An Interview with the ‘Jeff Bezos of China’

(Richard) Liu Qiangdong is the founder of JD.com, the second largest online retailer in China (think Amazon).

This interview he gave in the Financial Times is behind a paywall, but I wanted to include the summary of his humble upbringing. It is amazing how much some people can accomplish despite being dealt a very tough hand to begin their lives.

Again, like so many of China’s new titans, Liu’s family was so poor that until he went to university aged 18 he only tasted meat once or twice a year. His family, peasant farmers in arid coal country, 700km south of Beijing, had a few rice fields but they also had to hand over the crop to the government; these were the dire days after the Cultural Revolution. “From June until September we were able to eat corn — cornmeal porridge for breakfast, corn pancakes for lunch and dry cornbread for dinner; cornbread so tough it made your throat bleed,” he tells me. “The other eight months we ate boiled sweet potato for breakfast, sweet potato pancake for lunch and dried sweet potato for dinner.”

Now he is 43 and worth nearly $11 [billion].

Richard, as he likes to be known to foreigners, founded the e-commerce company as a single counter in a Beijing electronics market in the late 1990s. Now it is the third-largest internet company in terms of revenues, behind Amazon and Google but well ahead of Facebook, number four.

At 18, Liu passed the difficult entrance exam to attend an elite university in Beijing, but his family did not have the money to pay to get him there. A collection of neighbors and friends raised the $75 while others donated food for him to eat on his journey.

Other interesting notes:

— China became the #1 e-commerce market in the world in 2014, passing the US. However, it is growing so fast that it is now almost twice the size of the US e-commerce market today, and in another three years, it could be larger than the next five largest e-commerce markets combined.

— JD had 300 employees eight years ago. Today they have 120,000.

— More than half of those employees work as delivery drivers or in logistics. Because JD controls this part of the distribution chain, over 90% of its shipments arrive on the same or next day of the order.

— Today’s millionaires and billionaires in China are almost all ‘new money’ since the communist control of the country did not add capitalist elements until the 1980s. However, over 80% of the new wealth in China is descended from the pre-1949 wealthy families before the communist regime took over. Liu’s family is one example, an elite family that lost everything and were forced to resettle twice. Liu prescribes his success to the culture and values his parents and grandparents continued to live by and instill in their offspring.

— Liu’s first job in Beijing at the start of college was as a letter writer for a firm that did not have the money to buy a photocopier.

— His first entrepreneurial venture, opening a restaurant, went bankrupt in under a year. “‘The cashier fell in love with the chef and they worked out how to steal from me and then all of the staff started stealing,’ he says with a rueful laugh. ‘It was all my fault because I had no management skills and I was never there.'”

— JD.com started as a single counter in an electronics district. Most of his competitors sold counterfeits and were opaque with customers about pricing their merchandise. Liu took a different approach, putting clear price labels on all of his products and giving authentic receipts for each purchase. It wasn’t long before he had the best reputation in the area.

— It was luck that helped him realize the potential of selling merchandise online. The outbreak of Sars in 2003 turned Beijing into a ghost town, so they set up an online portal as another sales channel. That is the only reason he caught on to the trend so early.

— He did the customer service by himself for the first four years the online site was operational.

“I bought an old traditional alarm clock and I put it on a wooden floor so it was like an earthquake waking me every two hours — I’d get up and answer questions online and then sleep for another two hours and then get up again,” he says. “In the first four years it was just me doing customer service and it was very good for me because I learned every detail of what our customers wanted.”

Source: Jamil Anderlini at Financial Times

Note: if you are not a FT subscriber, you will not be able to access this piece.