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5	5	= History and Development of the Company =
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7		-The company's chairman and chief executive officer, Mr. Richard Qiangdong Liu, launched an online retail website in January 2004. He subsequently formed a company in Beijing and another company in Shanghai and conducted his online retail business through these two companies. In April 2007, the company established a wholly owned PRC subsidiary, Beijing Jingdong Century Trade Co., Ltd., or Jingdong Century, and the company acquired certain intellectual property rights from the two companies Mr. Liu had established earlier, which ceased business operations and were later liquidated and dissolved.
	7	+The company's chairman and chief executive officer, Mr. Richard Qiangdong Liu, launched an online retail website in January 2004. He subsequently formed a company in Beijing and another company in Shanghai and conducted his online retail business through these two companies. In April 2007, the company established a wholly owned PRC subsidiary, Beijing Jingdong Century Trade Co., Ltd., or Jingdong Century, and the company acquired certain intellectual property rights from the two companies Mr. Liu had established earlier, which ceased business operations and were later liquidated and dissolved.{{footnote}}https://fintel.io/doc/sec/1549802/000110465918027777/a18-5116_120f.htm{{/footnote}}
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9	9	In November 2006, the company incorporated Star Wave Investments Holdings Limited under the laws of the British Virgin Islands as its offshore holding company in order to facilitate international financing. The company later changed the name of this entity to 360buy Jingdong Inc. In January 2014, 360buy Jingdong Inc. was redomiciled in the Cayman Islands as an exempted company registered under the laws of the Cayman Islands, and was renamed JD.com, Inc.
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170	170	In building up its product offerings, the company focus on quality as well as quantity. Due to its nationwide reach and its efficient fulfillment system, suppliers often choose it to launch new products that they expect will be in high demand, and the company often act as the preferred distributor for a period of days or weeks when a hot new product first becomes available for sale to the public.
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172		-**Online Experience**
	172	+== Online Experience ==
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174	174	The company believe that providing a compelling online experience is critical to attracting and retaining customers. The company make sales primarily through its content-rich and user-friendly website www.jd.com and mobile apps. The company's website not only offers a broad selection of authentic products at competitive prices but also provides easy site navigation, basic and advanced search functions, comprehensive product information and a large volume of customer reviews and ratings. These features address customers’ desire to view, understand and compare products before purchasing. With the increasing popularity of mobile internet-enabled devices, JD has also developed apps and features adapted to mobile internet users, and the company currently offer mobile access through its mobile website m.jd.com and its various iOS, Android and Windows-based mobile apps. As part of its strategic partnership with Tencent, JD has launched level 1 access on Tencent’s Weixin and Mobile QQ, whereby Tencent users can easily access its product offerings and have enjoyable mobile shopping experience. Approximately 86% of orders fulfilled were placed through its mobile apps in the fourth quarter of 2017, as compared to approximately 80% in the fourth quarter of 2016.
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184	184	Real-time order tracking. Customers can log into their accounts to check the status of their orders. All packages in its system are given a unique identifier and their location is updated each time they are handled by one of its warehouse or delivery personnel or one of its contracted third-party couriers. Furthermore, each of its delivery personnel carries a mobile personal digital assistant, which allows customers to track their location in real time on an online map.
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186		-**Customer Service**
	186	+== Customer Service ==
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188	188	Providing satisfactory customer services is a high priority. The company's commitment to customers is reflected in the high service levels provided by its customer service staff as well as in its product return and exchange policies.
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194	194	Membership program. JD has established a membership program to cultivate customer loyalty and encourage its customers to make repeat purchases. In 2017, the company upgraded the membership system and changed from the five-tier membership structure to “Jing Xiang Zhi (京享值)” value system, which takes into account various kinds of indicators, such as consumer behavior, interaction, credit ratings, risk level, among others, to determine the comprehensive score for each consumer. The company believe the upgraded membership system will be able to effectively enhance shopping experience and consumer engagement. In addition to its “Jing Xiang Zhi (京享值)” membership program, the company continued to promote JD Plus, a premium paid membership program. By the end of 2017, JD has attracted millions of JD Plus members and continued to introduce new benefits to JD Plus members, including free shipping, extra rebates, VIP customer services, access to free e-books, free return services and exclusive prices on selected product offerings. Meanwhile, JD Plus has been integrated with other primary forms of promotions such as “Super Brand Days” and “Lightening Deal” channel, as an effort of joint marketing.
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196		-**Pricing**
	196	+== Pricing ==
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198	198	The company offer competitive pricing to attract and retain customers. The company make continual efforts to maintain and improve an efficient cost structure and create incentives for its suppliers to provide it with competitive prices.
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202	202	Special promotions. The company offer a selection of discounted products on special occasions, such as the anniversary sales promotional event on June 18 and China’s new online shopping festival on November 11, and on important holidays such as Christmas and Chinese New Year. The company also hold daily promotions for selected products for a limited period of time. Special promotions attract bargain hunters and give its customers an additional incentive to visit its website regularly.
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204		-**Delivery**
	204	+== Delivery ==
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206	206	The company believe that timely and reliable fulfillment is critical to the continuing success of its business. To this end, JD has incurred and will continue to incur significant expenditures in building and operating its own nationwide fulfillment infrastructure. The following are some of the advantages that derive from its nationwide fulfillment infrastructure:
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216	216	Continuous expansion of delivery service. JD has established and are making continuous efforts to further expand cold-chain logistics and cross-border logistics capabilities and in other new business areas, to expand product selection while ensuring superior customer experience.
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218		-**Payment**
	218	+== Payment ==
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220	220	Payment-on-delivery. The company accept payment-on-delivery in almost all of the counties and districts across China where the company make deliveries through its own delivery personnel. The company's delivery personnel carry mobile POS machines for processing debit cards and credit cards and they also accept cash. Customers chose payment-on-delivery approximately 10% of the time in 2017.
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224	224	Other payment options. Customers may also choose to pay by postal money order. Enterprise customers can also make payment by wire transfer.
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226		-==== Merchandise Sourcing ====
	226	+= Merchandise Sourcing =
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228	228	In its online direct sales business, the company sourced products from over 15,000 suppliers as of December 31, 2017. Procuring products on such a massive scale requires considerable expertise, which JD has built up over a number of years. The company negotiate with the manufacturer or a higher-level distributor where possible in order to obtain the most favorable terms, even if the company sign a contract with a lower-level distributor for operational reasons. None of its suppliers accounted for over 10% (by value) of the products the company purchased in 2017. In addition, the company had over 170,000 third-party sellers on its online marketplace as of December 31, 2017.
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256	256	The company also have a dedicated internal division, to explore research, development and application of smart logistics and unmanned technology, which the company believe represent the future trend of the logistics industry. Through the development of a series of cutting-edge technologies such as intelligent hardware, internet of things, big data, robotics, image and vision recognition, machine learning, deep learning, and smart logistics devices, the company intend to revolutionize logistics industry and transform it from automation to intelligence. JD is also in the process of experimenting these technologies in a wide range of logistics business areas such as unmanned warehouses, drone delivery, self-driving vehicles, unmanned delivery stations and convenience stores, among others. The company will continue to invest in smart logistics to improve the intelligence level of its logistics system and to provide consumers with an unparalleled shopping experience.
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258		-==== Technology Platform ====
	258	+= Technology Platform =
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260	260	Technology is the key to the success of its future business development and the evolution of its ecosystem. The company's proprietary technology platform supports its rapidly growing processing capacity requirements, and provides it with detailed and accurate visibility and information based on its cloud computing infrastructure, comprehensive operating data from value chain, and advanced business intelligence analytics powered by artificial intelligence technologies.
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286	286	JD is making continuous efforts to develop its technology strength in artificial intelligence, leveraging its massive volume of data, to explore innovative business models. In September 2017, the company established the AI Platform and Research Division as a core component of its company’s technological ecosystem. JD has incorporated cutting-edge technologies, such as machine learning, natural language processing and related computational approaches, to continue to improve its operations. As of the date of this annual report, its applications of artificial intelligence technology include intelligent customer service assistant JIMI, intelligent SKUs selection system, and AI-driven advertisement platform, among others. The company also strive to assume greater corporate social responsibility by building an advanced public technology platform in order to better serve the community.
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288		-==== Marketing ====
	288	+= Marketing =
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290	290	The company believe that the most effective form of marketing is to continually enhance its customer experience, as customer satisfaction engenders word-of-mouth referrals and repeat purchases. JD has been able to build an extensive base of loyal customers primarily through providing superior customer experience and conducting marketing and brand promotion activities.
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294	294	With the increasing popularity of mobile internet-enabled devices, approximately 82% of its orders fulfilled were placed through its mobile apps in 2017. In order to further improve customer experience and increase user engagement on mobile internet, JD is exploring cooperation opportunities with many business partners on the mobile side. In addition to its successful partnership with Tencent and Toutiao in 2017 the company also formed strategic partnerships with Baidu, Qihoo 360, NetEase, Sogou and iQIYI, aimed at leveraging these companies’ massive user bases to strengthen collaboration in targeted marketing, user access points and content-driven marketing. The company incurred RMB7,233 million, RMB10,159 million and RMB14,918 million (US$2,293 million) of marketing expenses in 2015, 2016 and 2017, respectively.
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296		-==== Competition ====
	296	+= Competition =
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298	298	The online retail industry in China is intensely competitive. The company's current or potential competitors include (i) major e-commerce companies in China that offer a wide range of general merchandise product categories, such as Alibaba Group, which operates taobao.com and tmall.com, and Amazon China, which operates amazon.cn, and (ii) major traditional retailers in China that are moving into online retailing, such as Suning Appliance Company Limited, which operates suning.com, and Gome Electrical Appliances Holding Limited, which operates gome.com.cn. The company also face competition from online retail companies in China focused on specific product categories and from physical retail stores, including big-box stores that also aim to offer a one-stop shopping experience.
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310	310	The company believe that JD is well-positioned to effectively compete on the basis of the factors listed above. However, some of its current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases or greater financial, technical or marketing resources than the company do.
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312		-==== Seasonality ====
	312	+= Seasonality =
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314	314	The company experience seasonality in its business, reflecting a combination of seasonal fluctuations in customer purchases, promotional events, and traditional retail seasonality patterns. For example, the company generally experience less user traffic and purchase orders during national holidays in China, particularly during the Chinese New Year holiday season in the first quarter of each year. Furthermore, sales in the traditional retail industry are significantly higher in the fourth quarter of each calendar year than in the preceding three quarters. E-commerce companies in China hold special promotional campaigns on November 11 each year that tend to boost sales in the fourth quarter relative to other quarters, and the company hold a special promotional campaign in the second quarter of each year, on June 18, to celebrate the anniversary of the founding of its e-commerce business. Overall, the historical seasonality of its business has been relatively mild due to its rapid growth but has been increasing and may further increase in the future. Due to its limited operating history, the seasonal trends that JD has experienced in the past may not apply to, or be indicative of, its future operating results.
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316		-==== Intellectual Property ====
	316	+= Intellectual Property =
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318	318	The company regard its trademarks, copyrights, patents, domain names, know-how, proprietary technologies, and similar intellectual property as critical to its success, and the company rely on copyright, trademark and patent law and confidentiality, invention assignment and non-compete agreements with its employees and others to protect its proprietary rights. As of December 31, 2017, the company owned 336 computer software copyrights in China relating to various aspects of its operations and maintained 5,719 trademark registrations inside China and 896 trademark registrations outside China. The company had approximately 4,402 trademark applications inside China and 475 outside China. As of December 31, 2017, the company had 838 patents granted in China, 3,622 patent applications pending in China and 236 patent applications pending outside China. As of December 31, 2017, the company had registered approximately 3,662 domain names. The company's registered domain names include jd.com, 360buy.com, 360buy.com.cn and 360buy.cn, among others.
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320		-==== Insurance ====
	320	+= Insurance =
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322	322	The company maintain various insurance policies to safeguard against risks and unexpected events. JD has purchased all risk property insurance covering its inventory and fixed assets such as equipment, furniture and office facilities. The company maintain public liability insurance for its business activities at ten locations. The company also provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for its employees. Additionally, the company provide group accident insurance for all employees and supplementary medical insurance for all management and technology and other professional personnel. The company do not maintain business interruption insurance, nor do the company maintain product liability insurance or key-man life insurance. The company consider its insurance coverage to be sufficient for its business operations in China.
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324		-==== Organizational Structure ====
	324	+= Organizational Structure =
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326	326	The following diagram illustrates its corporate structure, including its principal subsidiaries and consolidated variable interest entities as of the date
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328	328	[[image:https://www.sec.gov/Archives/edgar/data/1549802/000110465918027777/g51161bwi001.jpg]]
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	330	+= References =
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	332	+{{putFootnotes/}}