In a recent earnings call for Q4, JD.com CEO Richard Liu recapped his company’s coronavirus aid efforts since the outbreak occurred just before the Chinese New Year. With the recent reports of price gouging on Amazon of supplies such as hand sanitizer and masks, as well the appearance of a number of faulty products claiming to provide protection against the coronavirus, U.S. tech companies should consider following the examples of their Chinese counterparts.
China’s top e-commerce companies are no strangers to dealing with outbreaks. Both Richard Liu’s JD and Jack Ma’s Alibaba were fledgling businesses when the severe acute respiratory syndrome (SARS) outbreak occurred in 2003, causing China to go on a lockdown similar to the one it is experiencing now.
Alibaba’s primary focus at the time was on B2B (business-to-business) work, acting as a facilitator between Chinese suppliers and American procurement teams. The travel warnings issued by various governments caused many retailers to seek business online instead, and Alibaba’s business grew 50 percent that year as a result. 2003 was also the year that it launched Taobao, which quickly surpassed eBay as the number one C2C (consumer-to-consumer) platform in China and was the start of the company’s foray into consumer sales.
Liu’s company – not yet called JD – was a small chain of stores in Beijing that primarily sold small electronic products such as CDs. Although he originally planned to continue expanding his business to over 500 locations, the SARS epidemic saw those hopes dashed, as he was forced to shutter all stores but one to conserve resources. However, the most challenging roadblocks are the ones that tend to spur innovation, and Liu used this opportunity to establish his business on the internet, eventually becoming one of China’s largest online retailers. “When SARS occurred 17 years ago, JD was a very small company, and we personally experienced then just how devastating an epidemic situation can be to both businesses and people’s lives,” says Liu. “That’s why today, JD will do everything we can within our power to serve our customers, as well as society.”
Because of these experiences, the Chinese e-commerce world was uniquely positioned in both experience and resources to provide aid when the COVID-19 outbreak began in the Hubei province just before the Chinese New Year.
As cities across China were placed under partial quarantine, online delivery services went from modern-day conveniences to critical assets in the containment of the virus and prevention of community spread. It was imperative that the supply chain of resources remain steady, not only for medical supplies and preventative materials but now produce and other everyday necessities as well.
JD’s logistic subsidiary has been instrumental in its response to the increased demand. As one of the biggest online retailers in China, Richard Liu has made sure that his company remains heavily invested in a self-operated, proprietary supply chain and logistics network.
In less than one month, the company’s drivers delivered 71,500 tons of rice, flour, and grain; over 50,000 tons of fresh produce; and 3 million cans of baby formula. Between the period of January 24 and February 2, rice sales on JD.com saw a 5.4 times increase of year-over-year sales, and flour sales increased 4.7 times.
The e-commerce platform Pinduoduo – which focuses on group-buying deals – said in January that it saw orders for strawberries, apples, and other fresh fruit rise 120 percent as consumers attempt to remain healthy during the epidemic.
JD Logistics has opened a dedicated relief channel for coronavirus-related aid materials from all over the country. It has delivered over 15 million items equating to 1,600 tons of medical emergency materials to Wuhan since the Chinese New Year. In response to the Hubei provincial government’s request for assistance in conducting its supply chain, JD Logistics built a platform to help manage emergency supplies and ensure timely delivery to hospitals and clinics. The company has also been providing its delivery services to pharmaceutical companies in the Hubei province.
Alibaba’s logistics management company, the Cainiao Smart Logistics Network, also launched an initiative entitled “Green Channel” that expedites delivery of coronavirus aid supplies to the Hubei province and other affected areas.
A crucial aspect of maintaining its high-functioning supply chain is keeping its workers and merchants happy. JD has invested $144 million in subsidies and an additional $14 million to supplement the expense reduction of logistics fees, traffic, advertisement, and promotional activity support. Immediately after the outbreak, front-line delivery drivers were all provided with masks, gloves, and other protective equipment.
Many e-commerce platforms have also vowed not to allow for unfair price hikes or the sale of faulty products on their sites. Alibaba’s Taobao recently removed 15 merchants that were selling fake or inferior masks, and JD removed 7. Taobao has launched several subsidies to ensure that masks remain reasonably priced, and JD has announced that it will impose penalties on vendors found guilty of price gouging.
Alleviation of Governmental and Hospital Burden
Technological advancements are at the core of any business hoping to keep up in today’s modern world, and Chinese e-commerce giants have been utilizing such advancements toward economic and social stability.
JD has waived fees for its cloud video conferencing service for both the general public and businesses to alleviate the need for face-to-face meetings. Alibaba is providing $1,000 credits toward the purchase of its cloud services to businesses that have been impacted by the outbreak.
Providing the local governments of affected areas with additional aid, JD has integrated its AI smart assistant technology into the WeChat account of the mayor’s office for various cities. By texting questions to the highly advanced bot, users can receive quick and accurate answers to their epidemic-related questions, including the proper way to wear a face mask, what they should do if they begin to experience symptoms, and whether a recent mode of public transportation had a coronavirus patient on it.
Tencent, the Chinese company behind WeChat, has also integrated its WeChat app with various tools to assist in the dissemination of information, such as a map to find the nearest out-patient fever clinics easily.
JD Health has also launched a free online consultation platform on its app. For no charge, users can speak to one of the 200 full-time physicians employed to provide assistance about coronavirus symptoms that they may be experiencing. In February 2020, the company expanded the app to include all diseases in its scope. The platform also offers psychological consulting services, a service that works twofold by assisting both the public in coping with stressors caused by the outbreak and front-line doctors and medical staff in high-pressure situations.
Alibaba has offered to provide its AI technology to laboratories and research organizations dedicated to creating a vaccine or treatments for those already infected. Alibaba Cloud also helped local governmental departments across the country develop online IT management platforms to organize and communicate the latest developments of the coronavirus outbreak.
Supplies Donations and Financial Contributions
Alibaba founded a $144 million fund to purchase medical supplies and has also focused much of its resources on medical research.The Jack Ma Foundation, the philanthropic endeavor headed by the former Alibaba chairman, has pledged $14.4 million in aid relief funds, $5.8 million of which has been designated specifically to vaccine research. Additionally, Tencent has committed $42.7 million to the first phase of a fund dedicated to coronavirus aid.
JD.com has made donations of high-demand resources to various charities and hospitals. To the Hubei Charity Foundation, the company has donationed over 100 million medical masks, as well as 60,000 units of medicine and medical supplies. It has also donated an additional 80,000 masks, 2,000 sets of feminine care products, and nearly 630,000 adult diapers to various hospitals in Wuhan.
“We feel a strong sense of responsibility to provide robust support,” Liu said during the quarterly earnings call.