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JD.com/Richard Liu: Another tech boss bites the dust

Richard Liu is the latest founder to vacate the position of chief executive at a Chinese tech giant. The billionaire is go back Chairman of JD.com, the second largest e-commerce company in the country.

Liu’s move to a lesser-known role is just the latest in a series of abrupt departures from the founder. Beijing’s crackdown on the tech sector means wealthy, powerful bosses like Liu are coming under scrutiny. But the handover to the next generation of leaders could not come at a riskier time.

Alibaba’s Jack Ma was the first prominent tech chief to duck for the Brickbats. He was followed by Colin Huang from the Pinduoduo food company. The founders of short video platforms ByteDance and Kuaishou Technology have also resigned due to regulatory pressure.

Liu had already distanced himself from day-to-day operations after rape allegations four years ago, which he denies. But he is still considered important to the success of his company. JD shares, which had fallen 30 percent in 12 months, fell more than 3 percent on Thursday in Hong Kong.

The raids weren’t just bad for JD. Antitrust authorities chose market leader Alibaba as their main target, which allowed JD to increase market share. JD fully controls its supply chain, warehousing and transportation. That means it offers customers a better experience than competitors who rely on third-party services. That also makes it a big employer, another plus in Beijing’s eyes.

Unfortunately, an asset-intensive business model becomes a weakness when prices and wages rise. In the fourth quarter, JD reported a quarterly loss. General spending increased by 89 percent. Fulfillment costs increased by more than a tenth.

China’s slowdown amid lockdowns in Shanghai and other major cities is another threat to sales. Alibaba has already reported the slowest quarterly growth since going public in 2014.

JD’s depressed stock reflects growing risks. But at a steep 28 times expected earnings, more than double that of competitor Alibaba, there’s room for further declines. Xu Lei, an executive with more than a decade at JD who will take the top spot, faces a major challenge.

Beijing gets two of his wishes. Liu has promised to help revitalize rural areas to support China’s shared prosperity goals. His retirement also means a founder of fewer at the forefront of influential technology companies. But the pressure on JD.com, like other tech giants, will continue.

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https://www.ft.com/content/948f7a1e-f921-425b-b4a9-603dfac87ccd JD.com/Richard Liu: Another tech boss bites the dust

Adam Bradshaw

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