JD.com's Challenges in China and Beyond

JD.com's Challenges in China and Beyond
Case Code: BSTR588
Case Length: 11 Pages
Period: 2014-2020
Pub Date: 2019
Teaching Note: Available
 Price: Rs.500
Organization: Jingdong.com Inc.
Industry: Technology & Communications
Countries: China
Themes: Corporate Governance, Corporate Strategy, Business Models
JD.com's Challenges in China and Beyond
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

This case is about Chinese e-commerce giant, Jingdong.com Inc.'s (JD.com) foray into the e-commerce market in China and the challenges it faced. The company’s business model was similar to that of US-based e-commerce giant, Amazon.com Inc. (Amazon), where JD.com bought inventory from branded suppliers and operated its own logistics chain. JD.com’s various efforts led to the company gaining a strong foothold in the e-commerce market in China. Having established itself in the home market, Liu set his eyes on serving affluent consumers in the US and Europe by partnering with US-based retailing giant, Walmart Inc. (Walmart) and online search engine giant, Google Inc. (Google). Some critics felt that JD.com must focus on China’s rural e-commerce market before expanding globally. Even as JD.com was focusing on the lucrative rural Chinese e-commerce market and serving customers globally, its reputation took a beating after the company’s founder and CEO Richard Liu (Liu) was arrested in the US on allegations of rape in August 2018. The Minnesota court cleared Liu of the sexual assault charges due to insufficient evidence in December 2018. However, the incident attracted a lot of attention in China and investors raised concerns over the fate of JD.com as Liu held a majority of voting rights in the company, which gave him huge control over key management decisions. Despite several efforts made by JD.com to tackle corporate governance issues at the company and restructure its businesses to win back the trust of investors, analysts felt that it would take some time for JD.com to recover. They wondered whether amidst these challenges, JD.com would be able to combat competition from global e-commerce giants such as Alibaba and other new players such as Pinduoduo who were fighting to win growth and market share in the e-commerce market in China.

Issues

The case is structured to achieve the following teaching objectives:

  • Analyze JD.com’s business model that led to its success in the intensely competitive e-commerce market in China
  • Develop strategies that could help JD.com to grow its business in China's rural e-commerce market and expand its global footprint
  • Understand the importance of having effective corporate governance policies at the company
  • Understand the issues and challenges faced by JD.com with regard to tackling competition from global giants such as Alibaba as well as new players such as Pinduoduo

Contents

Keywords

Corporate strategy; Corporate governance; Dual-class share structure; Value creation; Internationalization; Competition; e-commerce; business model; Retail; Logistics; Business strategy; Investor relations

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