Investing in the adss involves risks that are described in the "Risk Factors" section beginning on page 19 of this prospectus


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TABLE OF CONTENTS 2

INDEPENDENT AUDITOR'S REPORT TO THE BOARD OF DIRECTORS OF TENCENT HOLDINGS LIMITED (incorporated in Cayman Islands with limited liability)
Filed pursuant to Rule 424(b)(4)

Registration No. 333-193650
PROSPECTUS
93,685,620 American Depositary Shares


JD.com, Inc.
Representing 187,371,240 Class A Ordinary Shares
              This is an initial public offering of American depositary shares, or ADSs, of JD.com, Inc. We are selling 69,007,360 ADSs. The selling shareholders identified in this prospectus are selling an additional 24,678,260 ADSs. Each ADS represents two of our Class A ordinary shares, par value US$0.00002 per share. We will not receive any proceeds from the sale of ADSs by the selling shareholders.
              Prior to this offering, there has been no public market for the ADSs or the Class A ordinary shares. We have received approval for listing the ADSs on the NASDAQ Global Select Market, or NASDAQ, under the symbol "JD."
              Investing in the ADSs involves risks that are described in the "Risk Factors" section beginning on page 19 of this prospectus.

 

 

 

 

 

 

 


 

Per ADS

 

Total

 

Initial public offering price

 

US$19.00

 

US$1,780,026,780

 

Underwriting discount

 

US$0.76

 

US$71,201,072

 

Proceeds, before expenses, to us

 

US$18.24

 

US$1,258,694,246

 

Proceeds, before expenses, to the selling shareholders

 

US$18.24

 

US$450,131,462

 

              The underwriters may also exercise their option to purchase up to an additional 14,052,840 ADSs from us at the initial public offering price, less the underwriting discount, for 30 days after the date of this prospectus.
              Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
              Following the completion of this offering, our outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Richard Qiangdong Liu, our founder, chairman and chief executive officer, will be deemed to beneficially own all of our issued Class B ordinary shares and will be able to exercise approximately 83.7% of the total voting power of our issued and outstanding share capital, both on behalf of himself and on behalf of Fortune Rising Holdings Limited, immediately following the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to twenty votes and is convertible into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.
              The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, New York on or about May 28, 2014.


 

 

 

BofA Merrill Lynch

 

UBS Investment Bank




 

 

 

 

 

 

 

Allen & Company LLC

 

Barclays

 

China Renaissance

 

Jefferies



 

 

 

 

 

 

 

Oppenheimer & Co.

 

Piper Jaffray

 

SunTrust Robinson Humphrey

 

Cowen and Company

The date of this prospectus is May 21, 2014.


Table of Contents




Table of Contents

Table of Contents



 

 

 

 


 

Page

Prospectus Summary

 

1

Risk Factors

 

19

Special Note Regarding Forward-Looking Statements

 

68

Use of Proceeds

 

70

Dividend Policy

 

71

Capitalization

 

72

Dilution

 

74

Exchange Rate Information

 

76

Enforceability of Civil Liabilities

 

77

Corporate History and Structure

 

79

Recent Developments

 

86

Selected Consolidated Financial Data

 

89

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

92

Industry

 

119

Business

 

122

Regulation

 

145

Management

 

159

Principal and Selling Shareholders

 

168

Related Party Transactions

 

172

Description of Share Capital

 

174

Description of American Depositary Shares

 

186

Shares Eligible for Future Sales

 

198

Taxation

 

200

Underwriting

 

207

Expenses Related to This Offering

 

215

Legal Matters

 

216

Experts

 

217

Where You Can Find Additional Information

 

218

Index to the Consolidated Financial Statements

 

F-1

Index to Combined Financial Statements for Combined Platform Business

 

F-67

Unaudited Pro Forma Condensed Combined Financial Statements

 

P-1

              No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or any free writing prospectus filed with the SEC. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the ADSs offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
              Neither we nor any of the underwriters has done anything that would permit this offering or possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States.
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PROSPECTUS SUMMARY
              The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to buy our ADSs .
Our Business
              We are the largest online direct sales company in China in terms of transaction volume in 2013, with a market share in China of 46.5%, according to iResearch, a third-party market research firm. Our gross merchandise volume, or GMV, increased from RMB32.7 billion in 2011 to RMB73.3 billion in 2012 and RMB125.5 billion (US$20.7 billion) in 2013.
              We believe we provide consumers an enjoyable online retail experience. Through our content-rich and user-friendly websitewww.jd.com and mobile applications, we offer a wide selection of authentic products at competitive prices which are delivered in a speedy and reliable manner. We also offer convenient online and in-person payment options and comprehensive customer services. In order to have better control over fulfillment and to ensure customer satisfaction, we have built our own nationwide fulfillment infrastructure and last-mile delivery network, staffed by our own employees, which supports both our online direct sales and our online marketplace businesses. We have established strong relationships with our suppliers as we develop our online direct sales business. Leveraging our strengths, we launched our online marketplace business in 2010, which has allowed us to significantly expand our selection of products and services.
              As a result of our superior customer experience, our business has grown rapidly. The number of products we offer through our online direct sales and marketplace has grown from approximately 1.5 million stock keeping units, or SKUs, as of December 31, 2011 to approximately 7.2 million SKUs as of December 31, 2012 to approximately 25.7 million as of December 31, 2013 and further to approximately 40.2 million as of March 31, 2014. Electronics products and home appliances accounted for 80.1%, 65.3% and 63.6% of our total GMV in 2011, 2012 and 2013, respectively, and general merchandise and others for 19.9%, 34.7% and 36.4%.
              We foster an interactive user community that discusses, rates and reviews our products and services. We believe we have the largest online product review database of any online direct sales company in China with approximately 297 million product reviews generated by our customers to date. We had 12.5 million, 29.3 million and 47.4 million active customer accounts and fulfilled approximately 65.9 million, 193.8 million and 323.3 million orders in 2011, 2012 and 2013, respectively.
              Timely and reliable fulfillment is critical to the success of an online retail business. Given the underdevelopment of third-party fulfillment services in China in terms of both warehousing and logistics facilities and last-mile delivery services, we made a strategic decision in 2007 to build and operate our own nationwide fulfillment infrastructure. We believe we have the largest fulfillment infrastructure of any e-commerce company in China. We operated 86 warehouses with an aggregate gross floor area of approximately 1.5 million square meters in 36 cities and 1,620 delivery stations and 214 pickup stations in 495 cities across China as of March 31, 2014, and had 24,412 delivery personnel, 11,145 warehouse staff and 5,832 customer service personnel as of April 1, 2014. Leveraging this nationwide fulfillment infrastructure, we deliver a majority of the orders directly to customers ourselves, over 70% of which were delivered on the day the order was placed or the day after. As of March 31, 2014, we provided same-day delivery in 43 cities under our 211 program and next-day delivery in another 256 cities across China.
              We are a technology-driven company and have invested heavily in developing our own highly scalable proprietary technology platform that supports our rapid growth and enables us to provide
 
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value-added technology services. Our technology platform currently has the capacity to process up to 30 million orders per day and record the status of 1.5 billion SKUs. In addition, our sophisticated business intelligence system enables us to refine our merchandise sourcing strategy to manage our inventory turnover and control costs and to leverage our large customer database to create customized product recommendations and cost-effective and targeted advertising.
              We introduced our online marketplace to leverage our brand recognition, large and growing customer base, extensive transaction data, fulfillment infrastructure and proprietary technology platform. Our online marketplace allows us to provide customers a much greater selection of products. As of March 31, 2014, our online marketplace accounted for approximately 37.8 million of the approximately 40.2 million SKUs offered on our website. Our online direct sales and marketplace businesses together made us the second largest B2C e-commerce company in China, with a 23.3% market share based on transaction volume in the first quarter of 2014, according to iResearch. We attract and select third-party sellers to offer authentic products to our customers through our online marketplace. We monitor third-party sellers' performance and activities on our online marketplace closely to ensure that they meet our requirements for authentic products and high-quality customer service. In addition to basic transaction processing and billing services, we offer third-party sellers a suite of value-added fulfillment and other services.
              Our business has grown substantially in recent years. Our total net revenues increased from RMB21.1 billion in 2011 to RMB41.4 billion in 2012 and RMB69.3 billion (US$11.5 billion) in 2013. We had net losses of RMB1.3 billion, RMB1.7 billion and RMB0.05 billion (US$8 million) in 2011, 2012 and 2013, respectively.
              JD.com, Inc. is a holding company and does not directly own all of the entities through which we carry out our business operations. The PRC government regulates foreign ownership and imposes licensing and permit requirements for companies that offer value-added telecommunications services, distribute books and audio and video products and provide online payment services. To comply with these restrictions, we operate our website and mobile applications, sell books and audio and video products and provide online payment services through our variable interest entities in China. Our variable interest entities contributed 2.2%, 3.2% and 2.9% of our consolidated total revenues in 2011, 2012 and 2013, respectively. These variable interest entities hold the permits and licenses necessary for us to conduct our business in China. We face risks and uncertainties associated with our corporate structure, as our control over these variable interest entities is based on contractual arrangements rather than equity ownership. See "Risk Factors—Risks Relating to Our Corporate Structure" and "Corporate History and Structure."
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