JD.com pledges reorganisation and more hires to get growth back on track
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JD.com pledges reorganisation and more hires to get growth back on track

Chinese ecommerce giant JD.com, the country’s second-largest online retailer, has promised that a restructuring will see it return to the kind of growth trajectory that first endeared it to investors. In a recent WeChat message, the company’s founder, Richard Liu, pinned blame squarely on employees, saying: “our staff has ballooned. More and more people are giving orders, and less and less of them are doing real work. There are a lot of slackers in the company!”

JD’s share price has appreciated by 37% year to date

18.04 JD

Source: Yahoo Finance

A major drag on JD’s underlying financials has been its logistics arm. This was spun-off last year, despite operating successfully, has struggled to turn a profit. One of the reasons for this, according to Chinese media, is that the volume of external orders JD ended up processing was “too small”. Liu said that this resulted in “huge costs” to the company. It’s separation from the main business was a first step in JD’s ongoing restructure.

Beyond that spin-off, JD has eliminated the base salary of its sizeable delivery fleet and reorganised some of its senior management positions. However, despite media suggestions to the contrary, JD says it won’t be cutting any jobs. In a statement, a company spokesman said JD didn’t “have a plan for large scale layoffs,” and was planning to hire an additional 15,000 people in 2019.

He continued: “We are making organizational adjustments to make the company more agile and responsive – more lean. We are going back to our entrepreneurial roots. We hope these adjustments will help us return to our previous fast growth.”

Disclosure

Dominion holds JD.com in its Global Trends Ecommerce Fund.


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