Chinese Tech Billionaire Richard Liu Gives up Front Office Roles and Direct Ownership at Jd, but Is He Still in Control?

One of China’s most prominent tech tycoons is relinquishing direct ownership and executive roles in various entities under the business empire he founded nearly a quarter century ago, triggering questions about his next steps after the abrupt end of a lengthy legal battle in the US involving a rape allegation.

Richard Liu Qiangdong, the billionaire founder of JD.com and the world’s 155th richest man with an estimated net worth of US$10.8 billion, has surrendered his 45 per cent stakes in each of four entities owned by the company’s logistics, healthcare and investment subsidiaries since September, recent corporate filings showed.

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

The latest moves came after Liu, 49, handed over his CEO role in April to long-time confidant and company veteran Xu Lei, in one of the entrepreneur’s most high-profile steps to remove himself from the daily grind at JD.

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

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

In September 2021, Liu stepped down as president of JD, with Xu taking on the role to lead “the day-to-day operation and collaborative 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 might be following the footsteps of several Big Tech founders, who have stepped aside amid China’s regulatory crackdown on the industry, but retain control in indirect ways.

Liu’s recent transfer of equity interests may not necessarily result in a dilution in his control rights at JD, according to Kim Chang-hyun, assistant professor of strategy at the Shanghai-based China Europe International Business School.

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

“This is a common strategy often seen among founders of conglomerates,” Kim said.

When JD applied for a dual primary listing on the Hong Kong bourse in June 2020, its prospectus showed that Liu owned 78 per cent aggregate voting rights, despite holding just a 14 per cent stake in the company.

That same year, Liu stepped down from executive roles at around 230 companies under his sprawling empire, and walked away from another 18 in 2021, according to business data service Tianyancha.

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

Today, Liu retains executive roles at 33 companies, compared with the 333 executive roles he once held. As of the end of March this year, however, Liu still owns 76 per cent of aggregate voting power at JD, a drop of just two percentage points from two years ago.

Meanwhile, other JD executives, including CEO Xu, each owns less than 1 per cent of the total ordinary shares, making it virtually impossible for anyone to challenge Liu’s business decisions.

The view that Liu still holds a tight grip on JD is echoed by a former employee who remains close to the company and said that internally, there are talks about Liu mulling a return to management.

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