JD revamps corporate structure to cut costs and optimize efficiency

China’s JD.com is revamping its corporate structure to cut costs and optimize efficiency as CEO and founder Richard Liu urged the company to win over online consumers.

The company is splitting its 3C (computer, communication, consumer electronic) retail unit into two segment that manage home appliance and computer communication businesses respectively.

The 3C retail unit is core revenue generator of JD.com that contributed 60% of the total revenue for the third quarter of 2022. 

As part of the revamp, Liu said he intends to fire 10 percent of poorly performing senior level executives by the end of this year, China’s JD.com said on Tuesday that it would cut the salaries of more than 2,000 senior managers by 10% to 20% next year to improved benefits for lower-paid and entry level staff.

JD also plans allocate 10 billion yuan ($1.40 billion) for a fund to improve benefits of employee such as better medical insurance and higher housing provident Fund, the welfare also cover employee of recently acquired courier firm Deppon Logistics.

Richard still controls the company via aggregate shareholder voting rights despite he stepped from a frontline management position and handed over day-to-day operations to Xu Lei in September.

At the time, Richard Liu said in an internal letter that he would switch his focus to the company’s long-term strategy and rural development.

The long-term commitment of Richard Liu is aligned with Beijing’s initiative which called for common prosperity, seeking to narrow a huge wealth gap between Chinese super rich and poor citizens. 

JD has been hit by a slowing economy and weakening consumption this year, but the company still managed to grow its revenue by 11.4% to 243.5 billion yuan ($34.2 billion) for the third quarter this year.