Breaking promises and abandoning people, Liu Qiangdong returns to his ruthless role

 Breaking promises and abandoning people, Liu Qiangdong returns to his ruthless role

Wen/Observer Network Yiming Editor/Longwei

In the early morning of April 15, Liu Qiangdong, chairman and CEO of the Board of Directors of Jingdong Group, sent an internal letter to all Jingdong Distributors. Liu Qiangdong said in his letter that the company did not cancel the base salary of distributors in order to reduce wages. Increasing the companys and employeesincome together is the only goal of this adjustment.

In the past, the income gap was very small, the typical big pot rice mechanism. In the future, the company must break the big pot rice, let the brothers with good values and strong abilities earn more and have broader development space, Liu said. I know that breaking the big pot rice will have short-term pain, but if we cant stand the short-term pain, we will die!

Liu Qiangdong Data Map

This is Liu Qiangdongs second voice in three days. Behind this, Jingdong is experiencing the most dramatic period of change ever.

On February 19, 2019, Jingdong was exposed to have eliminated 10% of senior executives at or above the vice president level in 2019, followed by three more CXO senior executives leaving in the following month. Zhang Chen, Chief Technical Officer and Lungyu, Chief Justice Officer of Jingdong, announced their departure on March 15 and March 19 respectively. Lanye, Executive Vice President and Chief Public Affairs Officer of Jingdong, also announced their departure on April 4.

The high-level earthquake has not yet subsided, and there is news that Jingdong will start from the bottom: cancel the base salary of couriers, reduce the courier provident fund, carry out performance reform news; and eliminate three categories of people (people who can not struggle, people with poor performance, people with low cost performance).

When people lamented that Liu Qiangdong had forgotten the promise of not cutting a brother, the introduction of the core senior management rotation plan in Beijing on April 9 refreshed the peoples understanding of the big melon.

Subsequently, on the evening of April 12, Liu Qiangdong wrote in a circle of friends to explain the dramatic changes in Beijing and East. He said that Jingdong would never force employees to work in 995 or 996, but he demanded that employees in Jingdong have a fighting spirit. Jingdong has not implemented the last elimination system for four or five years. There are more and more people giving orders and fewer people working. In this way, Jingdong is doomed to be hopeless and will only be gradually eliminated by the market. Liu Qiangdong also said that Jingdong has not implemented the last elimination for four or five years, resulting in a sharp expansion of personnel, and more and more people giving orders and idling away.

Liu Qiangdongs repeated public statements, in addition to explaining a series of recent changes in Jingdong, also officially declared that Liu Qiangdong returned to the core role of Jingdong, that once ruthless, once wolf entrepreneur, returned!

Good Business Starters

Jingdong is not Liu Qiangdongs first venture project. In the mid-1990s, he had saved hundreds of thousands of dollars in his senior year by tutoring and writing programs during his study at the National Peoples Congress. At that time, it was a great fortune. Liu Qiangdong, who had money, wanted to start a business.

Liu Qiangdong was glad about the taste of a restaurant in Daxie Street. One day, when he saw the owner posting a notice to transfer the restaurant, he rushed back to take out 240,000 yuan of his previous earnings. He ran to the owner with two large backpacks, without even bargaining, and took over the restaurant.

At that time, Liu Qiangdong knew nothing about the concept of law and real estate, even the restaurant under the plate needed to pay rent. After seeing off the boss, the first thing he did was to go to the mall and buy more than 20 Casio watches, send them to the employees, and then ask them what difficulties they had.

When he learned that the staff lived in the basement of Daoxiangyuan and would be poured back in the rainstorm, he immediately said that it was not a human life, and then rented two courtyards to the staff in Liulangzhuang and installed air conditioning. At the same time, Liu Qiangdong also stipulated that the staff should not eat the leftovers of the guests henceforth, and that the leftovers of the guests must be poured out. The staff had to cook two meals and two vegetable meals and four dishes for each meal. Eat a soup until youre full.

But the operation of the restaurant only lasted for more than half a year. Liu Qiangdong found himself constantly making money outside, investing in the restaurant, and even began to ask his parents for money. In a hurry, Liu Qiangdong remembered to check the accounts and found that he had lost everything.

Originally, the chef of the restaurant and the sister of the cashier talked about love. When purchasing, they lied about twice the price of the food they bought, and they also took the good food they purchased as rotten and corrupt. In half a year, the chefs wine changed from a few yuan of Erguotou to Qingdao, while the 240,000 dishes of Liu Qiangdongs meals turned into hundreds of thousands of debts.

Frustrated Liu Qiangdong asked his relatives and friends to borrow some money, pay off the debt, and then paid each employee a double salary and left the restaurant.

Liu Qiangdong said that he no longer believed in human nature, but in management.

Strong entrepreneurs

In recent years, the word wolf sex has been very popular, and Liu Qiangdong, once recognized as a wolf entrepreneur. At the age of 24, Liu Qiangdong, with 12,000 yuan saved in two years, rented a shop with only 4 square meters in Zhongguancun, named Jingdong Multimedia, and started his second business. This shop is the predecessor of todays Jingdong Mall.

At that time, Jingdong was mainly selling CD-ROMs and CD-ROM recorders, which was not very impressive in Zhongguancun. But Liu Qiangdong has his own bottom line: insist on selling only genuine CD-ROMs. Others can earn 100 yuan by selling a barrel of CD-ROMs, while my genuine CD-ROMs can only earn 10 yuan, with a profit difference of 10 times. This idea has been extended to the later Jingdong Mall, of course, he himself may not have thought, this will have much impact in the future.

1999 was a milestone in the history of East Beijing. The turnover began to rush from tens of thousands to one million yuan a month, while the average income of Beijing workers was only about one thousand yuan at that time. At the end of that year, Liu Qiangdong held perhaps the first annual meeting in the history of Beijing East, announcing that the annual turnover reached 6 million yuan. At that time, the number of employees in Beijing East was 7.

Two years later, Jingdongs sales have increased tenfold, reaching 60 million yuan; in 2003, the annual sales reached 89 million yuan. Liu Qiangdongs insistence on selling only genuine goods is indispensable to the soaring sales.

2007 was a turning point for Jingdong. Xu Xin of todays capital gave Liu Qiangdong $10 million, becoming the largest shareholder of Jingdong. When Xu Dajie later talked about the investment, she said, After talking with Liu Qiangdong for four hours, I made up my mind to invest. Asked how much he wanted, he said, $2 million, and I said,Two million is enough. Give you $10 million.

Todays Capital Xu Xin

Xu Xin is looking at Liu Qiangdongs wolf nature. Xu Xin believes that this kind of enterprise sniffer is sensitive, insightful, can feel what others cant feel, first see what others cant see. Liu Qiangdong is undoubtedly the best in this respect, even frightened Xu Xin.

At this stage, Liu Qiangdong made the most important strategic decision in the history of Jingdong, building logistics by himself. It can be said that it was this decision that created Jingdong and its logistics team that amazed countless people.

However, at that time, Liu Qiangdongs idea of self-built logistics was not well regarded, and there were many internal opponents. Even when Liu Qiangdong told Xu Xin, Xu Xin was shocked. At that time, it was very losing money. Every city built, there were cars and many people to support. Xu Xin said that some cities may take nine months or two years to make money. When it expands from one city to 30 cities, it loses a lot of money. Investors dont understand it, but Liu Qiangdong insists on it.

Less than a year later, the first round of financing of $10 million was spent, and Liu Qiangdong smashed it into logistics. Liu Qiangdong began to look for new investments. At that time, financing was very difficult. Liu Qiangdong met 42 investors a week when it was the most difficult time. He later recalled this period of history and said, At that time, we had about two or three days left. If the second round of financing was not available, the company would close down.

At that time, Liu Qiangdong was very worried about the employees in Jingdong. In his opinion, it was easy for a successful enterprise to leave to find a job, while leaving as a loser was the opposite. Under heavy pressure, Liu Qiangdong began to have white hair.

Fortunately, at the end of 2008, Liu Qiangdong met Mr. Liang Botao at the Limited Partners Conference held in Xuxin. After listening to Lius speech, Liang Botao invested $1 million in his personal name on the spot to express his support. After that, Bear Bull Capital invested another 12 million US dollars, Xu Xin invested another 8 million US dollars. Liu Qiangdongs perseverance finally brought in 12 million US dollars, in exchange for Jingdongs continued survival.

For these, Xu Xin commented that Liu Qiangdong was very strong, but sometimes the truth was in the hands of a few people.

Become a recluse

It is obviously incorrect to say that Liu Qiangdong is a dictator. In fact, he has also delegated power.

Jingdong, which melts into money, can be said to be advancing smoothly, singing loudly, and even starting to be listed. Liu Qiangdongs management of Jingdong has also begun to change.

Since 2011, in a short period of one year, COO Shen Haoyu, CMO Lanye, CTO Wang Yaqing and CHO Longyu have airborne a group of experienced professional managers to Beichen Century Center. The common characteristics of these professional managers are their rich experience in foreign enterprises.

With these personnel in place one by one, Liu Qiangdong almost no longer asked about specific business, said only look at the results, regardless of the process. Liu Qiangdong said at that time, If I had managed for ten years, I could not let go. It was a serious failure for me. At that time, it was also passed down as a good talk.

However, the addition of fresh blood will naturally lead to the rebound of local forces.

With the infiltration of foreign enterprise management concepts such as CXO and other Westernization School, conflicts with the Native School in Beijing and East China also follow. In this conflict, Liu Qiangdong strongly supported the Westernization School, he said without shying away, Jingdong needs fresh blood, leaving one or two senior executives is a normal phenomenon, has always been old arms and legs, no way.

The Westernization School has indeed brought some new weather to the east of Beijing. During his tenure as CMO of Jingdong Mall and Group, Lanye led Jingdong Mall to achieve rapid growth in sales performance, and made great contributions in expanding commodity categories, enhancing brand influence and optimizing channels.

On the eve of 618, 2013, Liu Qiangdong, who had been studying abroad for four months, finally returned home. Having listened to the CXOs comments on all VPs, the Westernization School was very unkind to the indigenous group who played the world. Liu Qiangdong wanted to stand up several times to refute for his old subordinates. His words came to his lips and forced him to take a sip of water and sit well until the end of the meeting.

At that time, it can be said that it was the peak of the CXOs power in Jingdong. In 14 years, Jingdong Mall was renamed Jingdong Group. Its business was divided into four parts: Jingdong Mall Group, Financial Group, Paipai Net and Overseas Business Department.

The positions of senior managers have also undergone great changes. Liu Qiangdong has changed from the former CEO of Jingdong Mall to the chairman and CEO of Jingdong Group. The position of CEO of Jingdong Mall has been vacant, leaving Shen Haoyu, a representative of professional managers and former COO.

Shen Hao Yu

All this came to an abrupt end with a 16-year slowdown in growth in the eastern part of Beijing. According to Q1 financial report in 2016, Jingdong GMV reached 55%, down by 20% from 79% in 2015. Liu Qiangdong finally realized that although these exotic CXOs had rich experience, they lacked his wolf nature.

From the second half of 2015, the status of these professional managers began to decline. First, Lan Ye was transferred to CPO (Chief Public Affairs Officer) from CMO who holds the power of marketing. Then, in 16 years, Shen Haoyu, CEO of Jingdong Mall, was transferred to the position of President of Jingdong International Business.

On July 1, 2016, two senior vice presidents were promoted in Jingdong: Xu Lei took charge of the marketing department again, and Wang Zhenhui took charge of the operation of Jingdong Mall again. In addition, Yurui, the former vice president in charge of East China business, has returned.

After Liu Qiangdong led the return of the Senate, Jingdong quickly recovered its combat effectiveness. In 2016, after 12 years of continuous losses, Jingdong finally achieved its first full-year profit. By the beginning of 18 years, the share price of Jingdong had reached a high of $50, and its market value had reached a high of $72.132 billion since its listing, approaching Baidu.

Everything looks very good, but as Liu Qiangdong gradually disappeared again, the situation in Beijing and East turned downward sharply.

Return of Hard Characters

A series of accidents, Liu Qiangdong in a semi-retired state, but the king, will eventually come back.

Eighteen years can be called Liu Qiangdongs water adversity year. Firstly, only three years after its establishment, Pingduo listed high-profile, while the situation in Jingdong was rather unoptimistic; then Liu Qiangdong himself was in prison, falling into a big trouble. The direct impact of the trouble on Jingdong is that in just 20 days, the stock price has fallen by nearly 20%, and the market value has evaporated more than 60 billion yuan.

However, all this is only the beginning. With the cold of global stock market and the reasons of Jingdong itself, the stock price of Jingdong has been declining all the way in 18 years. Most of the rising stars have begun to attack Jingdong in terms of stock price and market value; while Liu Qiangdong, who has been regarded as the symbol of Jingdong, has also fallen into silence because of the lawsuit. For the company whose founder label is too obvious, all this undoubtedly leads to the bottom drawdown. Under the crisis, how does Liu Qiangdong do?

At the end of 18th, the second major structural adjustment took place in Beijing and East China in a year. In January 19, Jingdong also announced that it would upgrade the Jingdong Mall to a retail sub-group, which would form a three-legged sub-group structure in parallel with the previously completed separation of independent Jingdong Logistics and Jingdong Digital Technology.

Then a series of combinatorial punches began to be played: eliminating 10% of senior executives, three CXOs leaving, pushing the 995 working system, canceling the base salary of Beijing-East Express, senior executives starting to rotate.

In this process, foreign professional managers are gradually leaving, veterans in the early stage of entrepreneurship, and the power of cultivating students internally is constantly strengthened. Why choose to start at the top? Because senior managers are the most difficult to face and promote, which shows the determination of Jingdong. All-weather technology quotes a senior person in Jingdong as saying, Compared with Xu Lei and other senior ministers, professional managers are generally not strong in fighting and lack of recognition of Jingdong culture.

However, such adjustments are far from the end. According to an internal recording obtained by all-weather technology, a senior vice president of Jingdong pointed out: After the presidents optimization is completed, the next is the director, and then the next is the ordinary staff, which will last until the end of April.

In the online optimization list, Mason, senior vice president and head of technology research and development system of Jingdong, Yu Yongli, former head of Y Business Department of Jingdong, Du Shuang, former general manager of New Access Business Department, and Yang Ping-ren, vice president of supply chain of Jingdong are among the outstanding ones.

All-weather science and technology pointed out that the adjustment of Jingdong released some positive signals. An investor in Jingdong said that the adjustment had given them hope, instead of being as insensitive and indifferent as before. More investors quipped, If any Internet company is going to lay off its employees now, I think its a promising company.

In addition to using high-level knives, changes are also taking place at the grass-roots level in Beijing and East China. Jingdong began to abolish the base salary of courier, and will increase the task of courier receipt. The package will be included in the performance, directly affecting wage income. At the same time, it will reduce the couriers provident fund coefficient from 12% to 7%, down by 5%.

Liu Qiangdong preferred to abandon his personal settings and use courier to operate. Why?

According to the data, by the end of 2018, Jingdong had 178,000 employees, most of whom were couriers. For a long time, although the model of only dispatch, no package in Jingdong Logistics has established a reputation of good service among consumers, there is no doubt that the loss of the lame leg of the business model is enormous in terms of revenue. In the case of the hopeless short-term rapid upgrading of the major business sectors such as Jingdong e-commerce, finance and cloud, it is undoubtedly most reasonable to choose logistics as a breakthrough.

Before that, Jingdong tried to open its core competencies such as supply chain, logistics, technology and service to the outside world, and the main means of opening up was to tilt its performance to the package by a large margin. In the view of senior analysts of Jianzhi Research Institute, the adjustment and optimization of the current organizational structure is the active choice of Jingdong, which is conducive to the interests of long-term shareholders. Logistics is a basic asset at any time, and retail efficiency is also the result of sustained operation, both of which are barriers. In the future, Jingdong still has the chance to become a good company with sustained returns.


Liu Qiangdong once said, No brother should be expelled. But now hes broken his promise and people are falling apart. This is unavoidable in the bloody market. In Liu Qiangdongs words, if Jingdong really fails and every brother is unemployed, thats the worst outcome.

Since 2019, Jingdongs share price has risen all the way, reaching $30. Next, the market will continue to test the hard role of Liu Qiangdong.

Source: Responsible Editor of Observer: Qiao Junjing_NBJ11279