Richard Liu, founder of Chinese online retailer JD, is set to become more involved in the daily management of the company in 2023, according to local media outlet Huxiu, whose report cited an unnamed source.
In a recorded company meeting, the firm’s former CEO told staff that the company should refocus on the low-price strategy that helped it rise to prominence, while expressing frustration over executives’ tendencies to exaggerate their own performances. Many staff were surprised by Liu’s direct tone, the report noted, adding that he used phrases such as “feeling cheated by some mid-level leaders.”
Why it matters: JD is facing intense competition from cut-price e-commerce platform Pinduoduo and the growth of social e-commerce at companies such as short video giants Douyin and Kuaishou. JD’s yearly revenue growth rate has slowed from 20% in the first quarter of 2022 to 3% and 5% in the second and third quarters of the year, a significant drop from last year’s 36% annual growth rate.
- Although Liu stepped down as JD’s CEO in April this year, he has seemingly retained plenty of control, launching a series of drastic actions in recent months, including giving more benefits to grassroots staff, cutting senior executives’ salaries, and making major personnel adjustments.
Details: In his nearly 90-minute speech, Liu criticized what he claimed was the company’s currently out-of-focus strategy and overall organizational inefficiency, according to Huxiu’s report.
- Liu pointed out that competitive pricing is the key strategy of JD and that the company should focus more on how its products are being priced.
- Some of JD’s business teams have already removed the “per customer transaction” target from employees’ key performance indicator, a move in line with Liu’s emphasis on the value of “low price”. Previously, pursuing higher unit prices was a key goal for these teams.
- Liu also expressed frustration with how some top management figures had allegedly dressed up results with PowerPoint slides and new terminology. “Then you find out they’re liars,” Liu said, highlighting that the company’s results had fallen far short of its goals.
- The billionaire founder reportedly asked management executives to “return all strategies to cost, efficiency and experience.”
Context: Liu’s emphasis on a low-price strategy quickly gave JD a foothold in China’s booming e-commerce market in the company’s early days, but it was also the main reason behind the company’s persistent loss-making. The Beijing-based e-commerce giant didn’t achieve an overall full-year profit until 2019.
- Richard Liu began to distance himself from his JD management role in late 2019 after facing sexual misconduct charges in the US. The case was settled in October, after he reached an undisclosed agreement with his accuser.