JD.com billionaire founder Richard Liu blasts underperforming employees, as e-commerce giant faces mounting competition

Richard Liu Qiangdong, the billionaire founder of Chinese e-commerce giant JD.com, said the company is no place for unproductive staff and threatened to lay them off, as competition heats up in the country's online shopping sector.

"[For people who] underperform and don't work hard, the company will not tolerate them and will weed them out," the 51-year-old entrepreneur said in a video that is circulating on social media and was widely reported by local media.

Those who perform well should not have to work overtime, but average performers who work hard can also be assured that they will not be fired, Liu added.

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The remarks, some of his harshest in recent years, mark an escalation in tone by the company chairman, who last year warned his employees not to "lie flat", or tang ping - a Chinese term that means doing the minimum to get by.

They also stand in contrast with past comments by Liu, who has repeatedly highlighted comradeship in the company culture by calling staff "my brothers".

The strong words come after the Beijing-based firm made a series of adjustments to its work schedule and timekeeping policies, including shortening the lunch break from two hours to one hour, as well as additional efforts to prevent "buddy punching" - a term describing workers clocking in for colleagues who are late or absent, according to people familiar with the matter.

One executive at JD.com, who declined to be named as he is not authorised to speak to the media, said the company is hopeful that the changes could help correct sloppy management in the past few years.

There have been serious issues in some main business units, and the latest efforts to instil staff discipline are sorely needed, according to that person, who also said the company expects the changes to motivate staff and provide a fair environment for those who are willing to strive for better performances.

JD.com did not immediately respond to a request for comment on Tuesday.

The company announced on Monday it will gradually raise the yearly gratuity payment for procurement staff from four months' pay to eight months' pay, with no cap on additional bonuses. The increase will take place in phases, beginning on July 1.

That followed two rounds of salary hikes in recent quarters, including an average 30 per cent increment for front-line customer service staff, and doubling the pay for procurement and sales employees.

The carrot-and-stick approach reflects Liu's anxiety over how to maintain growth in an increasingly competitive e-commerce landscape, according to Li Chengdong, head of internet industry think tank Dolphin.

Workers sort out parcels at a distribution centre for JD.com in Beijing. Photo: AP Photo alt=Workers sort out parcels at a distribution centre for JD.com in Beijing. Photo: AP Photo>

"As a company matures, it can acquire large-company characteristics, [such as] having staff who become less motivated and productive," Li said. "A company might be able to ignore those issues as long as it keeps growing, but with competitors now growing much faster, the firm is trying to run a tighter ship. "

However, changes in employees' work schedule alone may not be enough to boost growth in the long run amid shifting consumer preferences, Li added. As Chinese shoppers become more budget-conscious in a weak economy, JD.com's premium pricing and services, once a hallmark of the brand, could become a burden.

To address the issue, JD.com has devised strategies to cut the prices of products sold on its platform by taking a page from PDD Holdings, operator of budget shopping app Pinduoduo. These include a "10-billion-yuan discount" campaign, as well as flash sales and free shipping for items as cheap as 9.9 yuan (US$1.4).

JD.com last week reported a better-than-expected 7 per cent increase in first-quarter sales, with revenue from its retail business rising 6.8 per cent. Sales of general merchandise grew 8.6 per cent, while sales of electronics and home appliances increased 5.3 per cent.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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