Richard Liu took his company public in the biggest Nasdaq float of 2014. He’s already conquered China and the UK might be next on his list.
Fresh lobsters. The latest Mercedes Benz. Johnny Walker whisky. Lafite wines. Liverpool FC shirts. Kent and Curwen jackets and McVitie’s biscuits. Or perhaps a $100m house in the centre of Bejing takes your fancy, should you have a spare dime or two?
You name the product and China’s biggest online retailer, JD.com sells it, so long as it’s of the highest quality of course. Now China’s hungry shoppers want more British brands and Richard Liu, JD’s founder and chief executive, is in the UK to hunt them down.
“The Chinese middle and upper classes love British brands, particularly high fashion and luxury goods. And those that have royal links,” he says, with a big smile. “We love them.”
Liu is over in London from Bejing on his own shopping trip. He’s here to persuade some of the UK’s top names to sell their goods on his site which has more than a 100,000 products being bought regularly by 226 million Chinese consumers.
What’s not to like? Liu is promising UK companies a market of up to 600 million people, help with the logistics of getting products from the UK to even the tiniest villages across most of the vast country with the shortest delivery times.
We meet in one of the grand private rooms at London’s Ritz hotel. In China, the internet billionaire, whose given name is Liu Qiangdong, is something of a celebrity for his extraordinary success but also for causing a stir – before he settled down to marriage two years ago – with stories about his romances leaking on social media. In the US, Liu is also well-known from taking JD public in the biggest Nasdaq float in 2014, and becoming the first Chinese internet company to make the Fortune Global 500 list.
Yet here in the UK Liu has the lowest of profiles. This is his first UK interview and big pitch to UK companies. There is a translator on standby although she is underworked because Liu’s English is excellent. He wears his wealth – he’s worth a cool $8bn or so – lightly. He looks younger than his 43 years, is courteous and polite but his ambition is clear to see.
Take his approach to the UK. As well as providing UK companies with access to sell directly to China without the hassle of setting up a Chinese entity – he wants to make business easier still by helping with shipping, payments, customs and delivery services.
Naturally, he is far too diplomatic to say which brands he would most like to see on JD.com’s cross-border platform, JD Worldwide – although you don’t need to be a genius to work out that some of the UK’s tip-top brands from the smart shopping streets close-by are on his wish list.
Liu has also been shopping in Cambridge, for brains rather than brands. He’s been visiting scientists at the university as well as a couple of hi-tech companies which he hopes to collaborate with and invest in, as JD is creating one of the world’s most sophisticated logistics and delivery operations.
A new London office will open over the next few months, he says, his second European venture after Paris where JD does big business with brands from L’Oreal to Remy Martin. He also hopes to expand JD’s own silk route, which already stretches from Beijing to Hong Kong and New York to Silicon Valley, Italy, Germany, Korea and Japan, as he grows the international business.
And Brexit? Will the UK’s decision to leave the EU damage trade between the UK and China? “Regardless of Brexit, we see huge opportunity to do more business with the UK and we hope this will speed up. I don’t think that Chinese-UK relations have been changed by Brexit. ”
As well as luxury goods, Liu says Chinese consumers have a taste for solid everyday goods, like those provided by the Asda supermarket group. Asda, part of the US retail giant Walmart, is about to launch a flagship store on JD Worldwide selling everything from health products to teabags, all of which are sourced in the UK. In return for selling JD its own nascent Chinese online business, Walmart has become a shareholder and recently increased its stake in the Nasdaq-listed giant to 12 per cent.
Walmart joined Tencent, China’s monster internet company and one of the world’s top 10 most valuable companies, which also has a 15 per cent stake in JD, giving it access to Mobile QQ and WeChat, China’s biggest social media platform with 900 million users. Useful shareholders to have.
JD is now worth a staggering $57.6bn but despite the company’s rapid growth it’s only recently started to make a profit. Revenues last year were $37.5bn but it lost $1.4bn. However, first quarter figures for this year showed the e-commerce site made profits on revenues up by 40 per cent, and forecasts are good for the full year.
What’s more, he hopes to grow twice as fast as his main rival, Alibaba’s Tmall platform. Rather than take a fat salary as so many of his peers, Liu opted two years ago to be paid £1 a year for the next 10 years in return for options at a strike price of $33.40 for 0.9 per cent of the stock. The shares are now at $40. Not a bad bet.
Liu’s other big bet is staking his future on the latest technologies. He shows me a picture on his phone of one of the baby robots his scientists have made to be used around JD’s warehouses. There are 256 of them across the country, ranging from mega-spaces to cold-chain facilities for the fresh crabs and lobsters which are sold alive online.
Between China and Silicon Valley, Liu now has 9,000 engineers working on research and development including drones for delivering goods – he has Amazon in his sights – artificial intelligence, virtual and augmented reality, logistics automation, unmanned vehicle technologies and more.
R&D, he says, is used for everything from intelligent pricing to inventory management and fraud detection to delivery, particularly to the most remote villages of China.
JD’s logistics are complex but essential to his dream of providing a top-to-toe online service for customers and controlling the supply chain. JD’s 65,000 red uniformed delivery employees have become a ubiquitous sight in China, zipping around on red three-wheel vans from its 6,906 delivery stations to keep to the promise of next-day deliveries.
Liu reckons that by the end of next year his first fully-automated warehouse will be functional but does not predict that robots will take over all the jobs, at least not soon. “Blue-collar jobs will be lost, maybe half. But even with robots you still need people working in other areas, to monitor the video fees, for maintenance of the system and repairing robots.”
As with so many great entrepreneurs, Liu struck upon success almost by chance. He was studying for a degree in sociology at Beijing’s distinguished Renmin University of China and found himself with free time, so started learning to code and programme. In his second year he was writing code for electronics firms and then opened a stall called Jingdong Duo Meiti in 1998 at a Beijing electronics market, from which he sold magneto-optical equipment and CD burners.
By 2003, he had opened 12 stores but then the SARS outbreak struck, a disaster that forced both his staff and clients to stay at home. One of those lightning moments came when Liu realised that buying and selling online might be far more reliable and work well in a country as big as China. He closed his stores, raising money from his family, who were involved with shipping coal, and set up his first site, adding good quality consumer goods alongside the electronics. He also shortened Jingdong, which is a combination of his given name, Qiangdong, and the name of his girlfriend at the time, to JD.
He says his secret is to give his customers quality with authenticity, and being able to spot before others that the growing Chinese middle classes wanted more than cheap, fake products. It’s why he has taken such a tough line of zero-tolerance to counterfeiting, marking him out from rival retailers.
“The wealthier Chinese want high value added quality, this is important to them and I have always looked after the customer. We have to take care of them and please them.” It so happens that technology appears to be on his side – more than half of all retailing in China is predicted to be online over the next few years.
By Margareta Pagano