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In recent years, JD.com's market value has fallen sharply, from $120 billion at its peak to only $40 billion today, which is not even as good as Pinduoduo. Pinduoduo's market capitalization has now reached $140 billion, which has caused many people to wonder why JD.com is so giant as Pinduoduo, an emerging e-commerce platform.
To understand the reasons for the decline in JD.com's market capitalization, first of all, JD.com has carried out a business split. Subsidiaries such as JD Logistics and JD Health have been independently listed, and even JD Industry and JD Industry and Development have been spun off, which has impacted the overall market value. In addition, JD.com's profits are not as good as Pinduoduo's. Although JD.com tightened its spending last year and only earned more than 30 billion in profits, Pinduoduo has turned losses into profits at the end of 2021, and in 2022, it will climb profits to more than 30 billion, achieving several times growth. At present, Pinduoduo's profit performance is still strong, and it is expected to exceed 50 billion by the end of the year.
However, under these superficial reasons, the root of the actual problem lies in the different management styles of Liu Qiangdong, the founder of JD.com, and Huang Zheng, the founder of Pinduoduo. Although Liu Qiangdong has more experience and ability in management, Huang Zheng's biggest advantage is that he knows how to delegate power. In 2021, Huang Zheng chose to leave Pinduoduo completely and delegate power cleanly. Mr. Liu had tried to delegate power and handed over the CEO position to Mr. Xu, but he was widely believed to be the de facto head of JD.com.
Liu Qiangdong and Huang Zheng represent two generations, although both were born in low- and middle-income families, Huang Zheng's experience has been guided and helped by Ding Lei and Duan Yongping, and he has a broader vision. Huang Zheng met Ding Lei in college, and then met Duan Yongping through Ding Lei, and these two entrepreneurs provided him with valuable experience and advice. These connections and experience make Huang Zheng's vision extraordinary. In contrast, Liu Qiangdong had a more difficult life at the beginning of his business and experienced a life of poverty, so he cherished and was cautious about success.
However, it is this different experience and concept that has led to the difference between Liu Qiangdong and Huang Zheng in terms of management style. Huang Zheng dared to delegate power and handed over the company to someone else to fully manage, while Liu Qiangdong has not yet done so. This difference is reflected in the degree of decentralization in management, which has a profound impact on the development of enterprises. As Liu Yonghao said, decentralization makes it easier for enterprises to succeed, and Huang Zheng has made Pinduoduo a great success precisely because he dares to delegate power. Decentralization may be the key to achieving sustainable business development.