JD.com Outlines 2019 Achievements, 2020 Corporate Strategy
JD.com, 1/20/20
Richard Liu, Chairman and CEO of Chinese B2C e-commerce platform operator and retail infrastructure service provider JD.com (Nasdaq: JD), today highlighted the past year's achievements as well as the company's development strategy for 2020 in an e-mail sent to all JD staff ahead of the Chinese Lunar New Year holidays (Jan 24 - 30).
For the eighth consecutive year, JD.com will continue to deliver products to Chinese consumers during the Chinese New Year holidays, covering nearly 300 cities and thousands of districts and counties. The company will continue to provide over RMB 100 mln in support to enable the couriers who work during the Chinese New Year holiday to meet their relatives and children and celebrate Chinese New Year together.
Almost all industries and companies faced macroeconomic headwinds in 2019, and JD.com was no exception. Working within a volatile external environment, JD underwent an organizational restructuring at the beginning of last year. Through implementing our "Big Boss" initiative, business teams are empowered to make decisions, and frontline workers are much more motivated as the organization has become more efficient and agile. Getting more business managers involved with decision making and implementing key projects has improved the speed of response to customers and to the market. This is the result of the team's collective wisdom and capabilities. For the organizational restructuring, we held several deep discussions and reached decisions, upgrading our corporate values, based on which we have standardized our management approach and boosted team morale. This has allowed us not only to earn solid profit growth but also to achieve fast revenue growth.
At the same time, we have re-positioned the company from being a "retail and retail infrastructure" enterprise to a "technology and service enterprise with supply chain at its core." In the process of building a company that is led by strategy, our strategic roadmap becomes increasingly clearer and more focused as it evolves. The company as a whole, business groups and units as well as different functions have a clear idea of management responsibilities, strategic undertaking and target decomposition, so that each team can fulfill their own tasks and collaborate together for the company's overall development. Starting from our strategic positioning, our investment of resources is more determined, organizational coordination is more consistent, strategic implementation is more thorough, and the proportion of the group's revenue from technology and services is also rising, which has continuously strengthened our core competitiveness.
This year, a group of leading top talent with strong values, capability and a sense of ownership has emerged in all sectors of the group, and a number of scientists in the technology department have been named IEEE Fellows. Our focus on providing greater opportunity to younger leaders is achieving results: Yu Rui, who is from our TET (Training Eagle Team) management trainee program, is our youngest CHO. Yang Qikun, who joined JD.com right after graduation, is the CEO of JD Central. In the latest round of promotions, over 6,720 employees born after 1990 were promoted, and many will be gradually groomed for management positions. We have over 100 management team leaders who are born after 1985. Moreover, over 60 couriers on the front line have won recognition from or above the provincial level, such as the May 1st Labor Medal and the May 4th Youth Medal. Behind them, there are countless others in their respective positions who continue to create value in various roles and responsibilities.
Strategy, organization, system, talent and culture are the key to the stable, quality growth of our three core businesses in 2019. All the financial indicators of JD Retail are healthy and impressive. Consumer experience continues to be improved, which has promoted the upgrading of both the supply side and the consumer side of China's retail industry. JD Logistics has achieved single quarter profitability, relying on comprehensive end-to-end supply chain service and supply chain technologies to lower society's logistics costs and continue to increase the income of its employees. JD Digits focuses on the digitalization of various industries and has achieved breakthrough innovations in smart city, smart agriculture, fintech, digital marketing, smart robots and more.
Our core business has grown steadily and our emerging businesses are also growing fast. AllianzJD has become the fastest-growing insurance company in China and was making a profit in 2019. JD Property is listed as a top three property company in China, managing warehouse areas over 10 mln square meters in size. JD's international business is growing fast in Southeast Asia and the business model is getting clearer. In addition, the technology we've been building for many years has also ushered in a new dawn: JD.com has been selected by the Ministry of Science and Technology to join the National Open Innovation Platform for Next Generation AI in Smart Supply Chain. JD iCity, based on the digital science and technology capability of the "smart city operating system," has fully served key national projects such as the Daxing Airport and Digital Xiong'an. In the first three quarters of 2019, JD.com invested over RMB 13 bln in R&D and our technology department has over 18,000 employees. The growth rate of R&D investment for the whole year of 2019 was nearly twice the growth rate of total revenue. During the past six years, the growth rate of the group's R&D investment has far exceeded the revenue growth rate. We have become one of the companies with the largest investment in technology among Chinese enterprises, and these long-term investments are the guarantee of our firm commitment to our transformation to becoming a technology and service enterprise. We are even more proud that the group has not only achieved counter-trend growth in a complex economic environment, but has also continued to create a large number of jobs. At present, the total number of JD.com employees exceeds 210,000, an increase of nearly 30,000 over the same period last year, and our actions have led to the employment of more than 15 mln people from enterprises surrounding us as well as upstream and downstream ecosystem players, contributing to the country's economic development.
Entering the New Year, we will still face great challenges posed by the market and a competitive environment, but this is the force that drives us to seek innovation and change, continue to upgrade, and constantly evolve. Throughout this process, strategy, organization, system, talent, and culture are still the core dimensions that I am most concerned about.
In terms of strategy, the strategic decision-making committee (SDC), composed of dozens of heads of frontline business departments of the group, and the strategic executive committee (SEC), composed of heads of seven major business departments and functional systems, have formed a collective decision-making and rapid response mechanism after more than a year of being in operation, resulting in a methodology especially tailored for JD.com. It has become systematic through the top-level design of strategy, winning methods, guarantee and responsibility decomposition, and assessment of rewards and punishment. In the New Year, JD will continue to strategically maintain a unified vision, mission and goals, so that different business units and systems are on the same page and take consistent actions. Specifically, JD will stick to the strategic positioning of being a supply chain-based technology and service enterprise, focus on lower-tier market penetration, technology and service, and pursue further development of international business.
Regarding organization, JD will continue to build a building block organization with Big Boss as the core. Big Boss is a set of management systems that JD.com is using to address a huge organization where the business scope is constantly expanding and management difficulty is increasing "exponentially." Its core idea is to regard every small business unit as a business entity, and the manager of each entity as a real Boss - to hand over the business decision-making power to the person who is closest to the customer and knows the market demand best. After testing it in JD Logistics, we will promote the Big Boss mechanism throughout the entire group this year, building a large number of Big Boss units. Each Boss unit can be regarded as one or more component capabilities, called by other units to meet complex and ever-changing needs. We hope through this change to drive the efficient and smooth operation of the Boss unit itself, the upper and lower levels of Boss units, parallel Boss units and the overall building block organization, so that a company of hundreds of thousands of people can really get smart, understand needs, foresee the future, take the initiative to respond, and execute in an agile way.
We will focus on creating a collaborative and innovation system. We will run these two systems throughout the whole organization by guaranteed rules, transferable methodology and means of motivation, to continuously provide vitality to the organization. Synergy not only requires close cooperation between different organizational units, but also advocates for different units to act as back-ups for each other and take ownership, so that everyone can confidently put their trust in one another. For innovation, we advocate for breaking convention and moving away from dependence on a certain path, and encouraging fast iteration, from bottom to top. At the same time, we need to insist in investing in, expanding and strengthening scientifically proven innovation projects. The company will also provide comprehensive support for innovation programs with a series of guarantees, including evaluation, resource coordination, manpower security, performance rewards, and more.
Talent is always core to JD. We will continue to improve key talent and team development, building a talent system to enforce our future. This is the second year that we launched the young leader program, and we will develop a large group of young talent as leaders who possess both our corporate culture values and business acumen via both external resources and internal cultivation. By continuously upgrading the capability of both individuals and groups, focusing on contribution and attracting talent will ensure the organization has lasting and exuberant vitality, supporting the company to achieve high-quality growth. In addition, we will offer the most competitive salaries in the industry, strive for a talent appointment system which makes sure higher positions are offered to those with higher capability and vice versa. This will motivate all kinds of talent with fresh energy, especially providing a growing environment for young people, ensuring sustainable development for JD.com. "Only when an enterprise truly cares about the happiness of employees can the enterprise be great". JD.com will launch a series of employee benefit policies to make sure employees have a sense of belonging, honor and happiness. My biggest hope is that talent from all over will gather at JD, contribute and achieve value and happiness together.
Regarding our culture, as our business and talent structure becomes more and more complex, the company culture needs to be more and more diversified. Different business groups and business units will gradually have their own sub culture, requiring the company to have integrated rules and policies guaranteeing that our overall corporate culture won't be diluted, but also take into account the need for uniqueness and personalization. Right now, the CHO system is creating the "JD family" playbook, which aims to address this problem scientifically and systematically. We hope that through consensus and cooperation, we can defend the company's values, achieve cohesion, move together in-step and build a solid foundation to drive future development.
Keywords: Yang Qikun Richard Liu e-commerce Internet retail strategy B2C logistics JD.com JD Yu Rui JD Logistics JD Central JD Digits financial services
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