over 100 million masks and 60,000 units of medicine to charity foundations and cities across China, ensuring those on the front lines were properly equipped to fight the virus. In addition to this, they also donated products from their inventory such as feminine care products and adult diapers to the hospitals, and through JD Fresh provided fresh fruit like blueberries, raspberries, and apples to hospital staff in Wuhan. To the Wuhan Animal Protection Association, they donated five tons of pet food and 6,000 boxes of pet medicine for homeless animals.

Where other e-commerce companies such as Alibaba and Amazon struggled to keep up with the increased demand they experienced as consumers remained inside and turned to online shopping for all of their needs, JD.com was able to stay on track and maintain a steady supply of the consumer’s needs at their standard 90% of deliveries being made same-day. Thanks to their in-house logistical network, they were not held up by relying on third party couriers and warehouses to fulfill orders and were able to keep a steady flow of consumer goods throughout the crisis. If an item was warehoused with one of their brand partners, they would utilize JD Logistics to pick up the necessary inventory directly from the brand’s warehouses, leading them to be seen by the public as one of the most reliable sources for all of their needs during the pandemic. In addition to this, they also committed to keeping the prices of their own products stable, and imposed heavy penalties on third party sellers that were found to have made unfair price hikes.

Similarly, Liu and JD.com also took steps to ensure there were no increased prices on drugs via their JD Health subsidiary. Being the largest pharmaceutical retailer in China, they worked closely with JD Logistics to begin delivering medicine quickly and efficiently from their e-commerce site. The company also launched a free consultation platform on their app to take some of the burden off of hospital staff to provide answers. Using the app, patients were able to speak to a physician at no charge about not only coronavirus symptoms, but all diseases as the staff grew to include medical experts such as cardiologists and pediatricians. They also organized several livestreams with some of China’s top medical experts who had experience with the 2003 SARS epidemic on a variety of coronavirus-related topics. They also began to offer a free psychological support hotline, which was particularly vital to medical professionals that had been working in increasingly tense and high-stress conditions.

In addition to their consultation app and hotline, Liu worked with local governments to integrate their WeChat accounts with JD’s smart assistant technology. When a user texted the account a question, they would receive a response from an AI bot capable of question prediction, intent recognition, classification, identification, and similarity matching to provide a quick and accurate response on the latest epidemic information. The technology was able to provide answers to a wide variety of questions such as how to properly wear a face mask, how to dispose of them once used, how to proceed if you are experiencing symptoms. The service could also provide locations for fever clinics and check if a user’s recent mode of transportation such as a flight or bus ride had a reported coronavirus patient on it.

In Liu’s open letter to his employees, he said JD.com intends to “unswervingly transform into a technology driven supply chain services provider. This was clear in their coronavirus response, as they utilized their billions of dollars in the research and development of drones, autonomous technology, and robots for last-mile delivery solutions. Although they had been using autonomous delivery robots for small and medium-sized products since the previous year, in February their robot was able to make its first large-size package delivery of daily necessities and donated medical supplies completely free of human assistance to a local hospital.

Liu has made clear that he sees value not only in supporting large cities such as Beijing and Shanghai, but also third and fourth-tier cities like the one he grew up near. When the boat route to a small village across Baiyang Lake was closed due to coronavirus precautions, JD Logistics used their drone technology to instead fly parcels over the lake and deliver them to a predetermined location in the village where the customers were able to retrieve their packages without any human to human contact.

The difficulties this year have presented were unexpected to be sure, but nobody was poised to surmount them better than Liu Qiangdong and his company. Of this, Liu said to those who had helped him build his company into the behemoth it is today: “It is a dozen times harder than in the past to realize our technology and internationalization dreams. But, no matter what time, JD is the one who has dreams and dares to pursue them. It is more frightening to not dare to think than it is when your head was cracked open and bleeding due to pursuing your dreams.”