A Response to the JD Short Thesis on SumZero

Some of you may have seen the 50-page JD short write-up that was recently posted on SumZero. The author essentially compares JD to Valeant and slaps on a $12 price target for his short thesis.

Coming up with such a sensasonal comparison, I was expecting to come across some high-quality analysis to back-up the attention-grabbing headline and hopefully learn some new insights from someone with an opposing view. Instead, what I got was a very biased and inaccurate report. A condensed version of the short seller’s paper can be found a here.

Below I will address all of the short seller’s major arguments.


  1. Returns/cancellations may be as high as 20-25%. Net GMV removed after IPO.

Anyone who has put in some effort to study JD and the e-commerce industry knows that gross/reported GMV is before returns/cancellations (which the company clearly defines in its filings). That is practically how any discerning analyst models the business including the sell-side. I don’t know anyone who models gross GMV as being completely monetizable, or bases their valuation off of gross GMV alone. All Chinese e-commerce companies disclose only gross GMV which is common knowledge for those that have studied the industry, but somehow for the short seller this is a red flag for JD…

JD stopped disclosing net GMV after the IPO because all of its competitors including BABA only report gross GMV and reporting agencies/media were using JD’s net GMV figure to calculate their respective market share vs. Tmall which basically penalized them vs. the competition. But if you call up IR which doesn’t seem like the short-seller did, they would tell you what the net GMV and implied return/cancellation rates are. To the extent that gross GMV is useful as a financial metric, growth in gross GMV could be used as a rough proxy for measuring growth in net GMV or “net monetizable revenue” once one has come up with a reasonable return/cancellation rate.[1] Certainly this metric when properly adjusted is a key business driver for a company scaling in high-growth mode and by nature is very different from the questionable metrics used by internet companies during the dot-com boom as the author tries to draw a historical comparison to…

Historically returns/cancellations have been about 18-21% of GMV for the 1P and 3P business (IR will confirm this with you). Another way to confirm this is through public filings as JD reports both the gross GMV and net revenue figures (under the “online direct-sales” line) for the 1P business (the only difference between the company’s definition of net GMV and net revenue is the VAT which is 17%).

For example, in FY2015 JD reported gross GMV of RMB 255.6 billion and net revenue of 167.7 billion for the 1P business. The way to get the return/cancellation rate is to arrive at net GMV by adding back the VAT (167.7/0.83 = 202 billion). The difference between gross GMV and net is 53.6 billion (255.6 – 202) which implies a 20.9% return/cancellation rate. Where the short-seller miscalculated is instead of dividing the net sales by 0.83 (if the tax is 17% then what remains is 83%) to properly account for the effect of the VAT, he mistakenly grossed it up by 17% which understates net GMV and overstates the return/cancellation rate.

point 1 jd

In any case, we can see that the return/cancellation rate has trended up over time. There are two primary reasons for this as management has clearly communicated: 1. The mix-shift away from electronics into more general merchandise, especially apparel, has increased the return rate (the return rate is still at industry-low levels around mid-to-high single digits whereas cancelled orders make up around 80% of the gross-to-net GMV gap); 2. More purchases are now done on mobile (mobile accounted for 30% of total orders in Q3 2014 vs. 72% by Q1 2016) where consumers tend to leave more orders uncompleted and where there is likely more impulse-type buying. Management is working to bring the completion rate on mobile down to a level more similar to desktop over time.

Accusing the company of a lack of disclosure where JD clearly defines gross GMV and net GMV in its filings and would readily supply information on net GMV over a simple phone call seems pretty ridiculous.


  1. Brushing on 3P marketplace reported by media and recent JD comments: 10% GMV discount

Brushing is a common phenomenon on all marketplace e-commerce platforms including Taobao/Tmall, eBay and Amazon (I am reasonably knowledgeable about this as one of my best friends was a Powerseller on eBay, where brushing is extremely common). The idea is that to get better reviews and more importantly, a higher review count for their products, some 3P merchants would “brush” by buying their own products and write favorable reviews (and never delivering the product, for obvious reasons), in turn driving up the reputation of their stores and their rankings over keyword searches.

This problem in particular is prevalent over Taobao which does not charge a sales commission, and hence “brushing” is practically free for the merchant. On Taobao and to some extent on Tmall, this introduces an adverse selection problem on the platform as the bad actors crowd out the good actors who refuse to brush and artificially boost their ratings.

Brushing is a much smaller issue on JD for a number of reasons. Firstly, 56% of JD’s LTM GMV is 1P (self-operated) which by definition has zero brushing. Secondly, a very substantial % of GMV on the 3P platform is generated by flagship stores owned by the brands themselves who rarely engage in brushing. Thirdly, JD’s commission is much higher than Taobao/Tmall which makes brushing very costly for the sellers and lowers their ROIC on brushing relative to more legitimate marketing channels such as keyword bids and display ads. Finally, all of JD’s merchants are large brands or retailers that are over a certain size limit; JD is much more selective about its 3P merchants (far more initial due diligence and ongoing monitoring on marketplace merchants) and has a soft cap on the number of merchants allowed on its platform (JD only has around 100,000 3P stores vs. over 10 million on Taobao).

When a 3P merchant is caught brushing, JD generally kicks the seller off the website permanently whereas Alibaba follows a much more lenient “3-strike” rule (only removing the seller after catching him brushing/selling counterfeits three times). Unlike Alibaba which refuses to acknowledge brushing as a problem, JD has been heavily investing in anti-brushing technologies and has specifically called out their recent anti-brushing campaign as having a modest impact on GMV growth.

Furthermore, JD’s reported GMV has always excluded GMV generated by merchants with abnormally high return and cancellation rates, as well as any cancelled orders above 2,000 RMB to partially account for the effect of brushing. No other Chinese e-commerce company is as conservative with GMV reporting. Brushing is estimated to account for as much as 15 – 25% of Taobao’s GMV whereas most estimates put it at low to mid-single digits of 3P GMV for JD. Assuming 5% of JD’s 3P GMV is “brushed”, the impact on JD’s total GMV is less than 2.5%. Moreover, since 3P merchants mainly use brushing as a marketing tool, as JD’s technologies make it harder to brush, these sellers will increasingly have a stronger incentive to shift their marketing spending to keyword search advertising which would ultimately help offset any lost commission revenues related to brushed transactions.

As for the newspaper article which alleged that a JD employee helped sellers with brushing activities, JD has specifically responded that the employee was new to the company and was immediately terminated after the incident. The reality is no matter how much effort is exerted, you cannot completely prevent corrupt behavior at a company with over 110,000 employees.


  1. Improper counting by orders placed and limited disclosure: 5% GMV discount

This argument is just plain bizarre. The author claims that GMV is inflated because 1. It includes shipping fees (well, nearly all of JD’s orders include free shipping to the customer and the shipping service is a key component of the online shopping value proposition; Alibaba also includes shipping revenue in its GMV and Amazon includes shipping in net revenue); 2. It includes GMV from equity investees – by that logic if Amazon owned 20% of one of its suppliers it should not count revenue derived from that supplier as actual revenue!?); 3. It includes internet finance revenue (will be discussed in point 9 below).


  1. China-based auditor is unable to audit 100s of millions of orders: 5% GMV discount (We note that it is a gigantic task for JD’s auditor, PricewaterhouseCoopers Zhong Tian LLP to audit 100s of millions of orders placed which count towards GMV. As such given even the auditor cannot audit GMV, we would place an additional 5% discount/hair cut to the reported GMV figure.)

So the author has decided to give JD an arbitrary 5% GMV discount simply because it is impossible for the auditor to independently verify every single order on JD. I’m out of words here. Seriously, the same can be said about any large company engaged in large transaction volumes – Amazon, P&G, Wal-mart, JC Penney – you name it… Perhaps the author is trying to imply that management are disingenuous when disclosing key business drivers? In no part of the author’s paper did he touch upon any aspect of the founder’s background, character, or past dealings with major stakeholders – perhaps this not so surprising in such a biased paper as Liu could potentially be one of the most ethical corporate executives alive today.


  1. JD is Enamored with GMV While Losses Grow Larger

JD’s core business is actually profitable, despite operating in a growth phase. The current reported losses are due to one-time impairments and current investments running through the PnL that are tied to fast-growing businesses such as JD Finance and JD Home/Daojia that are at present subscale. JD’s reported FCF profile also turned negative in 2015 in part due to the heavy investment in fulfillment center construction – this is mostly growth-related CapEx. But if you analyze JD’s FCF generation a few years back, you can clearly see that the core business is solidly profitable and this is in large part due to the Finance unit being started only in 2013, coupled with the company’s prior strategy of leasing warehouses to meet order capacity. If the author provided a sound argument that JD is investing in low-return projects, then criticism of the current heavy spending is warranted.

Perhaps the author didn’t catch this, but JD added two new internal KPIs for 2016 (that will affect employee compensation) – and both are focused on increasing profitability – Cash Flow Days and Operating Profit.  The author has also omitted the steady gross margin expansion JD has shown year after year driven by rapidly growing 3P contribution profits.

I believe the right way to think about the GMV metric is to use it as a relevant benchmark for comparing the profitability and margin structure of the target business to other offline and online retailers at similar scale. GMV is a relevant metric for hybrid or pure-play marketplace retailers since a marketplace business (commission-based revenue model) has a very different margin structure to a direct-sales/1P business. Depending on the average product/gross margin of the 1P business, and the average commission/take-rate of the 3P business, comparing the profitability of a hybrid online retailer to a pure-play direct-sales retailer by assigning a steady-state or long-term margin on GMV could be a useful tool for analysis. Conventional analysis such as assigning a margin as a % of revenue for both 1P and 3P units is also possible, but less useful for straight comparisons between different retail models. Remember that GMV should always be adjusted for returns/cancellations, and any VAT taxes. No competent analyst I know of uses gross GMV for straight comparison/modelling purposes.

What the author seems to be missing is the massive operating leverage that will become evident from owning your own fulfillment assets as order volumes continue to grow as well as the sizable gross margin expansion from 3P GMV growth and increasing scale in the 1P business. The author seems to be skeptical that JD’s 1P gross margins will eventually expand despite his own admission that GMV will likely grow at least in the 30%+ range (faster than any direct competitor). I view this risk as very low given JD’s track record in execution and the fact that they are already the largest direct-sales retailer and are growing all categories at a volume rate multiples of that of their largest rivals Suning and Gome. The author also does not take into account the considerable likely incremental cost-savings in the future from more automated warehouses and the use of delivery drones.

Ultimately, it is the margins (gross and operating) and FCF, in particular, that matters most to JD’s long-term intrinsic value (something the author has yet to have an opinion on) and JD management understand this as well (apparently the author doesn’t think so) and have their own opinion of what type of margins JD could achieve long-term if you speak with them. Overall, it appears that it is the author who is myopically focused on GMV and short-term reported losses over having an informed view of what the economics of JD’s business could look like longer-term.


  1. Paipai acquisition boosted JD’s GMV by RMB 33.6bn ($5.3bn). GMV was counted, but RMB 2.8bn impairment created for shareholders. Questionable capital allocation for GMV?

The $5.3 billion the author quoted is cumulative GMV over two years (seems like he made the number artificially larger to exaggerate his claim). Ever since the Tencent – JD strategic partnership transaction closed, JD has always disclosed core GMV on an ex-Paipai basis (Paipai is a C2C platform originally owned by Tencent). JD shuttered Paipai last year because as a C2C platform similar to Taobao, Paipai is fraught with counterfeit products and given the sheer number of small merchants on the platform, it is practically impossible for JD to enforce a counterfeit-free platform. In sum, JD’s decision to kill Paipai was motivated more by reputation management over short-term economic considerations.

More importantly, the author omitted the biggest component of the Tencent deal which gave JD an exclusive position on Tencent’s flagship mobile apps WeChat and QQ (35% of all time spent on the internet in China is spent on Wechat). WeChat and QQ now account for 20 – 25% of JD’s customer traffic and have helped JD significantly accelerate its growth profile. To completely disregard this contribution while isolating a minor part of the deal to discredit management’s capital allocation track record is one example that highlights the author’s overly biased position.


  1. JD counts in its GMV orders placed in JDs websites but operated by equity investees like Bitauto and Tuniu where traffic generated through JD platform…The question is why should JD be counting in its GMV when this is an equity investee?

It doesn’t appear that the author has ever used JD’s website. GMV generated through both Bitauto and Tuniu actually take place on JD’s platform under its travel and auto verticals so Bitauto and Tuniu are effectively 3P sellers on JD just like any other 3P merchant. Both account for a negligible amount of JD’s GMV currently.


  1. These investments (Tuniu, Bitauto and Yonghui) have been a dud and burned real cash…

This argument is analogous to saying that because a stock in your portfolio has fallen below your cost basis that it must be a permanent impairment of capital… please spare me.

Both Tuniu and Bitauto are publicly traded on the NASDAQ and JD’s write-down of value in both was driven by the fact that their market capitalizations have fallen substantially over the past year (JD acquired a stake in both during 2015). For context, Tuniu is the third largest Online Travel Agency in China (think Priceline) and has recently established an alliance with industry leader Ctrip (forming effectively a monopoly); Bitauto is one of the top two advertising platforms in the internet auto vertical. Both are rapidly growing players in industries with massive TAMs. To say that the investments have been a waste of money simply because of short-term volatility appears quite unfair to say the least.

JD has not realized any capital losses on these investments and it is also obvious that Chinese-related securities as a whole have not been performing well over the past year. Both stocks have gotten crushed over the past year (each down by more than 50%+) and I am not saying that over time JD’s investment in either Tuniu or Bitauto might not turn out to be a disaster but I definitely think it is premature to jump to a conclusion that they are without properly assessing management’s decision. One has to consider that management is very focused on long-term value creation and that is also reflected in their capital allocation decisions. Now if the author provided some sound fundamental analysis to support his claim that Tuniu and Bitauto were a waste of shareholder cash instead of relying on Mr. Market as his informer of intrinsic value then I’m all ears. In any case whether these equity investees become very valuable or not, they are not key value drivers to either the long or short thesis.


  1. JD’s consumer finance business GMV as % of GMV has been rising (with limited disclosure). JD has no track record in growing, operating and managing risks in internet finance.

First of all, what JD refers to as consumer finance GMV is not the revenue of the JD Finance business but rather the portion of GMV that’s tied to JD’s consumer financing offerings (for example, it’s the GMV recorded when you buy, a fridge on a consumer loan from JD Finance). JD has separated JD Finance into a standalone unit that will be self-financed in 2016. This unit was valued at $7.2bn post-money in January (which the author conveniently omitted in his analysis) by top-tier investors and will likely be IPO’d sometime within the next few years. It is true that JD’s experience managing internet finance businesses is rather short but the same can be said to just about any internet finance company on the planet. The whole point is they will try to get better at it and create value by leveraging JD’s massive distribution platforms. To reiterate in my original JD paper posted several weeks ago, JD Finance’s management team is prioritizing risk management over speculative lending growth.


  1. As GMV grows, are investors underestimating the risks in JD Finance business? Internet Finance is a space with intense competition with larger, more profitable players!

Internet finance is a multi-trillion dollar opportunity in China. It appears the author believes this is a liability (note that the business is now siloed away from the core business in the worst case scenario that it never achieves minimum efficient scale) solely on the rationale that 1. This is a new area for JD and 2. This area is competitive and yet extremely well-informed people at Sequoia think this business is worth at least $7bn.

Admittedly there is competition in the Chinese internet finance space, especially on the online payments side given the larger size of AliPay for third-party payments. But as I mentioned in my paper, the market opportunity is large enough that at this early stage multiple players can create a considerable amount of value given their online distribution advantages and richer data sets over the state-owned banks.

Has the author provided any rationale that this business is not worth at least $7bn today? No, in fact he did not touch upon the nature of the fundraising round in January. Bigger picture, JD’s core business alone could be worth at least $200bn over the next 5 – 7 years, which frankly would make the internet finance division’s value look like peanuts today.


  1. JD’s Management Has Limited Tenure For a 12 Year Old Company Which is Rarely a Promising Sign For a Company Yet to Make Money

The author really just answered his own questions here. JD is a very young company and as a result has short-tenured executives. It is also important to keep in mind that when JD was founded it was very much a one man show where Richard pretty much took on most of the executive responsibilities as the company did not have the money nor reputation to hire professional managers. JD upgraded its C-suite in the early 2010s after receiving investments from Hillhouse and Tiger Global and that allowed Richard to delegate more responsibilities to professional managers.


  1. Who is Jiaming Sun Owning 55% of the VIE, more than Richard Liu, JD’s Founder? A Mystery

It wouldn’t be such a mystery if the author had done any research in actual Chinese. Sun Jiaming is one of JD’s earliest employees and as recently as a year ago was the SVP of General Merchandise at JD. He recently left the company for personal reasons but like Liu he had to enter into a series of contractual agreements to ensure that JD would retain effective control over the VIEs should he stop being a JD employee.


  1. JD is a Hedge Fund Darling and Has Nearly Unanimous Buy Ratings by Analysts. Is It A Crowded Trade Like Valeant?

Yes there are some very smart people who own JD in size who hold a better opinion of the company than the author. By the author’s logic is any name heavily owned by hedge funds doomed to fail as an investment?

It’s simply not enough to be “contrarian” to do well with an investment – you also have to be right. Simply calling JD a hedge fund hotel and comparing it to Valeant without providing any sound fundamental analysis to back-up the claim basically kills any credibility the author had in my mind.

Looking at JD’s shareholder base and the extensive sell-side coverage, I would view the story as pretty well-known by major institutional investors (so it is definitely not an “under-the-radar” type of mis-pricing): JD is typically pitched as a vehicle to gain exposure to the growing Chinese internet and consumption theme. However, I am not convinced that the long thesis is well understood by the majority of potential shareholders who sit in an office in New York and lack a variant perception. As for my numbers they are materially higher than Street consensus over the next several years and I am highly skeptical that the market is accurately pricing in the long-term earnings power of the business. If the current stock price represents the market consensus then I think a sound case can be made that consensus is way too conservative on a longer-term time frame.

I would also note that there are those that actually conduct their own independent due diligence in order to develop a well-informed view of their holdings (and pencil out the numbers accordingly) vs. those that conduct limited due diligence and simply piggyback off of their buddy’s ideas at other funds. Price-agnostic buying of “outsider” companies based solely on getting exposure to a robust narrative such as TDG, CSU, or any Liberty-related story, for example, is almost a guaranteed path to generating mediocre returns.

It is also important to consider the quality of the funds holding the stock vs. simply labelling the stock as a hedge fund hotel that is ready to crash. Different funds have different time horizons, investor bases (quality matters) and average cost bases that could affect the short-term liquidity of shares. In JD for example, despite the numerous Tiger Cubs in the stock I basically treat their exposure as one de facto position since they like to share the same ideas with each other (hedge fund circle jerk is real). Hillhouse of course is well-known for taking concentrated positions with a very long-term time horizon.

Frankly when it comes down to it whoever owns the stock is irrelevant for the long-term fundamental investor in my view – except in the rare case that a large shareholder is actually adding value to management by leveraging its exceptional proprietary research to create additional value. Over the short-term it could affect the stock’s liquidity and cause higher than average volatility since shorter-term funds can crowd in and out of the stock – I view these liquidity events as more of a potential opportunity for the longer-term investor – but it could very well be a real risk for the shorter-term investor/trader.

Finally the stock is hitting fresh 52-week lows and is near its IPO price which took place more than 2 years ago; sentiment at the moment appears quite poor – calling it a crowded trade like Valeant at this point seems like a stretch at best… I am not even going to get into how JD is different from VRX since the author obviously made no worthwhile effort in his own case despite his claim.


  1. “Services and other” revenue has deferred revenue included and limited disclosure

The author seems to take issue with the fact that 4% of JD’s deferred revenue account (a whopping $80 million) is related to Bitauto and Tuniu. “At APS, we note that there are accounting ways counted here like deferred revenue from 2015 resulting from “resource” arrangements with Bitauto and Tuniu, equity stakes where JD is deeply underwater. Burning cash but booking accounting revenue?”

Really not sure what the author here is suggesting really. There is a clear business relationship between JD and Bitauto and Tuniu both of which are NASDAQ-listed industry leaders. To not book revenue would be illogical when a service is provided or expected to be provided.


  1. JD’s Non-GAAP gross margins need to be adjusted to reality
  1. The author is correct in stating that JD’s 1P gross margin has been flat in the last four years. However, this has been the result of an intentionally low-pricing policy as part of management’s plan to quickly gain scale (management has stated quite explicitly at meetings that they have been deliberately holding gross margin flat and reinvesting scale benefits back into pricing), similar to what Amazon has been doing for the past twenty years. One interesting data point is that despite being the largest retailer in China, JD’s gross margin is over 10 points below its offline peers such as Suning and Gome which has helped them to win substantial share in the price war. 2016 is the first year JD is letting 1P gross margin expand (already increased 80 bps in Q1 this year) and management’s plan calls for 1P gross margin to increase from around 6.5-7% currently to 13-14% in the next few years. In my own estimates I am assuming 1P gross margins to expand closer to 12% by 2020.
  1. Outbound/last-mile shipping costs are not captured in COGS – this is also correct, but the author is completely wrong on everything else when it comes to JD’s cost structure compared to Amazon. First of all, JD lumps its shipping expenses into the fulfillment costs line under Opex because JD’s fulfillment operations are integrated with its proprietary last-mile delivery. Amazon’s fulfillment cost is also recorded as an Opex line item but outbound shipping is lumped into COGS because Amazon outsources the majority of its last-mile delivery to UPS/USPS/FedEx. The short-seller’s analysis which adds all of JD’s fulfillment costs back to COGS is misleading and not comparable to Amazon. To make JD’s results apples-to-apples to Amazon we need to add back only the last-mile delivery portion of fulfillment. More importantly, Amazon also has a substantial 3P operation (50% of Amazon’s orders are 3P compared to 44% for JD) which similar to JD is 100% gross margin and overstates Amazon’s 1P gross margin in the consolidated revenue line. Finally, prime membership fees and AWS revenue at Amazon are both very high gross margin revenue streams (offset by much higher Opex ratios than retail) that skew the numbers.
  1. JD’s use of weighted average inventory – the author’s assertion that electronics prices are falling 10 – 15% a year is purely fictional. According to the National Stats Bureau of China deflation in prices of electronics and appliances has only averaged about 1.3% for the past three years. Also the author seems to be forgetting that JD is a direct retailer with substantial scale, not a supplier that may have to eat deflationary pricing. More importantly, JD’s inventory turnover is very fast at about once every 35 days so COGS for the first 11 months of the year would be the same regardless of whether JD uses weighted average or FIFO. The impact of the inventory accounting choice is very small.


  1. JD’s inventory has grown faster than 1P direct sales in 4 out of the last 6 years and in the last 2 years. Rarely a promising sign given huge $3bn of inventory as of Dec 2015

Even according to the author’s table inventory turnover has been very much flat for the last five years (2009 is irrelevant given the company was super tiny at the time):

jd point 16

Also it’s important to note how fast the inventory turnover is – if you calculate inventory turnover correctly (by using average inventory for the denominator rather than ending inventory like the author did), JD’s inventory turnover comes out to be over 10x or once every 35 days.


  1. JD relies on Non-GAAP accounting metrics but several of the expenses should be viewed as real expenses and given real cash was burned on investments

The author is correct in stating that stock-based comp should not be added back as it is a real expense. However, practically ALL best-in-class high-tech companies do it so JD’s practice is not out of line with industry standards. Furthermore, stock-based comp at JD makes up a much smaller % of its market cap than most Silicon Valley tech companies, suggesting that JD dilutes shareholders less on an annual basis. Note that on my own numbers I fully expense stock-based comp as a real expense when assessing profitability. In reality whether you adjust for SBC or not, the equity here is demonstrably undervalued.


  1. JD consolidated operating cash before internet finance working capital is scant and GMV conversion to operating cash is limited even before internet finance business started

JD actually has generated positive maintenance free cash flow every year in the last four years when CFO is adjusted for the internet finance business which is a negative drag to JD’s working capital position. But more importantly, JD is currently in a high-growth phase and accordingly has been heavily investing in growth-related capex over the past couple of years (tied to expanding fulfillment capacity via fulfillment center buildouts, equipment, etc) like any fast-growing online retailer well-positioned in the most attractive e-commerce market globally would be.

It is true that JD has reported little accounting profits despite raising a substantial amount of capital over its rather short 12-year history as a company. But I think it is first-level thinking to take reported financials as a proper measure of the economics of the business or assume that the business will be in a perpetual state of cash burn – without being thoughtful about how the economics of the business will look like in the future. My own view is that JD has steadily increased its earnings power over time, management has consistently focused on maximizing value over the long-term (and this means raising enough capital historically to pursue this goal), and the time and capital it took to build a moat around the business today illustrates the substantial barriers to entry in becoming a tier-1 e-commerce platform.

Allow me to demonstrate in greater detail why I believe the author’s thinking is flawed here. Aside from wrongly adjusting the Gross GMV figure, the author failed to properly adjust JD’s reported EBIT and FCF to normalized levels in order to account for the substantial growth-related investments. A more sophisticated type of analysis would include a deep dive into the unit economics of JD’s business on a customer and/or order-level basis in order to assess whether any incremental invested spending/capital is generating a sufficient incremental rate of return. Now one can have a legitimate debate about the magnitude of the rate of change over time for these metrics, yet the author has failed to even mention them. At this point in time, all the key drivers are solidly moving in the right direction (and have been improving historically) and JD’s unit economics have already hit a positive inflection point (customer-level IRRs are likely already in the triple-digit range driven mainly by the growth of 3P contribution profits, a steadily declining fulfilment cost per order/customer, and a larger customer base). For the long-term investor, it is a thing of beauty to be invested in a company that has a long runway to invest substantial amounts of capital at high incremental returns.


  1. JD has a number of related party transactions that are large and merit closer attention. What is Staging Finance entity given it is responsible for RMB 1bn of related party transactions?

All of the so-called “related party transactions” took place with companies that are equity investors/ investees of JD (Tuniu, Bitauto, Tencent, Staging Finance). Nothing strange here.


  1. Some Insiders Have Been Net Sellers In Last 12 Months. Share Buyback Not Yet Conducted. Instead, JD Has Raised $2bn In the Last 5 Months

The claim that insiders have been selling stock is simply bogus. Fortune Rising is an employee Incentive Pool where shares are periodically sold for employee awards. Richard Liu has not sold a share since the IPO and owns close to 20% of the company. The buyback hasn’t been conducted but I expect them to be buying back shares very soon, especially with the stock trading at these levels.

It also appears that the author taken the recent financings out of context by suggesting that JD has conducted $2bn of straight dilutive equity raises when in reality $1bn was a series A funding round raised for the JD Finance unit at a $7.2bn post-money valuation (worth a whopping quarter of the current JD market-cap today) and another $1bn was a recent bond issuance at very attractive terms – likely done to increase the company’s firepower to repurchase undervalued shares. The author seems to believe that JD is doomed in a perpetual state of capital raising when in reality the balance sheet is very strong, the core business is already FCF positive and its margins are on the verge of a major inflection point. Perhaps most importantly, JD Finance will now also be independently financed. Overall, I believe the risk is to the upside with respect to a greater chance that JD will be buying back their own stock at these levels vs. diluting the equity; count this as another potential near-term catalyst to my own thesis.


  1. Other additional points

The author’s subsequent analysis regarding 1. JD’s slowing GMV (which is natural given the law of large numbers and it’s impossible to maintain 80% growth for a $70 billion retailer??), 2. Intense competition from Alibaba/Suning (JD is growing at 3-4x the speed of Suning’s overall business which is struggling to clip a double-digit growth rate and is taking market share from both Taobao and Tmall), 3) However, some investors had valued the stock once at peak market cap of $50bn due to its GMV and revenue growth. It’s nice to know that the author is competent at reading stock price histories. Seriously… is it not a surprise that a Chinese “high-growth internet stock” could have a volatile share price print over any period of time?


  1. JD.com vs. Amazon.com

So I think I have a right to a damn opinion here since I’ve studied both companies quite extensively. Overall, I agree with the author that a comparison between JD and Amazon is irrelevant given where each retailer is in its respective growth cycle and their different business mixes. Amazon is different from JD in many ways, particularly in its business mix (AWS + online video streaming + Prime + other moonshoots vs. JD’s end-to-end fulfilment network + JD Finance + O2O), but similar in many ways also, namely the corporate culture, extreme emphasis on the customer experience and long-term focus on creating shareholder value.

The author seems to be suggesting that the market consensus is long JD to get exposure to the “Amazon 2.0” theme in China which admittedly could reflect the thinking of some of the longs in the stock today. Where I disagree is that 1) JD is an extremely well-managed business, (like many of the large Chinese internet companies are) – likely better managed than Amazon – look at what they did to Amazon in China for example 2) JD is a much more attractive investment compared to Amazon today.

Consider that Amazon is currently trading around 1.5x 2016 GMV (or slightly less than 1 times if you assume AWS is worth $150 billion), and that JD is trading at less than 0.4x 2016 net GMV (less than 0.3x when JD Finance is excluded), it’s obvious to me that JD is being valued at a massive discount relative to Amazon despite growing GMV at more than twice the rate that Amazon is and operating an extremely attractive market for e-tailing.

Also the author’s negative view of JD’s massive employee growth and his analysis of the cost structure is simply misplaced. Other than Baidu’s growing self-owned O2O unit Baidu and Tencent operate a much more asset-light business model than JD and hence do not have a large growing blue-collar labor force and are not comparable benchmarks. So JD’s employee base has grown a lot over the years – cool – has it ever come across to the author that JD’s fulfilled order volume has grown from ~194mm in 2012 to ~1,263mm units in 2015 – a more than 6x increase and much faster than total Chinese parcel volume growth? I guess the author assumes that parcels deliver themselves magically in China. Has the author mentioned at all in any part of his write-up about JD’s growing competitive advantage in logistics by operating its self-owned fulfilment network? The author seems to be missing the whole essence of JD’s business model which is a combination of managing an online platform and end-to-end fulfillment network which is quite a powerful model in the right market and if managed by the right people. It is also interesting to note that Amazon has started to in-source parts of the logistics process as their order volumes continue to grow. (For the record I have great respect for the leadership in both companies and believe that over time both companies will become increasingly more valuable).

So the author seems to jump to a simplistic conclusion that operating an asset-heavy business is an inferior model to an asset-light one such as Alibaba and appears to be basing his conclusion on the current financial profiles of both companies. This is almost like saying that Walmart is an inferior business to eBay simply because it is a more asset-heavy business and thus has a higher cost structure, yet we all know how this big-box retailer came to dominate retailing in America. I have detailed extensively in my own paper why I think JD will be a long-term winner in China and will not go over it here again.


Final Thoughts:

What I always try to do is to have a superior understanding of the opposing argument better than the other side in order to deserve the credibility to voice an opinion. Although it is obvious that the author has spent a considerable amount of time on this short thesis (50 pages…), when it comes down to it he provides zero justification for his arbitrary $12 target price (FWIW at that price the stock trades at less than 2.5x and 3.5x EBIT and FCF on my 2018 #’s and less than 1x for both metrics by 2020).

If I were to construct a robust bear thesis on JD I would try to prove that it is a massive fraud since it’s the only scenario in my mind where the equity is worth near 0. However, the author has provided no “smoking gun”, nor has he approached with his analysis from this angle – the author claims that he has conducted channel checks, but where is the evidence of empty warehouses or fake suppliers or merchants? Frauds are also typically highly promotional companies that are overvalued on fake reported numbers alone which I argue that JD is neither.

Instead, the author primarily relies on speculative near-term catalysts (that are unlikely to materialize in my view) for his thesis over sound fundamental analysis (doesn’t seem like there is any margin of safety at all in his trade). With nearly $3bn of net cash sitting on the balance sheet, an improving margin profile over the next few years, and the JD finance unit being independently siloed – I see a future equity dilution as a low probability. Over time, the company’s earning power will become increasingly evident to the market – this is a long-term thesis that requires time to play out after all (if the stock was obviously undervalued to the casual market observer, I would be less confident that it was wildly mis-priced).

The only thing in the report that the author brought up as a legitimate concern to me is the CFO Sidney’s background at Longtop Financial Technologies – Longtop turned out to be a major accounting scandal that was exposed in 2011. Sidney worked briefly at Longtop when the company was still private as the CFO from July 2005 until March 2006 (around 8 – 9 months). From my understanding Longtop was engaged in fraudulent accounting since 2004 until it went bust. I believe Sidney was unknowingly a victim of fraud at Longtop (keep in mind he was there years before the company went public and he was not named in the lawsuits that ensued after Longtop’s collapse in 2011). The subsequent company he joined thereafter was acquired by Blackstone. I will definitely circle back to this issue at a later date and appreciate the author for highlighting this. For now, Sidneys’ position as JD’s CFO implies that Liu has basically endorsed him. My own impression of Sidney is that he is very straight-forward in his communication, is very thoughtful about the business and does not overly promote the business like what the author has implied throughout his report. Richard Liu himself is not promotional at all but it seems like the author has a different opinion. If he author can provide a sound argument that Liu is unethical and thus the equity is uninvestable then that would be a much more robust short thesis.

Other than that the author’s work here was extremely biased (the analysis was even misleading in my view), omitted major facts pertinent to his argument and failed to explore any element of the bull case (there was no acknowledgement at all of the real possibility that JD could be a multi-bagger investment over the next several years). The paper overall was very short on any real fundamental analysis, with little thought about the future economics of the business, and lacked any rigorous analysis on JD’s key business drivers. I’m also sure that Mr. Munger would be absolutely delighted if he found out that his picture was included in this paper…

In sum shorting JD stock presents an atrocious risk/reward profile since the equity can double or triple overnight and remain demonstrably undervalued (that’s what I would call a large margin of safety).


[1] This is a bit of a side note but to clarify in my paper I defined 1P net GMV as 1P Gross GMV net of returns/cancellations and the VAT, and 3P GMV as 3P Gross GMV net of only returns/cancellations (since JD takes a commission out of the entire 3P-related transaction where the VAT is not stripped out of that calculation). Originally I took a more conservative route and stripped out the VAT from the 3P-related transaction when calculating 3P net GMV.



  1. Thank you for a very thorough analysis. Although the short paper did not shake my overall long bias, there were some additional questions raised that have been well answered here.

    The only other thing I would also mention – and for me this is where I felt the short thesis really was becoming desperate – was its claim that JD.com was an inferior business to Amazon because it was only based in one country.
    1) that country has a population of 1.3billion, quite a large market by anyone’s standard
    2) that country, as described in your long thesis, has superior e-commerce economics, due to high population density, traffic and pollution, and the lack of established efficient offline retailers
    3) One additional advantage for large existing businesses operating in China is the ability to understand and navigate local laws, structures and traditions. Reading JD.com’s annual reports, I was struck by how often it basically said that it was complying with local laws as best as they currently stood and as best as they currently understood them, but that the laws and their implementation were hazy, arbitrary and changeable from one year to the next. Although this is in one respect slightly worrying for an investor who wants certainty, on the other hand, can you imagine how hard it is for outside companies like Amazon China to operate in this environment?! It is a clear advantage for JD.com and Alibaba, who know the rules of the system, both written and unwritten. Further, Chinese government attitudes currently seem to favour homegrown businesses to outsiders.
    4) the biggest reason by far for me – the secret to abnormally high profits its dominance of local markets. JD.com has the ability to do this in China (arguably for direct sales it already does). Amazon can do this in some worldwide markets but in some like China it cannot. In an abstract form I would rather be the shareholder of a company that dominates 100% of its markets than 75% of its markets. Its profitability will be greater. Read Bruce Greenwald et al. The short thesis prefers a company exposed to the Indian market. (Incidentally if JD.com suddenly announced they were going to make a bug push to expand into India, where it has no physical infrastructure, commercial relationships, understanding of local laws and customer mindshare, well then I would be very worried indeed.) The wish for a company exposed to other fast-growing markets is indicative of the short thesis’ short-term, trend-based, wishful fantasy investing rather than fundamental analysis.


  2. I thought this was a solid, well-researched, balanced rebuttal. Time is on JD’s side. I just hope that being in the public eye won’t distract the JD’s teams focus on running the business for the long term.

    I was really inspired by a couple of Richard Liu’s speeches to employees – my team and I translated them from some internal documents that were made recently available to the public. It’s very clear that Richard is a passionate, focused, principled guy.

    Richard Liu Speech @ JD Annual Meeting, Jan 17, 2015 (translated):

    Friends, Happy New Year!

    Does everyone still remember what our theme for 2014 was? Yes, it was “lift the sails and explore the seas.” Some people ask, why did we pick 2014 to go public? After we went public, our financials became transparent – today we have over 30 billion RMB of cash, becoming one of the most cash-rich companies across the entire Chinese internet sector. All of the rumors that we will run out of cash are discredited. Besides allowing tens of thousands of partners to see our financials, this greater transparency will allow them to sleep well at night, and courageously continue to partner with JD.com. I am aware that going public has brought many changes to our organization.

    I went to Germany last July (2014), while I was discussing with our investment banker on the car, the driver asked me, are you guys from JD.com? When I said we were, he said he bought 3,000 Euros of our stock.

    A couple of months before that, when we visited a large shareholder at his house, I met many other global internet investors. That’s when I first realized, in this international environment, almost everyone has heard of JD.com.

    In 2013, famous companies and entrepreneurs from Flipkart in India to Sir Oliver (?) in Germany (founder of Rocket Internet perhaps?) all publicly stated they are striving to copy Jingdong’s model.

    After we went public, we are no longer a company no one has ever heard of. Rather, we stand on the world stage, carrying the hopes and expectations of not just our investors, but also our employees, partners, and the countless entrepreneurs who strive to learn something from us as they create their own e-commerce empires in their own countries. Because of our success, we have been a model for other e-commerce entrepreneurs to follow in their countries – which has led them to very successful valuations to realize their dreams.

    Let everyone take a look at the results we achieved in 2014. On top of the over hundreds of billion GMV we achieved in 2013, we realized yet another 100% growth in 2014. By 3Q14, JD already achieved over 50% market share for 1P platform e-commerce China. Five years ago, I publicly said, we hoped JD would achieve 50% market share in the 1P e-commerce market – we actually achieved that in 3Q14. But this isn’t even the most important – most importantly, our growth rate still remains twice as fast as the growth of the entire China e-commerce sector.

    I firmly believe we will achieve even higher market share. In 2014, our strategy for expanding our distribution channels has achieved further breakthroughs. According to the latest numbers from last night, our JD delivery team has already covered 1,880 districts. We have already become the largest retailer in China of computers and branded cell-phones, including online and offline. As of end of 2013, we have already over 50,000 business partners. Through our sweat and toil, we have collectively serviced over 100 million different customers – that means 1 of every 14 or 15 people in China has enjoyed the services offered by JD.com.

    In 2014, we had more than 70,000 employees at JD. We carry the hopes and expectations of not only them, but also their families. If we were to shout out “are there any JD people?” loudly in the streets of Beijing, Shanghai, Guangzhou, and any large city in China, there would definitely be someone who steps out. This morning, when I was in the car on the way to this meeting, I was wondering exactly how many JD delivery cars I would see on the road? I saw 5 this morning – I only went from North 5 Ring to East 5 Ring – a very short distance. Even on this very short trip, I saw 5 red delivery trucks with our logo on it.

    Some people ask, how did we achieve so much success in 2014? Some people on the outside may ask us, why should it be JD that succeeds? We tell them – because of our team! Last few days, I saw on my We-Chat friends circle, one of our delivery comrades helping with a situation: a 70-year old man, who was infirm, left his house and went missing. Their family contacted the police station to help search for him. With they couldn’t find him after 26 hours – the old man was starving and thirsty and was languishing on the streets. People surrounded him, but no one wanted to go up and help him in fear of causing unnecessary trouble. It was at this time, one of our delivery comrades saw him – he ran into the crowded, picked the old man up, and brought him to the police station where he reunited with his family. Today, our delivery comrade is at our meeting – please stand up. Everyone clap for him!

    There are many stories like this. I remember a few years ago, during Beijing 7-21 “Flood” incident – the entire city was mired in flood and disaster. Our delivery people continued to provide timely delivery to our customers, many of whom didn’t have electricity, water, or food, and needed JD even more to deliver goods promptly to their house. Our delivery employees didn’t just stop after they delivered goods to citizens of Beijing, but afterwards, on their own volition, they made the extra step to help alleviate disaster, helping carry people to safety, helping push cars out of flood waters, helping citizens protect their goods from flood disaster. That night, I can tell everyone, our JD delivery employees definitely made their contribution to Beijing.

    Two years ago, a car in Beijing had an accident. The driver and passenger had already blacked-out, but were still in the car. Because the car was driving fast, it had flipped over and was stuck on a busy intersection – but no one dared to approach the car in fear of explosion. It was at this time, one of our delivery employees came to the scene, didn’t think twice, broke the window, took the two people out, laid them on the ground, and called 120. Ultimately, he helped put the two injured people on the ambulance, but afterward he continued to deliver products for JD without taking a rest. To today, I fear the two survivors don’t even know it was one our JD delivery personnel who saved their lives.

    Our company has done countless things, but very little is actually broadcasted publically. In the last few years, our country has experienced a lot of earthquake disasters. In 2013, we went to southwest China to help alleviate disaster – what we did was very timely. I gave an order to all of our high level employees – if our country meets any disaster or needs anything urgent, we will use our logistics warehouses to send products to disaster zones – no need to inform central HQ. This is our JD people, and this is our JD culture.

    This is the cornerstone of why JD succeeded. Many people praise us, say we are very awesome, but people everywhere also say we continue to lose money. Even the parents of some of our delivery people have asked their sons and daughters: “JD is a good company, but will the lack of profits eventually lead to a problem?” I told them then: “believe me, and also believe yourselves, if we wanted to make money, we could easily make some small changes and could make unlimited money.”

    We are not like many other Chinese factories or delivery companies which, through things like labor exploitation, use of franchise model, or other tactics, avoid responsibility for their employees, or don’t pay for medical & insurance (“Five Insurance and One Fund”). For our almost 100,000 employees we have right now, we have to pay 2.5 billion RMB in benefits. If we avoided paying this, we would already easily be profitable. But we don’t cut corners.

    At JD, we have a contract in place with every one of our employees, delivery people, packaging employees. We will pay for all of our employee’s benefit insurance. If you are making 8,000 RMB, we will pay according to exactly how much you make. Every employee, delivery person, working person who has worked at least 1 year with us, we will take care of this for you. We want every one of our employees to live with self-respect when they are over 60 years old and can no longer work, we want our comrades to still have the same self-respect they have today. I will not let a single comrade who worked for us when they were healthy to suffer when they can no longer work. Besides salary, gov’t required benefits, and medical/insurance benefits, JD also will provide additional benefits for our employees – drinks and work suppliers will be provided in every office and distribution center.

    Yet we still have other methods of making money. Since 2013, we have decided that every year, JD.com must invest in a new, big initiative. Not a small investment, it must be a huge investment. This initiative must be a long-term one – one that takes at least 3 to 5 years to contribute to our entire company’s revenue or profit. In 2013, we created our finance product, in 2014, we entered into a partnership with Tencent and created Paipai Web – which we are allowing to be an independent subsidiary with its own development plans. Paipai is still in the early stages of development and nurturing – to be tremendously successful, we need to increase our investment, give it more support. If we didn’t have these two initiatives, if we just focusing on core JD e-commerce, using USA accounting standards, we would already be profitable – even including all taxes, all benefits to employees, and other costs. However, this shouldn’t be the long-term goal and dream of our company. A one-sided business model can’t provide comprehensive service to our customers. If we don’t invest in tomorrow, if we don’t invest in the next 5 years, it will only be a matter of time before we are no longer a company that makes people enthusiastic and proud. Thus, we must continue to invest in 2015 – every year we will have to invest in a new business.

    If we open one eye and close one eye, and let those who sell fake products onto our website, we can temporarily make lots of profit.

    If we just give less options to employees, we could also make a profit now. Since 2007, when we first issued options as compensation to employees, the total value of all options issued to employees, calculated using yesterday’s closing price, would already exceed 10B RMB.

    So if we wanted to make money, it would simply be too easy. But we will never make money that’s not worth making – we will never spend a single minute to think about whether we should pay less taxes. Some channels for making money does not lead to pride and will only create deep embarrassment.

    What is the main theme for 2015 (this year’s) annual meeting? It is: “Innovation and Breakthrough.” Some people say that JD, over the last few years, didn’t have much in terms of business model innovation and breakthroughs. We spend 10 years on building our ecommerce business, we have continued to innovate on our business, our products, our service. To be honest, our 1P platform is really the best e-com model you can have – we don’t need major overhauls. We have plenty of new innovations, including 211 Speedy Delivery Service, JD service stations, O2O projects, rural distribution and on-campus distribution, Paipai’s decentralized mobile initiatives, Wei-Store project – all of these have achieved big success so far. Our PaiPai We-Chat store, since coming online in October 2014, in only a few short months, daily GMV broke 20M RMB, with record of 60M RMB achieved.

    Today, I wanted to elaborate on JD Finance initiatives and innovation, to broaden everyone’s scope. We have already expanded JD BaiTiao, JD BaoBei, reaching tens of billions of outstanding borrowings (RMB), without knowing user’s names, without a loan officer, without a dedicated website. Every supplier and merchant can get loans within 3 minutes – these are huge “tests” for us. I believe this will bring great benefits to our suppliers, our merchants, and ultimately our customers.

    For our product crowdfunding – since December 2013, JD’s product crowdfunding has achieved 60% market share – a commanding #1 in this sector. For 2013, there were 3 products that exceeded 10M on JD product crowdfunding (not sure if referring to RMB or volume).

    In 2014, we will also have equity crowdfunding. Where is social value in this initiative? We want to level the playing field for capital one day – we want the person with 10,000 RMB and the person with 10M USD to have equal investment opportunities. Otherwise, the poor will have nowhere to put their money other than bank accounts and see their money devalue, whereas the rich can find companies like JD to invest in, reaping huge returns and become richer. This will only exacerbate the division between rich and poor. So I want every one of our JD employees to remember, equity crowdfunding’s ultimate goal is to allow normal citizens to have opportunity to have equal investment opportunities.

    You can change the life of a someone in the countryside by simply giving them a tractor for plowing and farming. Starting today, our JD Baitiao service, will not only use big data to serve white-collar customers in cities, but in 2015 we will focus in entering rural China and school campuses. So far, JD has already opened large amounts of district-based service centers (Tier 3 cities and below). Thru these service centers, we will penetrate deeper into villages and build up village-based distribution centers. When we grow over 100,000 employees large in the future, we will also benefit from over tens of thousands of brothers in the countryside to help us with word of mouth advertising, delivery, payments, logistics, and after-sale service. That is why we have Baitiao service today.

    I am from the rural countryside. I have lived there for 18 years – I am too familiar with the realities of village life. Almost every villager has been exploited by high interest loans. Countless villages, cracking under pressure of high interests, have seen their family destroyed, and are unable to recover even after 5-10 years. All of the money they make goes into interest payments, but are never able to repay the principal. Every year, there are farmers who are swindled into buying fake seeds – they work tirelessly to plant the seeds, add fertilizer, but see little or no harvest come harvest time. At JD, over 70% of our employees come from the countryside – I believe every one of you today has seen or experienced the pain of buying fake seeds, fake chemicals, fake fertilizers – and countless farmers losing hope when they have no harvest because of this. Today, I want every farmer to be able to buy real seeds, real chemicals, real fertilizers, real electronics, real food products, real clothing from JD.com.

    End of last year, it was very exciting. The media was saying we were “a company of China”. I think this is not proud enough – I think a true label worthy of respect and pride is “a company of the people.” A company that belongs to the country, but also its citizens. What is a citizen’s company? Any true company of the people would not sell fake products to its own people. Nor would it sell fake products all over the world. Nor a company that doesn’t pay taxes, nor a company that only makes all the money for itself but doesn’t allow its partners or other parties to make money in the process.

    The US has a company for the people as well. It’s called Wal-Mart. It’s market cap is ok, but almost every US citizen, including the US president, understands that Walmart is a “company for the people of USA.” I can tell everyone, the USA government will not and cannot tolerate the consequences of WMT going under. The founders of Wal-Mart are the only US entrepreneurs today who have received a medal from the US president – the highest honor in the USA. Hence, our definition of a “company for the people” isn’t necessarily the company with the highest market value, but the company that creates the most value for society. Only a company like this can be considered a company for the people.

    My friends, there will be a day when there will be a Chinese company whose revenue will exceed 1 trillion RMB. This is revenue, not platform GMV. A company like this will be the country’s largest “company of the people.” Over 70% of its employees will be from the countryside and will be simple, young people who will, thru own hard work, propel the company into the top 20 on the Forbes 500 List. This company will have trade with over 100 countries around the world, or have business relations or customers from these countries. As long as this company continues to adhere to its business values and vision, continue to add value to society, there will be a day where this company becomes a core participant in global / world trade, if not the game-setter.

    My friends, this type of company, I can tell everyone, when it appears in China, will be us! Continue to work hard, use our hands, to create something that this country and all the Chinese around the world can be proud of. A company people can respect and trust. Becoming the “company for the Chinese citizens” is my new dream. In 2015, my brothers, we shall continue to fight shoulder to shoulder! Thanks everyone!


    Richard Liu’s Message to JD.com employees during its IPO in 2014

    Dear brothers/friends:

    After 10 years of hard-work and struggle, we are officially on NASDAQ today! This is a monumental day in our course of development. Starting today, the dedication that our JD brand represents is up for the world to see; starting today, Joy (JD’s mascot) and what the mascot represents will enter the hearts and minds of homes around the world; starting today, it is a new start for JD people!

    Although I am just a college student with a farmer background, I’ve always had a dream – to build a business that would be valuable for society. Even during my darkest hours of entrepreneurship, I have never gave up on this dream, nor have I ever doubted this dream. Today, the dream has been realized! Thanks to the big era of China’s opening and reform, we no longer have to rely on our fathers – we can all equally pursue our entrepreneurial dreams. Thanks to our customers for tolerating our imperfections, always whipping us to improve and grow. Thanks to all of our suppliers, all of our investors, for believing in our growth.

    But even more, I have to thank my comrades and employees – for moving away from comfort, rolling up our sleeves, and doing the most difficult, most dirty, most tiring work of e-commerce – thanks to your dedication, perseverance, and never giving-up, you have brought JD to a new level!

    What makes me proud, is that we’ve made three big accomplishments in the past 10 years.

    One – we have reinvigorated the element of “trust” in Chinese e-commerce. From our first day, we have adhered to our “real products, no fake products” creed. The backbone of this creed is our respect for the customer and for what the business should represent. We have used our integrity to earn customers’ trust for our platform.

    We have recreated the online shopping experience for JD.com. We have realized and proven that delivery, “last-mile” delivery, are amongst the most important parts of a customer’s experience when they shop online. While others have laughed at us for years, we have used our “stubborn” adherence to consumer experience to earn customer’s happiness and satisfaction.

    We have re-highlighted e-commerce’s value as a shopping channel. Our value isn’t that we’ve greedily made an incredible profit, but we’ve helped improve the entire shopping ecosystem from beginning to end. We’ve committed to investing in R&D and big data for years, committed to investing in logistics and online finance. Our efforts have brought greater efficiency to our partners and customers.

    For the next 10 years, we have several major things to accomplish.

    We will continue to strive to be truly global – to transform JD into a world-respected commerce constituent.

    After we go public, we will have a stronger drive to help boost China’s economy, to help China’s manufacturing sector, to better help China’s companies integrate into global stage. I hope we can use JD’s platform to drastically improve China’s ability to get its products into the hands of global customers. We hope JD will help foster the creation of even more billion RMB, tens of billions RMB, and hundreds of billions RMB-scaled companies.

    We will strive to create a more diversified online platform to help entrepreneurs and small and medium businesses grow.

    Through development of B2C, C2C, finance and other segments, JD will strive to legally create a full-fledged ecosystem for JD customers and potential customers.

    We want every entrepreneur and merchant to be able to make money using the JD platform as long as they work hard at it. We want to be an enabler.

    We will continue to use industry-leading IT and tech to help create this platform and service.

    For traditional retail, the internet represents a completely innovative and revolutionary business ecosystem. We have spend a lot of money and time finding better ways to use IT to improve the entire logistics process. In the next few years, we will continue to heavily invest in this category, with key areas of focus being cloud computing, data mining, and mobile. We will help players in traditional retail make the transition onto e-commerce, and thereby help improve efficiency and growth of the overall economy.

    Lastly, I want to emphasize our company culture. After we IPO, JD will use stock-based compensation and other incentives to reward our hardworking employees, to make them feel safe and secure, and to allow their families and spouses to feel proud. Born in difficulties, die in comfort. But I have to remind everyone: going public is NOT our ultimate goal – we must continue to learn from our competitors and be curious about innovation. As we expand into adjacent verticals and different geographies – we will encounter many more global partners and customers. Management and culture are the bedrocks that will keep us firmly focused on growth in the future. No matter how the stock moves in the future, how the market reacts, our mission and value will not change. Firmly remember our commitment to the customer, to our partners, and to society!

    “Eagles soar in the sky, fish swim freely in the water, nature’s diverse beings are all free!” (quoting Mao Zedong). My friends, JD’s next 10 years will be written on the world stage. This is our historical moment. Let’s create a world-class organization, I’m sure we can!

    Richard Liu
    May 22, 2014


  3. And here’s the 2016 Summary and Speech:

    Richard Liu JD Annual Meeting – 2016 Summary & Speech (translated)

    Richard Liu proudly stated, in 2016, JD aims to be the #1 retailer for home appliances in China. Moreover, if there are no huge unforeseen disasters, JD wants to enter global 500 companies list, based on net revenues.
    Recap of 2015:
    Total number of employees almost 110,000, with over 700,000 part time workers
    Serving over 100 million families globally and 150 million customers
    JD has become China’s largest retailer of cell phones, digital products, and computers (including online and offline)
    2016 Developmental Targets:
    To exceed over 150,000 employees, with part-time employees over 1 million
    JD Global growth rate to exceed 600% yoy
    Within 5 years, for global storage area to exceed 10M square meters
    Further brand penetration into Tier 4 – 6 cities
    Huge investment into creating a cold storage logistics network (integrated with B2C) that covers entirety of China
    JD will become largest retailer for home appliances in China (>Gome, >Suning)
    As ranked by net revenue, JD will become a member of Global 500
    In 3-5 years, try to create at least two publicly listed companies – starting from JD Finance. Each publicly listed company will seek to fairly and amply compensate employees with stock-based compensation
    Richard Liu’s full speech – Jan 2016
    Dear Friends,
    Great to see everyone again – everytime I see so many brothers / friends sitting here, I feel extremely happy!
    I trust yesterday many saw the video overview of our 1999 annual meeting. My first reaction after seeing that video, was that since the founding days of JD.com, JD has focused relentlessly on product quality. Everytime we sell a CD, record a video, we have preserved it for 16 years without problem – this type of product quality is extremely hard to achieve. Thus, we can still enjoy this precious video from 16 years ago. Back in 1999, including myself, we had only 7 employees. Back then, we couldn’t see too far, and we didn’t know what the truly large enterprises of the world were like.
    I said at last year’s annual meeting that “we would aim to march towards our 1 trillion RMB net revenue goal.” Although today, we have made substantial progress compared to our founding days, but if we view our ultimate goal as climbing the Himalaya Mountains, what position are we at today?
    The JD.com of Today
    As of December 31, 2015, JD had nearly 110,000 employees. But for 2016, we still aim to add 40,000 more full-time employees – we will have over 150,000 employees by year-end. Meanwhile, we have over 500,000 part-time employees in our “crowdsourcing logistics” divisions, and JD e-commerce already has village representatives in over 170,000 villages across China. Thus, we have over 700,000 part-time employees. I believe that our part-time employee count can reach over 1 million during this year.
    In 2015, our entire company serviced over 100 million families and 150 million customers. How big is 100 million homes? That’s equivalent to to the total number of families in several European countries together. We also have over 100,000 brand customers – our branded suppliers.
    At the same time, in 2015, we achieved several “number ones.” By sales amount, we are China’s largest purveyor of cell phones. Regardless of whether online or offline, JD is China’s largest retailer of cell phones, digital products, and computers.
    In our home appliance division, Philips has seen sales volumes on JD grow rapidly – with sales on our channel matching that thru Walmart within the last year. Aux air conditioners, LG washing-machines, Hisense’s color TV – sales of these products on our platform have already exceed that of our competitors. JD, including crowdsourcing, sells over 70% of the air purifiers sold online in China. Many of our employees in the home appliance division have told me – our goal for 2016 is to be China’s largest retailer of home appliances, period.
    Our GMV growth for apparel and accessories was over twice that of the industry in 2015. Last year, we did over 500 million units of apparel and accessories. For 2016, our goal is to allow every family in China to buy at least one piece of apparel from JD.com. At the same time, within 3 years, I hope that our apparel division will become China’s largest branded apparel retailer. We will aim to sell real brands, seek to cultivate an appreciation for brand culture, design, and values. We will not slap a brand logo on low-quality good and call it a branded product. We will never compete with others on who can provide low quality or fake products. Our consumer products division, infant formula division, diapers division, are already ranked #1 in China (including offline and online). We sell more rice than our two old competitors combined. In Moutai, Wu Liang Ye, and my hometown’s Yanghe liquor, JD.com is already China’s largest online and offline integrated retailer. Moreover, after my trip to France, we have become China’s largest retailer of products for the Rafi Organization. JD.com can provide 100% guarantee of the authenticity of the products sold on our platform. We make this promise not only for our 1P products, but also products sold by our merchants on 3P.
    In 2016, we still have several new initiatives to share with everyone today. Firstly, I want to introduce our “Xin Tong Lu” initiative. This originated from me personally – it is our #1 initiative / project for 2016. So what does this initiative do? It’s generally very difficult for new ecosystems to penetrate as deep as “mom-and-pop” stores in China. For example, in every village in China, there is at least one such “mom-and-pop” store. After doing some field research, we realized that village customers of these stores still feel that it’s “still too far” to purchase from JD.com, from Taobao, from T-Mall – all too far for these villagers. Every villages has a “Mr. Wang” who has sold products, such as cell phones, for 15 years and counting and has great service. There’s no problem that “Mr. Wang” cannot solve. Mr. Wang has built a reputation, ecosystem in that village that even JD.com cannot compete with. We can’t displace Mr. Wang based on price, quality, or service alone.
    In these rather “closed-village” ecosystems, where it would be difficult for us to replace them, we want to become their trusted suppliers, their trusted partners. JD covers tens of thousands of villages in China, we have trucks entering and exiting villages on a daily basis. Whether you buy one cell phone or ten, the cost to us is the same – so we want to be the suppliers to the villages’ Mom-and-Pop stores, via the traditional wholesale approach. We can deliver to these stores every day. We hope these Mom-and-Pops can become our partners and help bring branded products rapidly into Tier 4 – 6 cities.
    Our next initiative for 2016 is JD Global – which actually officially opened its doors in 2015. Our sales volume in year 1 wildly exceed our estimates – I believe within a few years, JD Global will undoubtedly become an even more valuable part of our company.
    JD Global started assembly its team last April. By June, we started getting suppliers, and eventually we started going online. Within half a year, we’ve already opened about 10 country platforms, with rapid growth. In 2016, JD global’s growth rate hopes to exceed 600%.
    Our JD logistics division believes that within 5 years, our global storage/warehouse area will exceed 10 million square meters. We have constructed almost 200 logistics centers in China. Our four-tiered logistics network is extremely vast and complex, but we nonetheless rank amongst the world’s most efficient and most low-cost. JD continues to focus on the customer experience while maximizing logistical efficiency and reducing cost.
    I particularly want to mention Guangzhou’s #1 Asian Warehouse project, which started operations in 2H of 2015. This is JD’s second largest #1 Asian Warehouse project, but on Nov 11, this warehouse shipped over 500,000 packages in a single day – this has already set the global record for one-day shipment volume out of a single warehouse. Within 3 years, I believe Asian #1 warehouses, along with Asian #2 and #3 warehouses, will be integrated and JD’s capacity will rapidly increase. For a company which started as a primarily 1P platform, logistics and warehouse capacity directly and significantly decides our retail growth rate.
    At the end of 2015, we have also made a very big decision – that is, starting 2016, JD will invest significant amounts of money to build up a cold-storage and shipping network that covers every major city in China. There are several key terms here: #1 is storage-delivery integration. We have to have storage, but also need our own delivery ability. We also need the ability to deliver to every house, to service every customer, not just service a particular store or distributor.
    When this is built, JD will finally have “Three Large Networks”. The first large network is the commonly seen B2C platform, replete with storage and delivery capacity in the traditional B2C style. The second large network is a special delivery/logistics network for large home appliances in particular (bulky goods). Once we complete the buildout of our third network – fresh food and cold storage/delivery capability – JD will become the world’s only e-commerce company to fully integrate the three networks completely. In accordance with our goals here, JD will create a new division – the Fresh Foods division. This division will have two major responsibilities: first: to sell fresh foods, via the coordination of the cold-storage logistics and delivery network, and attract large numbers of suppliers. Besides selling fresh foods via 1P, we will seek to service our partners, such as Yonghui Supermarkets and Fruitday, to provide them with a comprehensive core-storage network to service the ultimate customer. Secondly, this Fresh division will search the globe for high quality food products that have yet to enter China, to ship them into China, and allow customers in China to enjoy the world’s safest and highest quality products.
    Let’s review our delivery network again – as of Dec 2015, JD already has 3,544 service stations and 140,000 village/rural salespeople. We have over 10,000 people in dedicated customer service, who have received over 120 million calls globally in 2015 – all to ensure that our customers can receive the most prompt service and solutions.
    Currently, JD.com’s core platform contributes a significant part of our sales GMV, revenue, and almost all all of the profits. According to our results for our already-released financials for 9M of 15, we are very close to profitability on a non-GAAP basis. This means JD’s core e-commerce platform has already contributed much bullets and blood to our entire organization, allowing the company to make meaningful new investments that will sustain growth in the next 3-5 years.
    Next, I want to discuss JD Finance. I have a good news to announce to everyone day. JD Finance has successfully executed A-round financing – our first round exceed 1 billion USD, valuing JD finance at over 46 billion RMB (~7B USD). This pace has already exceeded JD e-commerce core biz during its earlier days. We have only worked on JD Finance for two years and we have already realized these results. Because of our results, because of the market and investors’ expectations towards us, we feel far more pressure on JD Finance than during our early days developing JD e-commerce. For every cent we take from investors, we must return 10 fold, even 20 fold to them. Many elements of JD Finance are amongst the first in all of China, even all of the world, such as JD Bai-Tiao – we are the first e-commerce co. to introduce a service like Bai-Tiao. Logistics financing, equity-based crowdsourcing, product-based crowdsourcing – JD has succeeded at innovating on many fronts. Therefore, JD.com has the credentials to earn the market’s trust. I hope JD finance will continue to preserve its focus on innovation, continue to service our customers, never forget our emphasis on customer experience and putting customers first.
    In 2015, we have also embarked on another area of innovation – that is JD Dao-Jia. Our positioning is on fresh foods – to help offline supermarkets develop online customers. Over the last 10 years, we have made great progress on classic categories like apparel, accessories, 3C, consumer products, and FMCG – but fresh foods remains an area that challenged us. We found that regardless of 1P or 3P format, fresh foods continues to be an area of challenge – we tried many approaches in the past few years and after many failures, we finally decided on the JD Dao-Jia model. We will focus on identifying the fresh food products closest to the consumer, the closest delivery personnel, and to eventually convert the shopper from walking thru grocery stores to buying groceries from his home via cellphone. Once this habit is established, it is almost impossible to change. We have invested in Yonghui Superstores – they are one of of the top logistics supermarket operators in China. We hope to be become their long-term business partner and work together to encourage online ordering of groceries. In only half a year’s time, on Nov 11, 2015, we delivered over 500,000 packages related to JD Daojia – in 2016, we hope to exceed 2 million packages delivered.
    Let’s talk about JD cloud for a second – we’ve already finished construction on our East China cloud service center – we are installing the facilities and will be online by this year. Construction is also starting in other areas – this April (2016) will be JD Cloud’s first true year of development and growth. I hope several year from now, JD Cloud will become yet another major contributor to our total revenue and profit.
    Besides our major innovation initiatives, 2015 also marks a major year of investments for JD – we’ve initiated some major investments and M&A during this past year.
    Besides our continued fight against fraudulent and low-quality products to protect consumer interests, we also announced that we will be officially closing PaiPai Web this April. The entire PaiPai team has been absorbed into JD’s core e-commerce, finance, and other teams. I hope we can applaud for every one of our Paipai employees because of their utmost best efforts to fight against fake products. In China today, many C2C merchants still do not require SAIC registration to open stores – so SAIC’s enforcement division often finds it very difficult to enforce against this. JD’s closing of Paipai is definitely not due to the Paipai team’s lack of ability – rather, it is due to JD’s zero tolerance for fake products whatsoever. The only lack of ability one can speak of is JD’s “lack of ability” to make any money whatsoever from fake products.
    In 2016, absent any unforeseen circumstances, I firmly believe JD can enter into the Global Top 500 as measured by net revenue.
    Since we started from zero in 2004, when we didn’t have technology, IT, capital, or any type of personal connections, we only had 36 people when we began our foray into e-commerce. If and when we enter the Global Top 500 (in terms of net revenue), we will have all the more reason to feel proud.
    So what is the JD of today? We are the sun at 8, 9 AM in the morning. If climbing the Himalaya Mountains is our goal, where are we today? We’ve only entered base-camp – our road ahead is still far and long – what we see today is only what we can see from the first camp on the Himalayan mountain base. But our JD people will not rest, we will not rest our progress forward, we will continue climbing, reaching higher and further.
    Let me extend my sincerest thanks to our organization, our partners, our investors, our guests, and all of our employees and loved ones my thanks and gratitude. Without you, we wouldn’t be here today. Without you, we wouldn’t even be at “base-camp”. Thanks everyone!
    The JD of Chinese Citizens
    During our annual meet last year, we mentioned for the first time that we hope JD can become a JD of “the people”. A company of the citizens is a company that creates great value for society, not measured in terms of revenue, or market cap. What do we mean by a “Company of the Citizens”? In sum, it includes revenue, employment opportunities, taxes paid, societal responsibilities, and globalization.
    A “citizen’s company’s” path to globalization is the perfect representation of the globalization of that country’s culture. Only when a country has large number of globalized firms and well recognized brands, can that country be sure that its culture and that of its companies has been accepted into the global stage. We believe that in the China of today, to become a global company, especially a global “citizen’s company”, is a sure way to make our country and citizens better.
    Firstly, we aim to have net revenues exceed RMB 1 Trillion.
    Secondly, we aim to employ over 1 million employees (full & part-time).
    Thirdly, we seek to pay over 10B USD (70B RMB) worth of taxes from the entire JD ecosystem. We do not support the common phrase, “because of corrupt officials, paying taxes is useless.” This is extremely naive, uninformed, and irresponsible speech. Companies must pay taxes, company executives must pay taxes. Only when a company pays tax can the country and society be more stable. Only with a stable society can our company continue to grow.
    Number four, social responsibility. Starting 2016, JD officially promises, starting this year, thru our village e-commerce model, we hope to help 50,000 families escape poverty in China annually. We mentioned our goal of increasing lower tier city penetration two years ago, and we have already entered into hundreds of thousands of villages – hence, JD is capable of this initiative. Hence, fresh food delivery is entirely possible; rural e-commerce penetration is entirely possible – both bring unlimited value to society. I come from the country-side, and over 70% of our employees (part-time and full-time), come from the countryside. When one talks of country-side entrepreneurs, I, Richard Liu, must be one of the largest rural entrepreneurs in China.
    But we represent a new generation of farmers – farmer entrepreneurs of a new age. What is meant by a new farmer? That means we have the patience, honesty, integrity, kindness of farmers, but at the same time we have a global insight, we have dreams, we have energy to develop, to innovate. Every one of us hopes we and our family can enjoy better lives, every one of us hopes our children don’t have to suffer thru the same unfairness as we did. We want our kids to stand on the same starting line as those kids from Beijing, Shanghai, and other cities.
    Electric motor vehicle question. Currently, JD has over 5,000 vehicles over China, but in the next five years we hope to double that to over 10,000 vehicles. We hope all of our vehicles can gradually transition to electric cargo vehicles. Moreover, in the next 10 years, we hope to transition all of our delivery personnels’ 3-wheeled electric cars to 4-wheeled cars to improve safety for our delivery personnel. We hope every one of our electric vehicles will be zero emission to prevent our already challenging environment from becoming even worse. I hope one day our JD will be amongst the greenest large enterprises with over 1 trillion RMB revenue in China – our energy waste level will be the lowest, our carbon footprint will be the lowest. We will add more value to society this way.
    Fifth, globalization. First, a bit of news – in 2015 we built up our Indonesian company, we co-invested with our local partner, we are currently online and operating. The Indonesian company and the JD core e-com in China are the same – we need 5 to 10 years, drop by drop, slowly but surely grow the business – we want to become the top ranked e-commerce brand in Indonesia – to become the favorite e-commerce player amongst Indonesians and even all Southeast Asians. Southeast Asia is for sure a very large market. We will first develop in Indonesia, but we will later on expand to SE Asia – I hope JD can become as successful there as it has been in China.
    The theme for our annual meet this year is: “New Economy, New Order.” Quality, brand, merchants, these are the core values and principles we’ve adhered to in the second half of 2015.
    China is the world’s most populous country, and there is ample opportunity for authentic high quality brands to shine. If our country’s economy is to truly develop well, we must rely on the government, society, consumers, including all merchants, working harmonious and together. Our country has experienced already 30 years of high speed growth. Today we already have the capabilities to emphasize consumption quality. If countless Chinese brands can rise together, we can transform our manufacturing advantage into a brand advantage. Because of our gigantic manufacturing capability, our supply chain has a lot of built-in advantages. I hope every one of our partners, every brand manufacturer, have a common goal – every one of us must fight to improve the consumption quality in China and help nurture the rise of a brand culture! We must continue to work hard and fight!
    Lastly, I want to summarize for everyone what is called “JD for the Citizens.” I hope JD can one day become an enterprise Chinese citizens can be proud of.
    JD of the Future
    In the next few years, our organization will focus on 3 areas of growth: e-commerce, finance, and technology. E-commerce includes the core JD platform, JD Daojia. Finance includes JD Finance and the JD Insurance we currently have in development. Technology includes JD Cloud and JD’s artificial intelligence product. These three areas will be a huge focus for us.
    Our growth for 2016 will be very strong – to allow our company to have the ability to make our employees even more prosperous.
    First, we want to increase the maternity leave for our employees. Every female employee who has a child will get additional 30 days of paid maternity leave. Given we strive for gender equality, male employees will also get 7 days of paid paternity leave. Every Chinese New Year, JD will reimburse 3000 RMB of travel expenses for each JD kid, allowing them to visit the city and spend New Years with their parents who are still working at JD.
    Secondly, we want to lend 1B RMB of non-interest loans, to provide our hard-working employees and core senior employees enough money to buy a house. I want to make sure every single one of our employees, once they reach a certain age, to have a house.
    Thirdly, we want to increase the size of our employee assistance fund to 30 million RMB. In the past, the largest size for any particular employee was 20,000 RMB, but now we are increasing that ceiling to 100,000, to include not only employees themselves, but their family as well.
    At the same time we will implement JD’s version of “Phoenix Nest” planning. Thanks to 3 years of planning and construction, JD’s main building has been fully occupied. We made great deals with local government and bought the local land nearby our existing facilities. We have great plans for our current HQ and 7 large districts. We want to ensure that every district’s employees can have a stable area to work – by end of 2016, we want to complete the renovation of all of our core 8 JD work centers across China.
    Moreover, in the next 3-5 years, besides going public in the USA, I also want us to create 2 or more public companies. I want to float our independent subsidiary on the market and hope that this can provide the entire organization with renewed vigor and independence for all of our employees. I want a greater number of publicly-listed companies to give our employees greater financial flexibility via stock options. Although there are many investors at this meeting today, I unabashedly tell everyone, for every subsidiary that goes public in the future (starting from JD Finance), we will allocate a good amount of stock options for our employees.
    What is meant by “1 Trillion RMB JD.com?” There are two hard goals we must achieve to win this accolade. One, is for our net revenue to exceed 1 trillion RMB. Two, is for our market capitalization to exceed 1 trillion RMB (154 billion USD).
    What is the JD of the future? I want JD to be the most trusted business in the world. This is the wish of our entire organization. Not only receive the trust and adoration of Chinese customers, but also to win the trust and confidence of all the consumers in the world. We are a trustworthy company, and this is our ultimate goal.
    Brothers, we have successfully developed for the past 12 years – it has been difficult. The next 12 years starts today. We said on June 18, 2015 that “we shall not forget our initial plan, continue to go out to the battlefield.” Today, the last thing I will say, I want to re-emphasize that phrase – I hope we never forget how we started, why we started this company over 10 years ago. Don’t forget our dreams and what we aim for – let’s continue to fight and work for the JD of China’s Citizens!
    Thanks everyone!


  4. Those talks are just spectacular. I am so impressed by Liu’s intense desire to do good for the common man through his company.


  5. Thank you very much for your extensive research!
    I am in today @20.85 US$.
    My first Chinese stock so far.

    Regards from Germany


    1. I followed your method and calculate return&cancellation rate for 1P sales FY11,12 and 13 and got 15.5%, 14.3% and 13.8%, which are low compared to IR’s range. Curious to hear your thoughts on these historical rates.


  6. Hi do you have any thoughts on why the # of warehouses JD has declined to 209 in Q1 vs 213 in q415? You would think warehouses should only grow as its a key component for them. Not addressed on the call either.


  7. Any thoughts on these articles? http://tech.sina.com.cn/i/2016-10-24/doc-ifxwztru7001048.shtml

    An internal investigation uncovered 10 cases in which staff in different departments, including those sourcing consumer goods and luxury items, had accepted bribes and gifts from suppliers or participated in banquets organized by them, which are violations of the company’s code of conduct, JD.com said on Monday on its official WeChat account.

    The employees have been fired, and some have been detained by police, the company said.


  8. Sina article looks pretty petty to me. I’m not surprised if this isnt across the chinese landscape. the only difference is richard is much more strict on cracking down than other cos…


  9. Police are involved with shoplifters. Aka petty theft. Police involvement doesnt mean the company has major problems. Good luck with your short madam


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