INFO GRAPHIC
COMPANY FOCUS DEEP DIVE
JD.COM
Founded in 1998,
JD.com, or Jingdong, has grown to become China’s second biggest online retailer. The company buys inventory from branded suppliers, and owns and operates its own logistics chain, including drone delivery for rural areas. As of 2018, the Beijing- headquartered company had 314 million active users, 30% of the Chinese B2C online market, and revenues of ¥462 billion ($67 billion)
FAMILY
Founder Richard Liu grew up in poverty in Beijing, the son of peasant farmers. After university, he founded a bricks- and-mortar electronics store 360buy in 1998, which focused on selling authorised products at a time when counterfeit products were widely sold. By 2003, he had opened 12 stores. After the SARS outbreak hit the region in 2003, Liu was forced to take his business online, and he soon realised the huge potential of online commerce. He then changed the domain name to
JD.com and closed all bricks-and-mortar stores in 2005. In 2007, Lui changed the company’s business model from selling consumer electronics to a wide variety of goods. In China,
JD.com has been compared to Amazon because of their similar business models, and because like Amazon founder Jeff Bezos, Liu is self-made.
JD.COM IN NUMBERS Revenues Founded 1998 66
CAMPDENFB.COM Generation First
($67 billion) 2018
¥462 billion
Voting Family shareholding
79.5% Employees 175,366
Retail and consumer products
Industry ISSUE 75 | 2019 X-FACTOR
The company’s backers include online gaming and social messaging group Tencent, which has a 20% stake in the company, and private equity firm Hillhouse Capital. On top of that, it also has several major foreign investors. Earlier this year, Google paid $550 million for a less than 1% stake in the company. Retailer Walmart also owns just under 11% of the company. However, because of
JD.com’s variable interest entity (VIE) ownership structure, Liu maintains tight control over the company, where his 15.5% equity stake represents 79.5% of voting shares. Under the VIE structure, sensitive assets like operating licences and core technologies are controlled by Liu and a handful of key employees.
JD.com, the listed entity, in turn signs contracts with Liu and others for the right to collect profits and dividends from the business.
LOOKING AHEAD
Liu has said his goal is for half of the company’s profits to come from outside China within 10 years. In his pursuit, he plans to spend €1 billion ($1.12 billion) over the next two years to build a logistics network in France. After that, he intends to turn his attention to the UK and Germany. The company also plans to expand beyond commerce and open a European research centre in the UK this year to focus on artificial intelligence and big data. In South-East Asia,
JD.com launched online stores in Thailand and Indonesia late last year, completing its first ever drone delivery outside China in Indonesia after securing government approval. Back home in China,
JD.com is expanding its premium bricks-and-mortar supermarket 7Fresh with 1,000 new stores planned over the next five years.
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