Chairman and CEO of China’s second-biggest ecommerce player JD.com Richard Liu relinquished the ownership of daily operational activities amid executive reshuffle. Liu, who also founded JD.com in 2004, will continue to hold the chairman and CEO titles without being involved in his previous tasks. He will take up devising the company’s long-term strategy.
Chinese ecommerce giant Jingdong or JD.com on Monday announced a reshuffle of its top brass. Subsequently, Richard Qiangdong LiuOpens a new window , the company’s founder, chairman, and also CEO, will step aside from day-to-day operations. JD.com also created a new role of president, which is being taken up by Lei XuOpens a new window , an internal company executive who headed JD Retail until now.
Going forward, Liu will “devote more time to formulating the Company’s long-term strategies, mentoring younger management, and contributing to the revitalization of rural areas,†according to JD.com’s press releaseOpens a new window . So it seems Liu is going nowhere for now, although it does seem like the billionaire founder is being relegated in view of Beijing’s clampdown on its flourishing technology sector.
Several other company heads and stalwarts in their own right also stepped down recently. This includes Colin HuangOpens a new window , founder and now ex-CEO of PinduoduoOpens a new window ; Zhang YimingOpens a new window , founder and the former CEO of ByteDance, which created news aggregator Toutiao and the short video sharing service TikTokOpens a new window .
China’s Crackdown on Its Technology Sector
The single-party government, run by the Chinese Communist Party (CCP), has been reported to have taken a hard look at their existing relationship with internet and technology companies. China is thus putting an end to the unimpeded growth its technology companies enjoyed in the past decade.
This resulted in Alibaba affiliate Ant Group’s blockbuster IPO listing being blocked earlier this year in February 2021. Ant Group was founded by Jack MaOpens a new window , and it owns AlipayOpens a new window , China’s largest digital payment platform.
Jack Ma’s criticism of the Chinese financial system in front of China’s high-profile businessmen in October 2020 apparently also has not gone down well with the CCP. Since October last year, the richest person in China has only made a few scattered public appearances.
And then, in April, Alibaba was hit with a whopping $2.8 billion penaltyOpens a new window for violating antitrust laws. Chinese ride-sharing company Didi Global, which went public on the New York Stock Exchange in June, also faced similar issues. The Chinese government, through the Cyberspace Administration of China, went after Didi, citing that the company is illegally collecting user informationOpens a new window .
China also imposed regulations around gamingOpens a new window and mandated video game companies to restrict the time users spent gaming to three hours a week from September 1st. As a result, Tencent, NetEase, Interactive Entertainment and others will have to allow gaming only betweenOpens a new window 8 PM to 9 PM on Fridays, Saturdays, and Sundays.
Even JD.com, along with 12 other companies, have previously become the subject of the CCP’s regulatory scrutiny. Adam SegalOpens a new window , the director of the digital and cyberspace policy program at the Council on Foreign Relations, told TimeOpens a new window that modulation of the technology sector, which witnessed freehand growth, is underway.
“The story of Chinese tech companies over the last 15 years is, they grew quickly and became innovative because they existed in this space that the state did not regulate and did not fundamentally understand,†Segal said. “Now it has clearly laid down the marker and said: That era is over.â€
Come to think of it; this is along the lines of the United States introducing a set of five new regulations to check the rise of Big Tech or GAFAM (Google, Apple, Facebook, Amazon, Microsoft) companies. Besides the intricacies of the laws themselves, the major difference is that the U.S. regulations will go through an electoral process. On the other hand, China, a communist country with a capitalist economic outlook, has no such governance protocols.
See Also: Microsoft Product Boss Elevated to the Executive Leadership Team
The JD.com Reshuffle
Liu will be replaced by Xu to oversee the day-to-day operations of JD.com, the second-biggestOpens a new window Chinese ecommerce company by market capitalization. Liu, who in 2018 was arrestedOpens a new window but not charged over allegations of rape and sexual misconduct amounting to a crime in the United States, will continue to serve as the chairman and the CEO but in a different capacity.
“JD has a sound management structure with a large number of excellent business leaders, who, represented by Mr. Lei Xu, have strong belief in JD’s long-term business philosophy, proven leadership capability and extensive industry experience,†Liu said.
“Looking to the future, the correct long-term strategic design, the growth and development of young talents, and the healthy and coordinated development of various business units will continue to be the driving force for JD in doing the hardest and most challenging, but right and most valuable things for the industry,†he added.
Xu’s experience in leading roles in JD Retail’s sales, marketing, and operations divisions should come in handy for the management of routine tasks. Xu has run JD Retail since July 2018 and has been at JD.com for 12 years.
Xu’s position as the CEO of JD Retail will be taken over by Lijun XinOpens a new window . Xin, who in turn occupied the CEO mantle at health management platform JD Health, will be replaced by Enlin Jin. Enlin, until now, served as the head of one of the departments under JD Health.
Closing Thoughts
Since Liu’s arrest in Minneapolis, he has kept a low profile. There were concerns of a succession plan, or lack thereof, since Liu hadn’t straightened it out. China getting tough on its own entities and their leaders is not unprecedented. However, going by Liu’s position as one of the most powerful internet players in China, him being sidetracked was always on the cards.
How long it takes to push him out remains to be seen.
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