Click the image for details Losses! Losses! That was the label always attached to JD.com, but now a stunning reversal: a big profit of RMB 1 billion! JD.com is finally making money. On the evening of March 2, JD.com released its full-year 2016 financial results, officially achieving annual profitability. JD Group's 2016 net profit was RMB 1 billion, marking its first annual turnaround from loss to profit. In 2015, under Non-GAAP, the net loss was still RMB 900 million. According to the financial report, JD Group's full-year 2016 net revenue was RMB 260.2 billion, up 44% year-on-year, and GMV reached RMB 658.2 billion, up 47% year-on-year. While releasing the earnings report, during the conference call, when discussing order size and cost issues, Liu Qiangdong proactively proposed that JD.com would start a price war in the FMCG sector, directly targeting its competitors in the supermarket and FMCG space. "Now we are starting a price war in the FMCG sector. Obviously, a price war is good news for us." Liu Qiangdong cited the book price war JD.com launched in 2009 and the major appliance price war in 2012 as examples, thereby assuring shareholders that the price war is a positive, "because it means JD.com will sooner or later become profitable in this sector." According to information disclosed during the earnings conference call, FMCG is currently JD.com's main loss-making category. Over the next two years, JD.com will continue to invest in this category, waiting for the profitability potential of this business to emerge. Liu Qiangdong stated during the conference call that JD.com has signed gross margin protection clauses with most suppliers. If competitors lower prices, JD.com has the right to reduce prices to the same level. But at the same time, suppliers must guarantee JD.com the same gross margin. With this, Liu Qiangdong promised investors that JD.com will not suffer losses due to the price war. The reporter noted that during the 2016 Double 11 period, JD.com forcibly adjusted the prices of goods from FMCG giant Nestlé and locked its backend. The latest financial report shows that the number of days JD.com takes to pay suppliers has extended from 42 days at the beginning of 2015 to the current 53 days. Meanwhile, accounts payable and prepaid merchant funds increased from RMB 29.8 billion at the end of 2015 to RMB 44 billion at the end of 2016. This is the second consecutive time Liu Qiangdong has proactively discussed the price war after releasing financial results. During the Q3 conference call in November 2016, Liu Qiangdong had already stated that although the group's revenue scale was expanding, it was inevitable that a price war would occur at some point in the future. In August of the same year, JD.com announced it would invest RMB 1 billion to launch a price war against Tmall Supermarket. Zong Qinghou: An E-commerce Price War Disrupts the Real Economy Regarding the tactics of e-commerce platforms frequently running promotions and using low prices to seize market share, Zong Qinghou, the founder of Wahaha with assets worth hundreds of billions, has long seen through all this. Previously, Zong Qinghou had spoken out for the real economy nationwide. Although he did not name any e-commerce platform, looking at the domestic e-commerce field, only Ma Yun's Taobao and Tmall, and Liu Qiangdong's JD.com hold the largest shares; they are truly the titans of the e-commerce world and the most representative enterprises. In fact, the rapid development of e-commerce has certainly had a significant impact on China's real economy, that is, offline physical stores. While e-commerce has created tens of thousands of jobs, many offline physical stores have also been forced to close. As Zong Qinghou said, e-commerce launches price wars, even at a loss, to encroach on market share, and then raises prices once they grow big. On one hand, this disrupts the established pricing system of the real economy; on the other hand, it impacts the real economy. At the same time, Zong Qinghou does not deny that doing the internet well can actually be very helpful to the real economy. Yesterday, after the Two Sessions, Zong Qinghou said in a media interview: The internet is a double-edged sword. It can help the real economy develop, but if not done well, it can also cause significant harm to the real economy. Actually, we are not opposed to the internet. Some e-commerce companies spend money to buy traffic. Their valuation is based on traffic. They buy goods from enterprises for 100 yuan, then sell them for 80 yuan after subsidizing 20 yuan themselves, destroying the pricing system of the real economy. If they monopolize the market in the future, they will raise prices again. This has a relatively big impact on the real economy. This article is compiled and edited by -END-