JD.com sets out ambitious growth plan on anniversary day in the face of brutal e-commerce competition
- The e-commerce giant said over the next 20 years it intends to build three enterprises with over 1 trillion yuan in revenue
- JD.com will seek growth from lower-tier markets, advancements in technology and services, and expansion of its international business
Chinese e-commerce giant JD.com, founded by Richard Liu Qiandong exactly 20 years ago, has set an ambitious vision for itself in the next two decades amid rising competition and the current economic slowdown.
On its anniversary day on Sunday, the e-commerce giant said over the next 20 years it intends to build three enterprises with over 1 trillion yuan (US$140 billion) in revenue and 70 billion yuan in net profit each, five enterprises in the Fortune Global 500 list, and seven listed companies each with at least 100 billion yuan market cap, known together as its “35711 Vision”.
This ambitious plan comes at a time when China’s e-commerce market is losing growth momentum as the economy slows and as its population ages. JD.com, the main listed vehicle, saw its first-quarter revenue rise 1.4 per cent year-on-year to 243 billion yuan, with a profit of 6.3 billion yuan.
JD.com’s new vision was announced in an open letter sent to its 560,000 employees on Sunday. Competitors are also rejigging long-term plans, with Alibaba Group Holding, which owns the South China Morning Post, in the midst of a restructuring that will carve its operations into six independent entities.
JD.com reshuffles top brass as CEO Xu Lei retires to make way for Xu Ran
Liu, who began to reassert control at the firm late last year after a low profile period, attended a ceremony celebrating the group’s 20th anniversary on June 18, according to local media reports. This day was turned into another annual online shopping festival in China by JD.com to counter the November 11 “festival” initiated by Alibaba.
In the past six months, Liu has reprimanded senior executives for poor performance and strategic mistakes amid slowing growth in the domestic e-commerce sector.
According to CEO Sandy Xu Ran, the former chief financial officer of the company who took over the role of CEO from Xu Lei last month, JD.com will seek growth from lower-tier markets, advancements in technology and services, and expansion of its international business. It will grow its foothold in low-tier markets through low-price strategies, said Xu at the event on Sunday, adding that “behind the low prices are lower operating costs and higher efficiency in our supply chain”.
Earlier this month, JD.com said at a press event that it has been targeting smaller merchants by allowing these “million” vendors to open stores on its platform. That marked a departure from JD.com’s traditional business model, which sought to distance itself from competitors by tightly controlling the number of vendors in its marketplace.
JD.com has two affiliates listed in Hong Kong – JD Health and JD Logistics, which went public in 2020 and 2021, respectively. The company announced in March that it also planned to spin off its property and industrial units – JD Industrials and JD Property – and list them in Hong Kong.
