 Okay. Ready to start? Yes, please. Okay. Well, our special pleasure to have Richard Liu here today as our guest. Richard is the founder and CEO and chairman of JD.com, which is the largest retailer in China. It's a company that he built from scratch and now runs. And it's quite successful in many different areas, and we'll go through that today. But why don't we just start by asking Richard, is this your first time in Davos? Yes. And what is your impression? Very happy. And it's a very effective forum hearing different voices from around the world. I'm very pleased to meet our partners here. Opportunities here? I think so. I'll talk about your company. It's called JD.com. What year did you start it? JD.com started 2004. I started in 1998. Where did you get the name JD.com? I wish my wife wasn't here, but I have to tell you honestly, she was my first girlfriend. Then we joined our names together, her last name and my first name. So you came from a family that your parents had a small company and you worked in it for a while? Well, it was a fairly typical sole trader. They sat on the canal doing transport. Then you went to college. Where did you go to college? In Beijing. In college you started a restaurant? Yes. Indeed. Did that work out very well? It failed. It collapsed. It didn't work out too well. So what was the reason you think it didn't work out well? What lessons did you take away from that? Well, I felt I was in year three. I was going to classes and only two hours a week. If it's possible. I felt that there was... You later started another company that was a retail company and it had physical stores. Where did you get the idea for that company and what did it do? Well, there were two reasons. One, before I went to the university, the transport business of my family didn't go well. So the family was poor. My grandmother who brought me up was sick. But we didn't have the money to buy medication for her. I needed to make money to pay for her medical care. And secondly, those were the days when most of the university graduates wanted to go into government or going abroad to study. But I didn't have the money joining the government office having a tea and a paper for a day. I didn't want to do that. So I decided to set up my own business. The business too? In Zhongguan Village. I've hired a four square meter store selling computer accessories. There's a 10 or 12 stores that you opened up? Yes. Indeed, up to 12 maximum at a time. What is scandal? Not scandal. The SARS epidemic happened. Is that right? Yes. Indeed. In fact, your business... When SARS hit, I didn't want my staff to be hit because talking face to face was a high risk thing to do. So I decided to close the 12 shops. I gave them a lot of instant noodles and water and staying at home. But the managers, we stayed at the office thinking about how we were going to survive. So one of the managers said that since we couldn't meet the customers, why didn't we sell online? We wouldn't need to meet customers. We could do business and the risk of SARS. That manager who suggested that, is he or she still with you? I'll tell you. He's already a billionaire. That was a good idea. So you began to close your physical stores and you just began to sell things online. Is that correct? What year was that? We closed the shops towards the end of 2004. We did one year both on and offline towards the end of the second year. Then we compared the figures. I realized that the online sales, the cost of the logistics was lower and more efficient and a better experience for the customers. Therefore, I felt that e-commerce would be the trend for the future. The leading e-cameras company in the United States was Amazon. Was Amazon very well known then or was it still relatively young when you were doing this? I heard of Dang Dang. Dang Dang was number one in China as the e-commerce. Amazon bought Jio in China but wasn't as known as Dang Dang. In fact, I didn't know what Amazon, the name was unknown to me. You sell things online, but what was it that made your company so effective? Did you have better ideas about how to do it online? Were you better at shipping the products to the customers? What was it that you did that was so unique that made your company grow so rapidly? I felt that doing online in 1998 was rather similar. In these days, Zhongkuan Village, there were many counterfeit products online and cheating on prices and services. Therefore, I felt the market was a bit of a chaotic. I wanted new rules for the market. We decided that we would not sell anything counterfeit. We would issue proper invoices and receipts and we would talk to the logistics. We wanted to provide the best experience to customers. What products were you selling online? Everything or just a certain type of product? When I started, we had limited amount of cash. We couldn't go into everything overnight. In 2004, we had IT products and then digital and then mobile phones. Every year, we added one new product. In 2010, we had almost everything. It took us six years. Today, your company has a market value of what? Perhaps 60 billion US. Today. What employees do you have? Last night, about 167,000. That's pretty big. How many are you adding a week? You must be adding a lot of new employees. Last year, we added about more than 30,000. Publicly traded, let's say, internet-related companies in China. The biggest market value is 10 cents? Yes. And then Baidu? Yes. And then JD.com? Yes. So your goal? Yes. Not number four, but number two, number one. How long will it take you to have the highest market value in China? When I had my first office, I think there was a column. I wrote four words there. And in Chinese, they said, just want to be number one. So how many years do you think it will take for you to be number one? So here, what do you think? First, I think it's the market valuation that's the most important. I think it's the value we create for the society as an e-commerce provider. And in the next few years, we want to be number one. We have finance, logistics, and technology, and every business will take time to develop. Okay, so today, if I want to buy something on your website, I have to live in China to buy something on your website. You deliver only in China? Well, we deliver around the world. New York, London, Paris. I'm living in Washington, D.C., where I live. I like your products. I just order it. And how long will it take for me to get your product in Washington, D.C.? Well, this year, our global delivery business is not as good as it is in China. Washington probably would take 10 to 15 days. But in China, an average of six hours only. Yes. In China, 57% will be delivered within six hours. 97% will be within 20 hours, not just Beijing and Shanghai, but lots of rural areas. We can do that. The most popular product that people buy from you? In recent years, the hottest products are consumer goods and food and also fashion. How's this all over China? Well, we have 500 logistics centers. Probably more than Amazon has. I don't know how many they have. And do you guarantee people they'll get delivery in six hours, or that just happens to be what it takes? Our website gives the commitment. Depending on where you are, we tell you exactly whether it's six hours or 20 hours. Suppose I'm in Beijing and I want to buy something on your website, I order it, and then how do I get it in six hours? Somebody comes in a car or where do you have something in the warehouse in Beijing and then it goes in a car? How does it actually happen? Well, in Beijing, we don't need six hours, about three hours. In Beijing, we call it 331. In other words, before 11 o'clock, if you order, before five o'clock, you get it. If it's before five o'clock, then this evening by 10, you get it. And if it's by 10 o'clock in the evening, by first thing in the morning, next day you get it. Order something on your site. Does it take just one hour or something? Do you get a special? When you order, it must be much quicker than even that, right? No? Not our way. No, we treat all customers the same way. The best standard for everyone. So, many people who are successful like you find themselves to be wealthy, and you're now one of the wealthier people in China. So, is that a burden or is it a pleasure? I think it's neither. I think it's more of a sense of responsibility. If you're wealthy, then you have resources in your hands, and wealth is a resource of the society. It's a question of how to use it to grow your wealth, the company, and the society. You want to do it simultaneously. That's what I would like to do. Have you found that friends that you had when you were poor all of a sudden are friendlier to you because you're wealthy? Do they call you a lot more and want to see you more? Most of my friends are all wealthy friends now. I see. Okay. Okay, so nobody from high school is calling you up who's not wealthy. They're just all wealthy today. Okay. Well, primary school, middle school, our classmates were very clever people. They all wanted to improve their lives. They were all hard-working people. Therefore, whatever they went to do after graduation, business, or teachers, or professors, they're all hard-working people. I think their life was good. Xi Jinping ever call and buy things on your site? Is he get things in one hour? Sorry, we don't have that. He's not a customer? I hope he is. Many people in China who've built great companies in China now want to expand into the United States or other parts of the world. What are your goals to expand into the United States or Europe or other parts of the world? We will take several steps. Three, the first one, we want to bring the best quality products from around the world to China. The second step is we'll go to Southeast Asia following one belt, one road, Middle East, and then Europe and America. We'll build out your core business of Internet commerce around the world. That's going to be your main business, Internet commerce, is that right? We have four core business, e-commerce, logistics, telecom, technology, so going to Southeast Asia will go in all four, not just one. When you're in Beijing, you go to work at what time? You're meeting customers, you're meeting employees, you're meeting government officials, how does your typical day work? If in Beijing, while get up about 7, 8, 30, all the senior managers have a meeting after that, it will be internal and external meetings dealing with WeChat and e-mail. Are you looking to move forward in other parts of the world by acquisitions or are you going to start with just growing the business from scratch in other parts of the world? I think it's hard to use one model, perhaps depending on countries at different particular time. We'll use different strategies in Southeast Asia. We look for local partners and then to develop green field projects, but we don't want to exclude acquisition. Talk about the Chinese economy at them for the moment. How do you think the Chinese economy is doing right now? Do you think it can continue at 6.5% to 7% growth annualized? I think the economy in China is rather like us. We went through high growth. China grew over 8%. In the last 14 years, we averaged about 100% plus per year. This year, I think we'll perhaps drop down to a more reasonable level, but in fact, we are improving the quality, for example, in finance for the three things. First of all, we will help our partners and users. We will bring them surprise products and services. Secondly, for the industry, for the society and the global industry, we hope it will help them to grow. Thirdly, as the speed slows, quality will accelerate its improvement. For example, we want to see better profitability to return to our shareholders. Who is your major competitor in China right now? Personally, I think it's myself. I challenge myself every day, including you. You're a business observer and you say, I'd like to buy your products from JD.com, but let's suppose they don't like your way you're doing business. Who would they buy something from? Is Ali Baba a competitor? Yes, you are. Perhaps Walmart. I said to you, why should I buy your products versus Walmart? Why are you better than Walmart? First, compare with Walmart, because our products are all good quality with good service, but our choices are wide. For example, today, we have 1 billion products to choose from, but Walmart is probably offering just a several million. We must have enormous amounts of warehouses, as we discussed, to keep all these products, but how frequently do you turn over your products? Do you hold them for a very short period of time in your warehouses before you sell them? Yes, that's our core competitiveness. This is really the core, the critical thing. In the past 10 years, we focused on three things, one, cost, two, efficiency. You look at our financial statements, our cost of e-cost, Walmart is comparable to Costco in the U.S., about 10% only. Our efficiency, the total number of products in warehousing, number about 5 million, but the longest turnover time is only 34 days. In the next five years, we'll reduce, increase to 8 million products, to 10 million products, but the turnover time will be less than 20 days. What product do you have? Does everything have the same margin as very small margins? Or do you have some things that have large, high margins? So far, it's fashionable products, and appliances are better, but margin better doesn't necessarily lead to net profit. Some margin is big, but the net profit is not necessarily so. You have become better known, well-known in China. Is it difficult for you to go out to a restaurant or to go see a show? Do people come up to you and want pictures, or they want your autograph, or they want a job? That's the only thing that lacks freedom there. In Davos, you can walk around here and people leave you alone, largely? A lot better than in China. So your goal is to build the biggest retailer in China, but would you like to ultimately compete against Amazon to be the biggest e-commerce retailer in the world? Well, I think I would just like to go a little bit. I want to be the biggest globally, not just in China. I firmly believe in the next 10 times that the largest e-commerce provider in China will be the biggest in the world. You've made a fair amount of money. You're an extremely wealthy person now. So do you use the money in any way for philanthropy? Do you give away money? Do you have any philanthropic programs yet, or you're not yet involved with philanthropy? Well, my wealth is mostly on paper. I've been working for so long. I haven't had a chance to cash what it is, but we have bring some cash. Half of our cash income has been donated. Shares and get cash anytime you really wanted it, but you haven't decided to sell very many shares yet. Is that right? Well, the price is too low. Now you are married with two children? Yes. What are your children? Daughter is nearly two, the younger one. Not affected by the wealth yet. She doesn't realize how famous her father is, right? I hope she will never know. She just needs to know who she is and where she wants to go, what life she wants. As you look at the United States as a place to expand, do you think it's difficult for Chinese companies to expand in the United States, or do you think the rules are fair? Many friends from other countries discuss protectionism in China, difficult to get in China, but I think things have completely reversed. Chinese companies finding it harder to go into the United States, I can feel the protectionism is quite serious there. I think it's not a good thing. I hope one day it will hurt U.S. economy too. So we hope that economy will be integrated. Don't stop that. One person who has some influence on the United States is President Trump. Coming to Davos, I think tomorrow, are you going to see him and give him your views on what he could do to open up the U.S. market or you're not likely to do that? I think he has a reception. I'm thinking of a going. Oh, I'm not sure it's an evening. Maybe just a reception or something. I'm thinking of a going. So you might try to get him to buy something from your website? If I get an opportunity, yes. So as you look back on your, you're still very young, you're 44 years old. So you're very, very young. What do you want to accomplish with your life? You want to build the best company in the world? Do you want to give away a lot of money? Do you ever have an interest in going to government politics, public policy? What are your ambitions, let's say, over the next 40 years of your life? In China, as an entrepreneur, I hope to leave something to China, which is to enable a lot of young people and entrepreneurs believe that if you do things in believing in integrity, you will still be successful. Globally, I hope one day when I retire, I'll be able to say, our people will say that he's a good guy. You're not retiring any time in the next few decades, I assume. I don't think I'll retire before 65. Well, it's a good age. When you get there, you might say, as I did, I'll keep working for a while. So you have no gray hair, so you're obviously not under too much stress. So one little gray hair, trust me, that's nothing. So now, are your parents alive? Yes, they are in good health. Thank you. What you've achieved? I believe so. Every parent feels proud of their children. And their siblings are proud of you, too? Or they're jealous? I believe they are proud. I have two sisters. One is my teacher of English, another is studying abroad. When your parents call you now and give you some advice, do you still listen to them or you don't listen to their advice so much anymore? Or they tell you how to run the company? You've got to listen to them for the rest of your life. All right. Well, I guess that's a good idea. And so today, what would you say you're most proud that you have achieved so far in your life, building a company, being a father, being a good son to your parents? What is the thing that gives you the greatest pride? I think family. I really want to be a good son to them. In front of my wife, I want to be a good husband. In front of the children, I want to be a good father. In front of the employees, I want to be a good boss. In front of partners, I want to be a good partner to them. I think you do play a different role in your life. I stock in China. Do you have any good ideas of stocks that I might buy? Is your stock a good buy at this price? Of course. Certainly. The best to buy is Jindong shares. And because I'm going to get an annualized return of 10% or 20% or something, or even more? I remember, Kerry averaged about more than 30% in the last 30 years. I think it will be better than that. Sometimes you must relax, other than doing an interview like this, which is of course relaxing, right? What do you do? Do you have sports or cultural things that you do? What actually relaxes you? I like swimming, and also fast walk. And also I tried to travel in the desert. I traveled all the deserts in China. Is that fun to do that? Traveling in the desert is fun? Okay, all right. To me, yes, but perhaps not others. And you want to buy something on JD.com? How long would it take to get delivered to you? That would be more than six hours, I assume. Unfortunately, you can't access internet, so you can't buy anything. Listen, you have an incredible success story, and it's one that I think all Chinese entrepreneurs and all entrepreneurs around the world are obviously envious of. So let me just congratulate you as we're out of time to congratulate you for what you've done, and I want to thank you for being very frank in this interview, and also thank you for coming to Davos and experiencing what is here in Davos, and I hope when you see President Trump you'll get him to buy something on your site. I will, thank you.