(Chinese Version)

Industry leaders from the Internet sector have been very busy lately. Lei Jun, CEO of Xiaomi, just gave an interesting presentation at a news conference in India in English. However, on his entrepreneurship journey to the US, Liu didn’t try to show off his Chinglish for a presentation.

In the afternoon of April 25th, 2015, US Eastern time, Liu Qiangdong, CEO of JD Group gave a speech on the Harvard China Forum, sharing his personal experiences of building his empire JD, and his second startup project, JD To Home, an O2O project that’s quite new to the market.

Liu Qiangdong stated in his speech that in order to achieve success when starting a business, one has to solve something for the consumers. If one certain product can meet consumers’ certain need, then it’s bound to succeed. Today, starting a company of one’s own in China is very popular. In China, entrepreneurs are rising from the ground and more and more people choose to start their own businesses instead of joining the workforce. It’s certainly a great time for startups. He also added that an amazing idea is all it takes to attract US$30 million these days.

Humanity’s insatiable needs continue to grow with no sign of slowing down, which creates great opportunities for entrepreneurs to start new businesses. When consumers have new needs, entrepreneurs have to satisfy them. In any case, you would achieve success if you keep your consumers satisfied.

The western world always doubts whether something might go wrong for China’s economy because this country continues to grow for a decade without stop. It seems that the western world believes continuous growth would eventually bring forth troubles for China. Liu Qiangdong didn’t think so. From his perspective, if the young generation in China could continue to innovate and work hard for their course, and maintain their passion for entrepreneurship, then there wouldn’t be any major problem in China’s economy. He also believes that if Chinese people could continue to study in the US, Europe and Japan, and learn advanced technologies, new knowledge and experience, China’s economy would remain stable and strong.

Liu Qiangdong suggested to overseas Chinese students that time has changed, and China is now a place with great market potential and an ideal place for startups to grow. In Liu’s opinion, Chinese private enterprises are as competitive as any other enterprise in the world.

When asked about his incentives to found JD.com, he claimed that they came from the problems existed in online shopping, such as knockoffs and slow shipping. Liu’s logic was simple: solving these problems would mean success for JD. As for his O2O project, JD To Home, Liu stated that it would remove the intermediate links in the chain, and enable consumers to enjoy goods sent directly from the habitats. He also aims to use big data to solve food safety issues and fertilizer problems in the countryside.

Here’s Liu’s transcript on the Harvard China Forum, edited by TMTpost:

Ladies and gentlemen, I have intended to give you an English speech, Subei English to be specific. But since Mr. Zhang (Zhang Lei, CEO of Hill House Capital) delivered his speech in Chinese, I might as well just speak Subei dialect and not embarrass myself.

Last night I asked a really good friend of mine from Columbia University about the topics that people might like today, and he recommended entrepreneurship. I know entrepreneurship has become a heated topic in recent years and many students here all act on impulse or plan to start their own businesses. In my opinion, if one wants to become a successful entrepreneur, then he has to solve actual problems for consumers. If certain products can meet consumers’ certain needs, then his project will definitely achieve success.

First, let me tell you a personal story. In 1992, I was accepted by Renmin University of China. It had the best economics and finance programs, and undergraduate students from these programs literally had no trouble finding a decent job. However, I majored in sociology. Sociology was quite the opposite of economics. It’s really hard for us to find any job, let alone good jobs. At that time, one of my roommates was obsessed with a girl from the English faculty, and he had been having a crush on her for a whole year. Every evening he would accompany her to night classes in an attempt to make a good impression. One day, he finally asked her out and they agreed to meet at the little garden near the east gate. We were very happy for him and got all excited while waiting for him to come back to the dorm. Unfortunately, he brought back bad news. He was turned down directly by her. Why? He told us that the girl thought we sociology major students couldn’t find a job after graduating from school, and therefore she saw no future in them as a couple.

After that incident, it occurred to me that I must find a girlfriend. That was the first obstacle I needed to tackle. Although my major created many challenges for me to find a decent job, that didn’t stop me from figuring out that girls liked mysterious men. So I tried to find all those mysterious things to make myself attractive. In 1993, the most mysterious thing in China was computer, and that was the direction I went for. I went to learn computer science and study programming. After having learned quite a few things, I actually made a business card system for my professors in the faculty. You know, professors in Renmin University had tons of conferences to attend so it’s difficult for them to find business cards. In my business card system, they could find particular card very easily by simply inputting just one word. They really liked my work. And thanks to all these efforts, I was able to find a girlfriend at the end of my sophomore year.

To succeed in a business, it’s essential for you to solve a particular problem.

After 6 years of operation based on trust building and sincerity, JD transformed to an e-commerce platform with the help of a stranger

1998 was the year in which I decided to start my own business and went to Zhongguancun. I only had 12,000 RMB and I spent all of them on renting a small booth that’s about 4 square meters. Every shop in Zhongguancun back then ran in the same business mode. The induction training for new salesmen was basically to teach them how to sell a computer that’s worth 25000 RMB at the price of 35000 RMB. We even had “How To Trick Your Customers 101”, literally. I knew this kind of business mode was going to fall apart eventually. Tricking the customers was never the answer, and this chaotic phenomenon would change in the end.

In this case, I was the first one to try selling goods with price tags and my shop was the only one that offered receipts. There’s no bargaining over my counter. Everything had a set price, and all of them were authentic and licensed. And every customer could get a receipt after purchasing.

During that time, my business mode seemed pretty out of place in the market, since other shops in Zhongguancun were trying to trick their customers and sell things out at a higher price. That was the problem, and whoever could find a way to solve it would achieve success. It’s simple.

After 6 years, my business expanded from a small booth to a brand that owned 12 shops in China, three of which were based in Beijing. The best part was that they all had great sales performance.

In 2003, SARS hit China. Everybody was living in fear during that time, so nobody would go out for shopping at all. We had no choice but closed all our shops. My staff and I were really anxious, because we still had to pay our rent and other expenses every day. We didn’t know what to do. We didn't sell anything, and we didn’t even open our shops. In this critical situation, a colleague came up with an idea, which was to sell our goods online.

If we sold our goods online, it would mean no direct contact with our customers or anyone. It’s safe and it seemed promising, so we went for it. We posted our information and advertisements on Sohu, Sina, NetEase and many other websites. But unfortunately, most of them were deleted by the webmasters. Sometimes we would get lucky and a few posts would survive on those websites, but still few orders came. It was pretty reasonable when we really think about it, since we asked our customers to pay first before we sent them their goods. We were just too young and too naïve.

Then, we tried to post advertisements on geek BBS platforms. One administrator saw our post. He not only commented but also set our post at the top of the front page where everyone could see. He commented that he knew us, and that we were the only vendor in Zhongguancun that didn’t sell fake disks. Can you believe that? At the top of the front page! Thanks to him, we received 10 orders within just one day.

For 6 years, we had been honest to our customers and we earned their trust. In the most crucial period, all our efforts paid off and we received great help from a stranger that we desperately needed. This incident actually helped JD transform from offline to online, that’s to say, we became an online retailer.

Why I have faith in JD?

Between 2006 and 2007, when I was trying to get financing for JD, many people kept telling me that I wouldn’t make it. Why? They commented that most goods (cheap ones) were already available on Dangdang, Amazon, and Taobao, which left no room for JD to enter this sector. For them, JD had no future, it’s doomed.

But we never felt that way. Why? The reason was that at that time, even today, there were many problems exited on e-commerce platforms. And I wanted to solve them.

Just imagine, when you are searching for a smart phone model, hundreds, or even thousands of results would pop up on your screen. Once you click in, the shop owner would immediately greet you. And then you ask why their goods are almost 300 RMB cheaper than those of other shops, they would answer something like it's because they’re running a high-volume, low-margin business. After hours of searching, you are finally convinced by one shop owner and make the order. Then you find out you have to pay for the freight. In the end, you receive your package. But after opening it, you discover that there’s no Chinese word on the package while any commercial good selling in China must have labels in the Chinese language according to the law. Then you go to that shop and confront the owner.

However, the shop owner tells you that it’s from Hong Kong, and it’s usable regardless of the sales region. Then you start using the new smart phone. Probably after two or three months, the new phone starts to act funny. But when you go to ask the shop owner for a solution again, he might probably reply “Hon, your phone does have guaranteed repair service. However, in order to get it repaired properly and for free, we need to send it back to Hong Kong, which would cost around 400 RMB for shipping. You can get it repaired for free, but you need to pay the shipping fee yourself.”

Just think about it. You need to spend 400 RMB on sending you phone to Hong Kong and you could only get it back in 2 months. If you just went to some random repair shop in Beijing, the shop owner would then tell you that you had been tricked and your phone’s actually a second hand refurbished phone. Then, you set off to find the shop owner and question him: “Hey, didn’t you say that this phone’s from Hong Kong and it’s authentic and new? But today that guy in the repair shop said it’s a refurbished phone.” Then, the shop owner would argue back “Hon, do you have any evidence that can prove your statement? Go get the proof, go find that guy and ask for proof then.”

When you try to ask for a refund and threaten the seller that you would leave bad comments if you couldn’t get it, you might receive over five hundred calls from the seller the next day. Everybody knows that in China there’s an app that could keep calling you once you turn on your phone. There were also extreme cases where the shop owners would send disgusting and even dangerous threats to the customers.

Shopping should be a simple experience

Why did we try to build JD.com? We literally started this whole thing from scratch. We had no money, no technology, no merchandised source, and we didn’t even know what’s VC. But we later found that there were many problems in online shopping. I believed that if JD could solve all those problems, then it’s a huge success. This is our goal, simple enough.

So in 2004, when we started running JD.com, we strictly stuck to one principle: every product on JD.com must be authentic and receipt is required to send with the package, no matter the customers want it or not. Commercial goods on JD.com are also cheap and it’s not because we are selling refurnished products, smuggled goods or we are evading tax, we pull this off by optimizing our operation system to reduce the cost, which enables us to lower the price and benefit our customers.

We also continue to innovate and upgrade our services over time. In 2005, we launched the Same Day Delivery service in China. In an interview with a foreign media today, the reporter asked me whether I had shopped on Amazon before when I was studying in Columbia University. I said yes. And then he asked me how I felt about it. Well, I gave him an honest answer “I felt great shopping on Amazon. But I could not stand the logistics service. It’s so slow.” Then he told me that Prime members could receive their shipments within two days, which is pretty fast. But you know what, in China, every customer of JD.com is a prime member, and they don't have to pay an extra US$99 for a membership. Customers only have to make an order that’s over 79 RMB in total, then free and quick freight service will be provided for them. In big cities such as Beijing and Shanghai, most shipments can arrive at the doors of the customers in the same day.

We stuck to our principle and set to improve our service, and eventually solved the existing problems in online shopping. This is the backbone of JD.com, and the foundation for our fast development and success.

It’s a great time for entrepreneurs

If somebody’s going to start a business, I hope he could ask himself one crucial question before taking actions: what problems does this startup project solve? If your project can’t solve any real problem, then I’m quite certain that your project would turn out to be a failure. Some people say, ‘No, starting a business is about getting rich, nothing else’ but the reality is that no entrepreneur can be successful when all he wants is to be successful and rich, at least not in my knowledge.

Everyone knows that startups are extremely hot now in China. How hot exactly? Well, investors sometimes can be dumb, and all you need is a mind-blowing idea to get US$30 million in funding from them. It’s easy, piece of cake. Everybody likes the idea. However, you should never forget that taking money from an investor doesn’t add up your personal wealth, and you’ll need to return it above 10 or 20 times. The cost of venture capital is also high; you would be better off asking for loans from banks instead of taking venture capital. Additionally, as a founder, if you’re broke you wouldn’t be able to get loans, and therefore you had to go with venture capital. But still, that’s not your own money. Venture capital will put more burdens on your shoulders, and the reality is that you need to return in 10 times or even 100 times.

Some people start a business of their own for more personal freedom, since they don’t want to work 9 to 6 or take orders from others, and in people’s mind being a boss means they can make their own schedule and go to work whenever they want. But as a matter of fact, if you really want more freedom, starting a business is the last thing you should do. As a founder, and the current boss, you have to be at the company and act with self-discipline. Other people can break the rules and show up late or leave early occasionally, but you can never do such things. You are a role model for your staff, and you are a leader in the company. If you come to work at one in the afternoon, the rest of your staff will also start coming in at three or four, that’s how it goes.

If you think starting a business can get you fame and opportunities to attend major conferences, I can tell you that there’s a 99% of chance that you would actually be famous. Well, it's not that kind of fame that people will like. You’ll probably end up as a case study for Harvard: this guy took US$2 billion investment, wasted it in just five years, and failed really hard. Everyone will study how you failed, and keep reviewing and talking about it.

It is, indeed, the best of times. If you look back 30 years ago or 30 years ahead, you would know that we are the most fortunate generation. There are tons of opportunities since in today’s world technology will advance more than it has over the previous ten years in just one year. Back in 1998 when we were connecting to the web with 14k phone lines, we thought it was fast. We thought getting an email with 1,000 characters in a moment was fast! But I think that very soon every household is going to need a 1 GB broadband.

So if humanity’s insatiable needs continue to grow, it would give us entrepreneurs great opportunities. When consumers have needs and you can solve the existing problems and satisfy them, you will be successful. When consumers have new needs, you have to satisfy them as well. In any case, you would achieve success if you could keep your consumers satisfied.

But this process of solving consumers’ problems has also created many new problems: environmental problems, pollution problems, healthcare problems, and education problems. But never forget that challenges are also opportunities. What I want to say here is that if you don’t take actions now, you’re going to regret it in the end. Our children will remember this generation and this great era that is worth remembering.

China has great potential, and it’s an ideal place for every one of you to explore!

At last, I want to talk about China. I think most people here are Chinese, many of which are Chinese overseas students. A few months ago, the prime minister of France asked me about this. He asked for my views on China’s economy, as an entrepreneur. China’s economy has been surging for over 10 years and no major problems have occurred yet though speculations about economic breakdown spreads every year. Well, in my opinion, there won’t be any major problem for China’s economy.

Why? Go for a ride at 10pm around Beijing’s CBD in Chaoyang district. And you would find that countless shops are still open and many professional talents are still working in big office towers. Chinese people are working hard to achieve success. We work hard, we try to start new businesses, and we innovate. That’s why I think China’s economy will remain stable and continue to surge. If we Chinese people could continue to study in the US, Europe and Japan, and learn advance technologies, new knowledge and experience there, China’s economy would have a perpetual drive that would never have major malfunction.

In the past three decades, we have been learning a lot from American and Japanese companies, and also many other overseas companies. We have been learning for 30 years. That’s why I can tell you that Chinese enterprises, especially private enterprises in the Internet sector, are as good as any other companies in the whole world. We are fast learners, and we learn it well.

Every Chinese Internet enterprise knows that they should work on innovation of the users’ experiences, just as every entrepreneur in the country knows the importance of professional talents. It’s known to all that it’s essential to have talented people working in their companies, and therefore enterprises need to build an adequate environment where smart and talented people can grow to attract and keep talented staff.

We learned how to respect our employees, how to encourage our staff, and how to grow with them. Now we know how to utilize regulations and rules and we have built a modern corporate system, and trade according to the global trading regulations. Additionally, we learned to use the most advanced enterprise management philosophy to run our companies.

Every time I came to the US, many overseas Chinese students would tell me that they would stay in the US and work for a few years to accumulate working experiences before going back to China. Let me get this straight, there’s no need for you to stay in the US for that long and this kind of idea is outdated. It's an old-fashioned thinking from 10 years ago.

Look at Hillhouse Capital, its name sounds funny right? But I can tell you that the company only took 10 years to expand from a small company that only had a capital of US$20 million to an enormous enterprise that holds US$18 billion. In just 10 years, Hillhouse Capital has been growing and expanding at a speed that’s no lower or even higher than many other outstanding fund companies. I am also proud to tell you that Sequoia Capital China’s rate of return is higher than many American investment companies. The time has changed, and China is a hot place for you to explore and grow. If you want to work in a fund company, go to Hillhouse Capital instead. Chinese enterprises are as good as American companies, and they keep getting stronger.

(The article is published and edited with authorization from the author @TMTpost, please note source and hyperlink when reproduce.)

Translated by Garret Lee(Senior Translator at ECHO), working for TMTpost.