billionaire founder richard liu urges jd.com to cut prices as he is ready to let go 10 pct of executives, leaked speech shows

Richard Liu Qiandong has urged JD.com to get back to basics such as low prices and quality service to win the hearts of online Chinese consumers, according to a leaked internal speech by the billionaire founder of the company published by media outlet LatePost.

Two people familiar with the situation at JD.com, which is battling weak retail sentiment, confirmed the authencity of Liu’s comments, which were originally made in a video conference to JD.com executives and later distributed as a memo to staff.

Liu said he intends to fire 10 per cent of vice presidents and 10 per cent of the company’s business directors by the end of this year, according to the LatePost article. The South China Morning Post reported earlier that the company will slash the salaries of around 2,000 senior managers by up to 20 per cent, as part of efforts to boost housing and education benefits for its rank-and-file employees.

JD.com, which is a close competitor of Alibaba Group Holding, owner of the South China Morning Post, declined to comment.

According to a Thursday report by LatePost, JD.com has also began an organisational shake-up, making managerial changes to its core JD Retail business and other segments, with Lijun Xin remaining as JD Retail’s CEO.

The computer, communication and consumer electronic products under JD Retail will be consolidated into two units, the home appliance unit led by Li Shuai and the computer communication unit led by Wu Shuangxi, according to LatePost.

Richard Liu, chairman of a business empire he still tightly controls via outsize voting rights, told mid- to senior-level executives in a three-hour speech last Sunday that they must focus on basics such as lowering costs, improving efficiency and serving customers.

A JD.com employee, who requested anonymity, said that Liu was particularly unhappy about the retail sector with JD.com failing to match competitors on pricing, seen by Liu as the single biggest factor in deciding competitiveness in the Chinese market.

Consumer sentiment has been battered in China recently by slowing economic growth, a stock market slump, a housing market downturn and the knock-on effects of strict measures to contain outbreaks of Covid-19.

Both Alibaba and JD.com withheld – for the first time ever – announcing their gross merchandise volume (GMV), or final sales tally, from the annual online and offline shopping extravaganza that culminates on November 11, known as “11.11”.

Liu’s comments indicate that the billionaire founder might be taking a more proactive approach to managing the business empire he started from scratch nearly a quarter of a century ago.

In September 2021, Liu stepped down as president of JD and handed over JD’s day-to-day operations to his trusted lieutenant Xu Lei. In April 2022 he handed over his CEO role to Xu, who has become the new face of JD since then. At the time, JD said Liu would devote more time to “formulating the company’s long-term strategies”.

Liu in October settled a civil suit with former University of Minnesota student Liu Jingyao, who accused the JD.com founder of rape in 2018, a day before a jury trial was to start in Hennepin County District Court in the state of Minnesota. In December 2018, the Hennepin County Attorney’s office decided not to prosecute Liu in a criminal case due to “profound evidentiary problems”.

Liu retains control of JD.com via 78 per cent aggregate shareholder voting rights, despite holding just a 14 per cent stake in the company, according to the prospectus of JD’s dual primary listing on the Hong Kong bourse in June 2020.

JD.com reported 243.5 billion yuan (US$34.1 billion) in third-quarter revenue last Friday, up 11.4 per cent year-on-year. Net profit was 6 billion yuan, compared to a net loss of 2.8 billion yuan for the same period last year.

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