More Top Execs Leave NetEase, Jingdong 京东和网易高管离职
July is becoming the season for high-level resignations at Chinese Internet firms, with media reporting the new departures of top officials at Jingdong Mall, one of China’s top e-commerce sites, as well as the web portal unit of online game firm NetEase (Nasdaq: NTES). Those departures, if correct, would follow the similar resignation earlier this week of the chief operating officer at Tudou (Nasdaq: TUDO), China’s second largest video sharing site, which is currently merging with industry leader Youku (NYSE: YOKU). (previous post)
I suspect that much of this turnover is being caused by turbulence in the broader Internet industry, where e-commerce firms are feeling the pinch of intense competition and advertising-dependent firms like NetEase and Tudou are starting to feel pressure from a broader spending slowdown. If that’s the case, then we can probably expect to see a steady stream of similar departures of top executives from Internet firms until the current competition and ad slowdown ease.
Let’s look at the latest news, which has media reporting the chief operating officer of Jingdong Mall, also known as 360Buy, has resigned from the company, possibly due to pressure from its investors. (English article; Chinese article) The reports are a bit confused, with some also adding that Jingdong’s founder Liu Qiangdong has personally denied the departure while others say the COO may return to his previous employer, Internet search leader Baidu (Nasdaq: BIDU).
The confused nature of these reports doesn’t surprise me at all, as I’ve previously said that Jingdong Mall, despite its rapid rise to become China’s second largest e-commerce player, is a company filled with internal conflict, which manifests itself in a steady stream of contradictory signals. I suspect the COO, Shen Haoyu, will ultimately leave, perhaps due to internal pressures and perhaps because he simply doesn’t want to work at such a chaotic company.
Meantime, other media are reporting that 3 top officials at NetEase’s portal division have resigned after feeling pressure under the company’s new performance-based review system. (English article; Chinese article) These particular resignations come against a broader backdrop that has NetEase trying to reinvigorate its portal business, one of China’s oldest players that was once an industry leader but more recently has become a laggard as NetEase itself evolved into an online game specialist.
NetEase has commented numerous times over the last year that it wants to rebuild the portal business for a potential spin-off if and when it becomes profitable. (previous post) In that context, combined with the broader slowdown in China’s online advertising market, these top executive departures appear to indicate that NetEase is having some difficulty in its portal business turnaround, and may ultimately have to find another strategic plan for the unit, such as putting it into a joint venture or selling it outright.
Bottom line: Top-level executive departures at Jingdong Mall and NetEase reflect broader turmoil in China’s Internet space, with more such resignations to come until the turbulence eases.
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