Background and History of the Company
JD Finance is a financial spin-off and an independent business group of JD.com, Inc., which is considered the largest e-commerce corporation in China. It aims at offering easy and convenient access to payments, borrowing, lending, and other operations. The company’s mission is to create a trustworthy online financial platform for investment and funding. According to Rubini (2018), JD Finance provides financial services to its customers, primarily represented by Chinese companies, start-ups, and individual consumers. The corporation ranks among the top-value Fintech Unicorns from around the globe, with a valuation of $34 billion (Rubini, 2018).
The purpose of this report is to discuss the background and history of JD Finance, indicate what products and services it offers, and provide a summary of the company’s challenges and opportunities.
The history and background of JD Finance are crucial to consider to assess the firm’s opportunities and the capability to resolve challenges. As stated on the company’s website, JD Finance was founded in October 2013 to leverage JD.com’s personal data resources and manage its risk control systems (“Our History,” n.d.). The online retailer is considered the largest in China as it belongs to the Fortune Global 500 ranking. In 1998, Richard Liu leased a retail unit in a technology hub to establish JD Multimedia, a company that eventually grew into JD.com (“Our History,” n.d.).
The corporation entered the e-commerce market with the SARS outbreak in 2003, and the next year, the brick-and-mortar store was closed as the business was moved online entirely. JD.com continued to grow its logistics network and became an e-commerce platform whose goal was ensuring excellent customer experience. In 2010, an online marketplace platform was launched, enabling the corporation’s product choice expansion. The development of JD.com provided a solid foundation for the establishment of JD Finance.
As JD.com continued to grow and advance its services, there was a need for sophisticated financial technologies for the company. JD Finance was established to offer solutions, such as financing loans, asset management, payment solutions, and crowdfunding (“JD Finance,” 2017). In other words, the platform provided online financial services linked to the JD.com company. JD Finance helped emerging enterprises connect with business development tools to grow and succeed. In 2014-2015, the corporation launched two other essential projects: a crowdfunding platform and a private equity financing service, both the largest in China (“Our History,” n.d.). Both projects significantly contributed to the company’s development and helped expand its opportunities.
JD Finance was revolutionary in the Chinese market as it brought innovation in traditional financial services, combining it with internet technology. It made investment easier for its customers and ensured convenient financial management. According to Feifei (2017), JD Finance raised $1 billion from a Chinese venture capital company and an influential insurance conglomerate. Besides, JD.com’s CEO Liu Qiangdong announced that the implementation of AI technologies helped lower the ratio of bad loans along with the capital loss rates by 50%, compared to the industry average (Feifei, 2017). For instance, a cloud services platform was developed with such functions as graph calculation and face recognition. Therefore, JD Finance can be considered a powerful financial player not only in the Chinese but also in a global market.
Description of the Firm’s Products and Services
The products and services offered by the company need to be considered to estimate its performance and future opportunities. As JD Finance started operating as an independent company in 2013, it set the objective to conclude a partnership with financial institutions and offer them its financial solutions (Tai, 2018). As stated in “JD Finance” (2017), the corporation has “seven major business lines: supply chain finance, consumer finance, crowdfunding, asset management, payment solutions, insurance and securities” (para. 2).
These lines are represented by various products and services, namely: JingBaoBei, BaiTiao, Crowding, XiaoJinKu, and JD Wallet. With their application, corporate and retail customers have access to customized financial services. JD Finance uses B2C and B2B models, as over 400 million clients are provided with a series of retail products, and over 700 financial establishments utilize the company’s technology services (Tai, 2018). In this regard, the corporation’s crucial strengths are its dynamic big data and innovative technologies.
JD Finance is currently leading in terms of data quantity, source, and processing capacity in the Chinese market. Among other products presented by the firm are funds, gold bars, small white CARDS with joint names, and small gold CARDS, lending, and insurance. Focus on platformization and content helps JD Finance target various customers such as banks, insurance, and fund companies, along with individuals. Overall, the company’s strategy allows for its rapid growth and increasing profitability.
Other aspects to consider are competitors and their products and services. For JD Finance, the primary competition is represented by Ant Financial Services Group, which is a financial partner of another e-commerce retailer Alibaba Group Holding Ltd (Tai, 2018). The company offers its customers security in executing payments online, operating such services as Alipay and Huabei. Alipay is considered the biggest mobile payment product in China. Hence, Ant Financial’s goal is to provide small businesses and individual clients with equal access to financial services. Among the Fintech Unicorns, it ranks first by value, which constitutes $60 billion (Tai, 2018).
Besides, other competitors are Lufax that offers peer-to-peer loans and financing platforms for its Chinese clients, and Qufenqi, an online electronics retailer with the option to pay in installments. Both companies raised a significant amount of money as the value for Lufax is $18.5 billion and for Qufenqi $5.9 billion (Feifei, 2017). Therefore, JD Finance needs to retain customers in a competitive environment, continually improve its services and implement new technologies.
The market and growth rates are also essential to keep in mind when estimating the corporation’s potential. In general, the Chinese financial market is currently progressing; however, exposure to external shocks and domestic risks imply threats to the country’s financial system (Tai, 2018). As to the stock price growth rates, some risks are associated with a volatile Chinese market, but the company offers a promising prognosis in terms of growth rates. Hence, it might be considered attractive by investors since JD.com seems to have overcome the COVID-19 challenge.
To conclude, JD Finance’s background and history JD Finance show that the company continuously improves its products and services, following the principles of platformization and intelligentization. It has indicated a new trend in the Chinese traditional financial industry. Therefore, JD Finance is likely to retain its position among the top-ranked Fintech Unicorns if it adheres to the AI and technologies strategy. Considering the company’s share price under the global economic crisis, JD Finance seems promising in succeeding in the changing financial services industry.
Feifei, F. (2017). JD Finance is stepping up big data efforts. China Daily. Web.
JD Finance. (2017). International FinTech. Web.
Our History. (n.d.). JD.com, Inc. Web.
Rubini, A. (2018). Fintech in a flash: financial technology made easy. Walter de Gruyter GmbH & Co KG.
Tai, G. (2018). JD Finance: To be FinTech or TechFin? The Asian Banker. Web.