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Q&A: JD.com, China’s Leader in Online Direct Sales to Consumers

By now many people have heard of Alibaba, China’s e-commerce giant, and how it leads China’s e-commerce revolution with its online Taobao Mall and later Tmall. Well, that’s already old news in the fast-changing China. The new kid and emerging leader on the block is a company called Jingdong 京东, or JD.com (formerly 360buy), which has already taken the largest share of online direct sales in the business to consumer (B2C) market, with over 43 percent. On top of that, a confident JD is also ready to take on the world by expanding overseas, including in the U.S.

That’s why Shi Tao (石涛), JD’s vice president and general manager of its global business, was in Seattle for three days, along with four of the company’s division heads. Busy meeting with local companies and government leaders after giving a presentation in Seattle, Mr. Shi sat down for an interview with contextChina in between meetings, answering questions about JD.com’s fast growth, its dog logo vs. Tmall’s cat, Amazon China, and more.

Q: JD.com has achieved growth of more than 200 percent a year for seven years — what is your secret?

A: We think logistics is our core competitive advantage. We have been doing this for the last seven years. From the first venture capital we received, we have invested all our venture capital into the logistics development.  (JD delivers in 24 hours to 156 cities in China through its 65 warehouses in 24 cities. –contextChina)

Q: Who is your biggest competitor in China now?

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A: I think it is Tmall. There are two kinds of B2C business. One is platform. The other is direct selling. We started from direct selling and later developed into both direct selling and platform. Tmall is the biggest platform player in China. They are still the largest among all these e-commerce players. For Jingdong, our core value is passion. We try to beat all these competitors in the market. We aim at Tmall as our biggest competitor because all the others, Suning, Dangdang, Amazon, Vancl, Yihaodian, and Yixun, are already behind us. We have already been the largest one in direct selling. Right now we are aiming on the platform.

Q: What do you think of Amazon China’s prospects, with Amazon being a Seattle company?

A: I would say Amazon is a very successful company since I worked for them for three years before. And I know what their competitive advantage is. They rely heavily on the system, the technology. But their policies, local strategies, and local marketing are kind of not flexible enough. That’s why they are behind us in China. We make a very quick decision based on the market challenge. But I don’t think Amazon is doing that.  What Amazon does in China is follow its global model and global process.  It they apply the model in Germany, France or Japan, they also do it in China. They don’t consider if there are specific challenges and customer needs. That’s the difference between us and Amazon.

Q. As an author and publisher before, how do you think your writing career helped with what you are doing now?

A: Well, that’s probably by chance. That was long time ago when I was young. After I returned to China, having lived in the U.S. for many years, I wanted to do something in business. I sort of benefitted from my experience in observing the society, observing people, trying to figure out how to deal with people, how to think about the society, and all aspects of the human beings.

Q: What does the JD logo mean? How did you get the JD slogan to be “duo, kuai, hao, sheng” (多,快,好,省) or “More, Fast, Good, Save”?

A: The logo is a little dog. The dog has a name.  The name is Joy. We wanted customers to think that we are the one who is really close to them and full of joy, and wanted to make their online shopping a joyful experience. That’s why we used a dog as our logo.  You know TMall, they have a cat. But we don’t think a cat is something representing joyful and loyal. A cat most of the time is a little mysterious, far from human beings, trying to be independent, polite but not close. We wanted to be very close to customers.

The four characters of our slogan, we think summarize our company, our website: Duo (More) means our big selection, as we wanted as many products as possible to serve our customers; Kuai (Fast), that’s our core value. Very fast delivery; Hao (Good) means the quality is so good. It’s not only you can buy so many different products, they are also of high quality; Sheng (Save) means our cheap price. You can save a lot of money when you shop with us. They really represent our core values.

Q: What is the significance of JD’s partnering with Wangyin Zaixian (网银在线) or “net bank online”?

A: We bought it.  We acquired that company as our portal for payment.  You know in China, if you want customers to pay online, you need to have a license issued by the government. JD is an e-commerce company not entitled to apply for the payment license. The only thing we could do is to acquire a company who has that license. Wangyin does have an online payment license. We built it into our payment channel, especially for JD’s customers. Before Wangyin, we had to rely on third parties, like Alipay, Kuaiqian, Caiwutong. We also do a lot of COD, Cash on Delivery. But if you want to advance your payment solution for the customer, especially for those small orders, like digital music, e-books, you need to have your own payment solution. That’s the reason why we had to build it. This September, we are probably going to launch JD’s payment solution.

Q: What was the main drive for the expansion abroad, to have overseas products for your customers or overseas customers to buy China products?

A: There are different steps. First step is to sell our products to overseas customers. We have so many customers in foreign countries. They are probably students or ones who moved from China to other countries to live there. But they are JD’s customers and want to buy from us. We received a lot of customer response asking “why don’t you set up your selling channel for overseas customers?” After considering the situation, we think it is time for us to start selling products overseas. Next step is probably to launch into foreign countries, maybe in emerging market in Asia or East Europe or maybe South America, in order to expand into international market. Right now, our target is Chinese. In the future, we of course want to target international customers, no matter which country. We have to work on a strategy, which one we are going first, when we would do it, should we find a local partner, what categories we are starting, all these still remain a question.

Q: With your Seattle connection, since you worked for Amazon and were here a lot, when you are ready to open an American office, would you be opening it in Seattle? And what do you like about Seattle?

A: We don’t even know if we are going to open one. Let’s say it this way. If we need to open an office in the U.S., there are quite many places to think. But West Coast is probably the priority. We are not thinking of opening something in East Coast. But in California or Seattle or somewhere else, we have to think about it.

As for Seattle, first, this place is full of talents. If you want to open a business, first thing you want is good employees. Seattle definitely has that. There is Amazon, there is Microsoft, there is Expedia, and many e-commerce companies around. Second, we learned that Washington state has very good policy that there is no personal income tax. There are also good facilities and good environment for people and companies to be here. There are quite many advantages I think. Other places are also far from China while Seattle is quite close to China. If you have a lot of shipment back and forth between China and the U.S., then Seattle is a very good place.

Published August 16th, 2013

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