Chinese tech billionaire Richard Liu is stepping down from front office roles and direct ownership at JD, but is he still in control?

One of China’s best-known tech tycoons is giving up direct ownership and executive roles in various entities within the business empire he founded nearly a quarter-century ago, prompting questions about his next steps after the abrupt end to a long-running U.S. legal battle involving rape allegation.

Richard Liu Qiangdong, the billionaire founder of and the world’s 155th richest person with an estimated net worth of US$10.8 billion, divested himself of his 45 percent stakes in each of the four businesses owned by the subsidiaries for the company’s logistics, healthcare and investment since September, recent corporate filings showed.

According to the filings, the shares were transferred to Miao Qin, vice president and head of JD’s life and services business unit, for “administration efficiency purposes” as Liu, a non-executive director, was no longer involved in JD’s day-to-day operations. , which made it difficult to arrange the signing of corporate documents.

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The latest moves come after Liu, 49, handed over his CEO role in April to his longtime confidant and company veteran Xu Lei, in one of the entrepreneur’s most significant steps to remove himself from day-to-day life at JD.

“Liu is mostly abroad these days, and his absence in China could make administrative trivia, such as signing documents, a hassle,” said Li Chengdu, founder and chief analyst at Beijing-based technology consultancy Dolphin, adding that JD , as an established conglomerate, can operate smoothly without Liu’s constant presence.

JD did not respond to a request for comment for this article.

Liu was last seen in public last month when a photo appeared online showing him accompanying his pregnant wife, Gian Zetian, at a supermarket in Minneapolis, Minnesota. It had to be seen in a courtroom there civil case for rape filed against him in 2019 by a Chinese student, but an agreement was reached just before the start of the trial, relieving Liu of having to testify.

After that, Liu began to give up corporate and honorary roles the rape charge first surfaced in 2018, leading to Liu being briefly detained by law enforcement in Minneapolis. Although he was never charged with any criminal offenses and eventually returned to China, he gave up his membership in the Chinese People’s Political Consultative Conference, the highest political honor for any private entrepreneur in China.

Richard Liu (second from left) with his wife Zhang Zetian in an undated photo. Photo: Handout alt=Richard Liu (second from left) with his wife Zhang Zetian in an undated photo. Photo: Giveaway>

In September 2021, Liu stepped down as president of JD, with Xu taking on the role of leading the “daily operation and joint development of various business units”. At the time, JD said Liu would devote more time to “formulating the company’s long-term strategies.”

Some analysts said Liu could follow in the footsteps of several Big Tech founders who have stepped down amid China’s regulatory crackdown on the industry but retained control in indirect ways.

Zhang Yimin, founder of TikTok owner ByteDance, remains extremely influential over strategic decisions at the company, despite ceding his CEO and board seat to his university roommate Liang Rubo last summer, the Post reported last November.

Liu’s recent transfer of stakes may not necessarily dilute his controlling rights in JD, according to Kim Chang-hyun, assistant professor of strategy at the Shanghai-based China Europe International Business School.

Xu Lei (third left), then’s retail executive, strikes a gong to mark the company’s listing on the Hong Kong Stock Exchange at’s headquarters in Beijing in June 2020. Photo: AFP alt=Xu Lei (third from left), then CEO of Retail, strikes a gong to mark the company’s listing on the Hong Kong Stock Exchange at’s headquarters in Beijing in June 2020. Photo: AFP>

JD is listed on both the Nasdaq and Hong Kong stock exchanges under a dual-class share structure, an arrangement favored by tech founders so they can exercise effective control over a company by owning only a special class of shares with more good voting rights.

“This is a common strategy among conglomerate founders,” Kim said.

When JD applied for a dual initial listing on the Hong Kong stock exchange in June 2020, its prospectus showed that Liu held 78 percent of the aggregate voting rights, despite only owning a 14 percent stake in the company.

That year, Liu stepped down from executive positions at about 230 companies within his growing empire and will step down from another 18 in 2021, according to business data service Tianyancha.

In the first half of this year, Liu cashed in 6.6 billion yuan (US$930 million) by selling his personal stakes in JD Health and American depository shares he held personally through a vehicle called Max Smart.

A worker sorts packages for delivery at a warehouse in Beijing in September. Photo: AFP alt=A worker sorts packages for delivery at a warehouse in Beijing in September. Photo: AFP>

Today, Liu retains executive positions at 33 companies, compared to the 333 executive positions he once held. However, as of the end of March this year, Liu still held 76 percent of the total votes in JD, down just two percentage points from two years ago.

Meanwhile, other JD executives, including CEO Xu, own less than 1 percent of the total common stock, making it virtually impossible for anyone to challenge Liu’s business decisions.

The view that Liu still has a tight grip on JD was echoed by a former employee who remains close to the company, who said there was internal talk that Liu was considering a return to management.

Outside the company, however, Liu’s successor, Xu, has become the new face of JD.

The CEO attended last week’s World Internet Conference, China’s annual showcase for its Internet governance model, where he delivered a speech touting JD’s role as a “real economy enterprise” and the company’s powerful supply chain, which it says is able to deliver parcels to 94 percent of China’s counties within 48 hours of an order being placed.

This article originally appeared in South China Morning Post (SCMP), the most authoritative report on China and Asia for more than a century. For more SCMP stories, please browse SCMP application or visit SCMP Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

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