Executive Briefings

Chinese E-commerce Billionaire Says Honesty is the Best Policy

Before he became a billionaire in e-commerce, Richard Liu was a failure. As a student, Liu started a restaurant in Beijing but went bankrupt. When he took a second stab at business by opening an electronics store in 1998, Liu insisted on honesty. After seeing other shops overcharge customers and pass off counterfeit goods, he says he sold only genuine merchandise.

"I felt this was an opportunity to establish a new kind of business," said Liu in an interview. He said his shop became the first in northwestern Beijing's Zhongguancun neighborhood, a center for technology companies, to use price tags to avoid haggling with buyers.

After Liu went online in 2003 and expanded into selling home appliances, clothing and other goods, that focus on reliability helped his company, JD.com, grow into China's biggest internet-based direct retailer. It is a powerful selling point for Chinese consumers who have endured repeated scandals over fake and sometimes deadly milk, medicines and other products.

Liu, 41, said his disastrous experience operating a restaurant while studying at People's University in Beijing in the mid-1990s taught him a painful lesson about the role of honesty in business. He said pilfering and phony receipts were common.

"An employee would pay 2 yuan for bean sprouts but tell me he paid 4 yuan," said Liu, whose name in Chinese is Liu Qiangdong. "The cashier and other employees would sneak money into their own pockets."

Liu is part of a wave of Chinese business leaders in fields from e-commerce to tourism and mobile phones who are helping to drive the rapid evolution of the world's second-largest economy.

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"I felt this was an opportunity to establish a new kind of business," said Liu in an interview. He said his shop became the first in northwestern Beijing's Zhongguancun neighborhood, a center for technology companies, to use price tags to avoid haggling with buyers.

After Liu went online in 2003 and expanded into selling home appliances, clothing and other goods, that focus on reliability helped his company, JD.com, grow into China's biggest internet-based direct retailer. It is a powerful selling point for Chinese consumers who have endured repeated scandals over fake and sometimes deadly milk, medicines and other products.

Liu, 41, said his disastrous experience operating a restaurant while studying at People's University in Beijing in the mid-1990s taught him a painful lesson about the role of honesty in business. He said pilfering and phony receipts were common.

"An employee would pay 2 yuan for bean sprouts but tell me he paid 4 yuan," said Liu, whose name in Chinese is Liu Qiangdong. "The cashier and other employees would sneak money into their own pockets."

Liu is part of a wave of Chinese business leaders in fields from e-commerce to tourism and mobile phones who are helping to drive the rapid evolution of the world's second-largest economy.

Read Full Article