JD.com restructures e-commerce business as CEO cleared of rape charges

JD.com has restructured the business following turbulent times for China's second-largest e-commerce company / JD.com

JD.com, China’s second-largest e-commerce player, is restructuring its e-commerce business in a bid to respond to the hugely competitive retail market and allay investor concerns.

The changes come just days after the company’s founder and CEO Richard Liu was cleared of felony rape charges in the US. US prosecutors stated there was insufficient evidence to follow through with charges against Liu, who was arrested in Minneapolis in August and released without charge.

In the months following Liu’s arrest, JD.com suffered steady falls in shares, dropping to a 19-month low and investors questioned Liu’s tight control over the company. Liu holds 16% of JD.com shares, however, a dual stock system means he controls nearly 80% of voting rights, giving him a huge level of influence and power over the company.

The restructure will move to allay these concerns by creating a new chief executive’s office, which will be tasked with coordinating the restructure and re-organising of the business.

As part of the restructure, the JD Mall business will be divided into three segments with one unit responsible for customer behaviour and market changes analysis, a second unit to provide customer services to satisfy consumer demand, and a third to handle infrastructure-building, service support and risk management, according to reports by South China Morning Post.

JD Mall is the company’s main revenue driver and the changes aim to respond to what JD.com has called the “tremendous changes” in the e-commerce industry.

The new business units will report to JD Mall chief executive Xu Lei. JD.com statements said the restructure aimed to evolve the business in step with consumers and the changes in the competitive marketplace.

JD.com also announced a share repurchase programme to buy up to US$1bn of its shares over the next 12 months.

In November, JD.com reported its slowest quarterly revenue growth since 2014 with revenue growth of just 25% as the company failed to reach analyst forecasts.

While the US-China trade war and Liu’s arrest contributed to concerns the weak performance was largely attributed to an overall slowdown in China’s retail market and increased spending by JD.com as it expands globally across South East Asia, the US and Europe.

The JD.com restructure follows a similar move by Chinese internet giant Tencent, which restructured in October to merge its mobile and internet business units.

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