Foreign media: Liu qiangdong retreats behind the scenes and Xu Lei, the potential successor, moves to the front desk


Sina Technology News in the evening of April 16, Beijing time, foreign media published an article today saying that Liu qiangdong, founder and CEO of Jingdong, is retreating behind the scenes, while those who have done practical things in Jingdong, including Xu Lei, are coming out of the background, which is a good thing to boost investor confidence.
For more than 20 years, Liu qiangdong has built a small suburban electronic product sales point (Jingdong) into China’s second largest e-commerce empire. Now, the billionaire entrepreneur is retreating behind the scenes, entrusting his deputy Xu Lei to take charge of Jingdong to overcome the biggest crisis the company has faced since its establishment.
At present, Liu gradually gives more control to Xu Lei, who previously operated JD’s core retail business. Since 2019, Xu Lei has led a delegation from Jingdong to Davos and this month replaced Liu qiangdong as head of a key subsidiary. All this has raised his qualifications as a supposed heir.
In an exclusive interview, Xu Lei, 45, outlined how Jingdong’s business will withstand the initial impact of the new coronavirus epidemic and where it will go in the future. As consumers are increasingly attracted to social media such as wechat, and its platform are expected to contribute less than 50% of the company’s revenue in the next five years.
Xu Lei hopes to create more platforms for different consumers and shopping behaviors according to the idea of Groupon like discount app recently launched by JD. The outbreak of the new coronavirus is accelerating this process, because it drives people to support multiple functions (from live video to chat) applications, which makes customized or specialized services more attractive.
“Many people still only know that JD is an online shopping platform, but we have many businesses and sales from all channels, including online and offline,” Xu Lei said in a video conference interview. Jingdong will be more closely connected with users. Jingdong will be everywhere. ”
Xu Lei formally joined JD in January 2009. He has successively held several important positions, including the head of marketing department, the head of wireless business department, the head of marketing platform system of JD mall, the vice president of JD mall and the rotating CEO of JD mall. In 2019, he formally took over the main business of JD mall.
Xu Lei is regarded as Liu qiangdong’s personal choice to lead the company into the “super retail” future. The so-called “super retail” future refers to the blurring of the boundary between real business and online business through technologies such as augmented reality (AR). This time, relying on its own warehouse and delivery workers, Jingdong has survived the epidemic crisis. But it’s a costly way that competitors and analysts have questioned.
So far, Xu Lei’s biggest success should be his response to Alibaba’s “double 11” Singles Day promotion. In 2014, Xu Lei insisted that JD needed to come up with its own landmark activities to fight Alibaba. But the idea has met with fierce opposition as executives know that JD can’t afford such a 24-hour promotion because it could disrupt its logistics network. As a reference, Alibaba’s partners delivered more than 1 billion packages in “double 11” in 2019. “Most people were against me at that time,” Xu recalled
Xu Lei’s solution is to extend the company for a few weeks around its June 18 anniversary and take advantage of JD’s long-term expertise in electronics. So “6.18” was born. In 2019, Jingdong’s sales during the “6.18” promotion reached a record $29 billion.
David Dai, an analyst at Bernstein in Hong Kong, said: “in addition to Liu qiangdong, those who have done practical things in Jingdong are now coming out of the background, which is a good thing to boost investor confidence.” “I don’t think he has a clear succession plan,” he said of Liu. But it’s clear that he now has a second commander. ”
To be sure, no one believed that Liu would immediately give up all control. Many things can change during an outbreak. Thanks to the dual ownership structure, with 15% of the shares and 79% of the voting rights, Liu qiangdong still maintains an iron fist control over the company. But that’s exactly what investors are worried about, especially after Liu qiangdong’s “sexual assault case” was exposed in 2018.
Then there was a downturn in Jingdong. This time, Xu Lei came out again. JD has cut staff in all teams, 10% of its senior management and the basic salary of express delivery staff. He consolidated or eliminated a large number of loss making or “illogical” businesses and instead focused on those that grew.
When Xu Lei made the headline of “6.18” in 2019 for the first time without Liu qiangdong, his image improved further. At an internal meeting just after Xu Lei’s promotion in 2019, Liu told the gathered executives: “if you don’t listen to Xu Lei, you don’t listen to me.” “It’s not what I ask for or what I like,” Xu said
At present, from all the signs, Jingdong seems to be back on track. It has just announced its first annual net profit since it went public in 2014, with sales and buyers growing faster than expected. Jingdong expects revenue to grow at least 10% in the first quarter of this year. In February, the sales of fresh food in Jingdong increased by 260% over the same period last year, and the sales of consumer electronics products such as mobile phones and laptops began to pick up in March. This is also one of the reasons why JD’s share price has risen this year.
Xu Lei believes that JD is now in a favorable position to catch up with the recovery of consumer spending in May. He also said businesses and brands had started hoarding products for mid year promotions. But he also pointed out that affected by the outbreak, there may be a shortage of some imported goods in the third quarter, such as cosmetics and small electronic products with chips from foreign companies.
In the long run, Xu Lei hopes to bring new measures to help accelerate the transformation of JD to an omni channel retailer with supply chain as the core. (Ya Ming)