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 "The competition makes the two companies stronger," said Liu, a
billionaire at 41. "I'm actually enjoying competing," the chief
executive told Reuters in an interview.
On top of shares in a $37 billion company that mean he's now worth
close to $8 billion, Liu still controls 84 percent of voting rights
at JD.com. If that causes corporate governance concerns, it makes
his resolve to take on his biggest competitor, the Alibaba Group
Holding Ltd [IPO-ALIB.N] e-commerce juggernaut co-founded by Ma, all
the more personal.
"He has this ambition to win... He says there's only number one,
there's no number two," said Kathy Xu, founder and managing partner
of Capital Today Group. Xu, one of China's most successful venture
capitalists, put $10 million into JD.com in 2006: Her investment's
now worth 110 times that amount.
Like Amazon.com Inc, JD.com has a logistics-focused e-commerce
business. The company, whose delivery staff outnumber Alibaba's
22,000 employees, promises same-day delivery in 43 of China's
biggest cities.
That sets it apart from Alibaba, which still depends on China's
often unreliable postal infrastructure to get goods to its
customers' doors as it accounts for about 80 percent of all
e-commerce in China.
"It's who can give customers the best experience, they're the one
who'll succeed and achieve ultimate victory," said Liu. According to
iResearch, China's e-commerce market will grow nearly two-thirds to
4.45 trillion yuan ($717 billion) in 2017 from 1.84 trillion yuan in
2013.
Like Amazon in its early days, it could also take JD.com time to
build a record of lasting profitability. In 2013, the company only
scraped a net income of $36 million with the help of Chinese
government subsidies, after total losses of more than $430 million
for the two previous years.
As Alibaba lines up it own mammoth IPO, investors have instead
focused on JD.com's outsized sales growth, with revenue tripling to
69.3 billion yuan ($11.2 billion) in 2013 from two years earlier.
Also encouraged by its close ties with Chinese internet giant
Tencent Holdings Ltd - Alibaba's arch-rival - investors have pushed
JD.com's share price around a third higher since its initial public
offering last month.
PERSONAL TOUCH
From a modest background in Suqian, in the eastern province of
Jiangsu, where his parents ran a small shipping business, Liu
carries a calm demeanor and sports the first flecks of grey in his
hair.
Every year, around the June 18 anniversary of his first company's
establishment, Liu dons a red JD.com delivery uniform and personally
delivers products to unsuspecting customers.
On Monday, Liu took to the streets of northern Beijing, near the
Olympic Bird's Nest stadium, at the handlebars of one of JD's
3-wheel delivery scooters. At first berated by a guard for parking
at the wrong entrance of the former Olympic village, Liu finally
delivered an order of dog food to a bemused office worker on the
third storey of an apartment block.
Investors can be sure Liu didn't miss any important decision-making
while he was out - with majority control of voting rights, board
decisions require his presence.
"The control provisions that Mr. Liu has are, in my view, truly
unprecedented," said Raffi Amit, a professor of entrepreneurship and
management at the Wharton School. "He has complete and unilateral
control of the board, which in turn controls the company."
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For Liu, there's no issue.
"For an entrepreneurial business experiencing high-speed growth, the
more control a founder has the healthier it is," said Liu.
"Investors think giving me control of the company will better
protect shareholder interests - I can give them better returns."
Though currently dwarfed by Alibaba, JD.com has a powerful ally in
Tencent, which took a 15 percent stake in JD.com in March and mapped
out a strategy for cooperation.
The most valuable weapon for JD.com and Tencent is WeChat. The
mobile messaging application, nearly ubiquitous on China's
smartphones, has evolved into a potentially lucrative e-commerce
platform that allows users to spend on the move.
Mobile e-commerce is surging: In the quarter ended March, mobile
purchases accounted for 18 percent of the total. "I believe JD will
definitely obtain the best market position in mobile e-commerce,"
Liu said.
DARK HORSE
Kathy Xu is a long-term believer.
"Richard has proven he has vision and capability of execution," said
Xu, Liu's first major investor. "I'm very happy he will make all the
decisions in the future."
"When I first met Richard it was eight years ago," said Xu. "We met
at 10 p.m. and talked until 2 a.m. I felt like this was a dark
horse," she said, anticipating a strong future for the then
unfancied entrepreneur.
Liu still eschews the celebrity trappings of some of the country's
more flamboyant tech entrepreneurs.
"My personal life is very simple. I don't have a ton of friends,"
said Liu, who describes himself as single-minded and devoted to his
work. "I don't have a social circle of entrepreneurs, a social
circle of people in entertainment, a circle for media."
In the future, Liu intends for JD.com to remain focused on its core
business: e-commerce. This is another strategy that sets it apart
from Alibaba, which has spent more than $3.4 billion since the
beginning of the year on investments outside core e-commerce -
including half a soccer club.
"I've never done movies, television and so on," said Liu, saying
those sectors won't become investment targets. "We will continue to
make some investments and do mergers and acquisitions. We mainly
revolve around core services for all of e-commerce."
(Additional reporting by Belinda Goh in SHANGHAI and by Beijing
Newsroom; Editing by Kenneth Maxwell)
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