京東 (JD) 2016 Q3 法說會逐字稿

Hello, and thank you for standing by for JD.com's third-quarter 2016 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks there will be a question and answer session. Today's conference is being recorded. If you have any objections you may disconnect at this time.

您好，感謝您出席京東 2016 年第三季度財報電話會議。此時，所有參與者都處於只聽模式。管理層準備好發言後，將舉行問答環節。今天的會議正在錄製中。如果您有任何異議，您可以此時斷開連接。

I would now like to turn the meeting over to your host for today's conference, Ruiyu Li. Thank you. Please go ahead.

現在我想將會議交給今天會議的主持人李瑞宇。謝謝。請繼續。

Thank you, operator, and welcome to our Q3 2016 earnings call. Joining me today on the call are Richard Liu, our CEO and Sidney Huang, our CFO. For today's agenda, Mr. Huang will discuss highlights for the third quarter 2016. Following the prepared remarks, Mr. Liu and Mr. Huang will answer your questions.

謝謝運營商，歡迎參加我們的 2016 年第三季度財報電話會議。今天與我一起參加電話會議的有我們的首席執行官劉強東 (Richard Liu) 和首席財務官西德尼·黃 (Sidney Huang)。在今天的議程中，黃先生將討論2016年第三季度的亮點。在準備好的發言之後，劉先生和黃先生將回答大家的問題。

Before we continue, I refer you to our Safe Harbor statement in the earnings press release which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most direct comparable GAAP measures.

在我們繼續之前，我建議您參閱收益新聞稿中適用於本次電話會議的安全港聲明，因為我們將做出前瞻性聲明。此外，本次電話會議還討論了某些非公認會計準則財務措施。請參閱我們的收益報告，其中包含非公認會計準則衡量標準與最直接可比的公認會計準則衡量標準的調節表。

Finally, please note that unless otherwise stated, all the figures mentioned during this conference call are in RMB.

最後請注意，除非另有說明，本次電話會議中提到的所有數字均以人民幣為單位。

Now I would like to turn the call over to our CFO, Sidney.

現在我想將電話轉給我們的首席財務官西德尼。

Thank you, Ruiyu, and hello, everyone. We're very pleased to report another quarter of solid growth, with record non-GAAP operating profit. Our net revenue grew 38% in Q3 2016 as we continued to pursue profitable growth during the quarter.

謝謝瑞宇，大家好。我們非常高興地報告又一個季度實現穩健增長，非公認會計準則營業利潤創歷史新高。由於我們在本季度繼續追求盈利增長，我們的淨收入在 2016 年第三季度增長了 38%。

Our direct sales revenue grew 36% in a seasonally slow quarter, led by food and beverage, home furnishing, cosmetics and home appliance products. Our revenues from services and others increased 60% year over year, supported by higher advertising revenues.

在食品飲料、家居、化妝品和家電產品的帶動下，我們的直銷收入在季節性放緩的季度增長了 36%。在廣告收入增加的支持下，我們的服務和其他收入同比增長 60%。

Our GMV, excluding virtual items, grew 47% year over year in the third quarter. GMV from general merchandise categories, excluding virtual items, grew 61% during the quarter.

第三季度，我們的 GMV（不包括虛擬物品）同比增長 47%。本季度，一般商品類別（不包括虛擬物品）的 GMV 增長了 61%。

Cosmetics, food and beverage, sporting goods, and home furnishing were the fastest growing general merchandise categories, while power and the footwear remained the largest, with solid growth.

化妝品、食品飲料、體育用品和家居是增長最快的百貨品類，而電力和鞋類仍然是最大的，增長穩健。

As a percent of the total, general merchandise GMV contributed 51.3%, a record high level for JD Mall.

百貨商品GMV佔比達51.3%，創京東商城歷史新高。

GMV from electronics and home appliance products grew 36% during the quarter, led by the home appliance category.

本季度電子和家電產品的 GMV 增長了 36%，其中家電類別領先。

The non-GAAP gross profit increased by 59% in the third quarter, which again demonstrated healthy monetization of both our 1P and the 3P businesses. Non-GAAP gross margin improved to 15.5%, up from 13.4% a year ago, as a result of higher 1P gross margin and higher growth in service revenues.

第三季度非 GAAP 毛利潤增長了 59%，這再次證明了我們 1P 和 3P 業務的健康貨幣化。由於 1P 毛利率提高和服務收入增長加快，非 GAAP 毛利率從一年前的 13.4% 提高至 15.5%。

Non-GAAP gross margin on direct sales revenue improved well above 100 basis points again on a year-over-year basis, driven by increased scaled economies and higher volume-based rebates across all key categories.

在經濟規模擴大和所有關鍵類別基於數量的回扣提高的推動下，非公認會計準則直銷收入毛利率再次同比增長遠超 100 個基點。

Non-GAAP fulfilment expense ratio was 8.2% in Q3 compared to 7.7% in the same quarter last year. The higher fulfilment expense ratio was mainly due to our investment in the consumable product category, which tends to have a lower basket size.

第三季度非 GAAP 履行費用率為 8.2%，而去年同期為 7.7%。較高的履行費用率主要是由於我們對消耗品類別的投資，該類別的購物籃規模往往較小。

As we mentioned in the last quarter, as part of our strategic alliance with Walmart we further expanded our investment in the FMCG category through both JD and Yihaodian platforms during the third quarter, including our support to Yihaodian.com promotion campaign launched in August.

正如我們在上季度提到的，作為與沃爾瑪戰略聯盟的一部分，我們在第三季度通過京東和一號店平台進一步擴大了對快速消費品類別的投資，包括對八月份推出的一號店促銷活動的支持。

As a result of this collaboration, all of our major expense lines were affected and the total impact to our operating profit was a negative RMB0.3 billion during the third quarter.

由於此次合作，我們所有的主要費用項目都受到了影響，第三季度對我們營業利潤的總影響為負 3 億元人民幣。

Our non-GAAP marketing expense ratio was 3.1% in Q3, largely in line with the 3% in the same quarter last year.

第三季度我們的非 GAAP 營銷費用率為 3.1%，與去年同期的 3% 基本持平。

Our non-GAAP R&D and G&A expense ratios increased 27 basis points and 28 basis points respectively compared to the same quarter last year, reflecting our increased investments in R&D talent and our new business lines.

與去年同期相比，我們的非 GAAP 研發費用率和一般行政費用率分別增加了 27 個基點和 28 個基點，反映出我們對研發人才和新業務線的投資增加。

The non-GAAP operating margin was 0.7% in the third quarter. Another record high was over 100 basis point improvement over the same quarter last year.

第三季度非 GAAP 運營利潤率為 0.7%。另一個歷史新高是比去年同期提高了 100 個基點以上。

Excluding the new businesses, our core JD Mall operations had an operating margin of 1.1% on a non-GAAP basis with a 45 basis point improvement over the same quarter last year. This margin improvement was entirely driven by the higher gross margin, partially offset by the higher fulfilment and R&D expenses discussed early, as well as our support to the Yihaodian platform.

不包括新業務，我們的核心京東商城業務按非公認會計準則計算的營業利潤率為 1.1%，比去年同期提高了 45 個基點。利潤率的提高完全是由毛利率的提高推動的，部分被前面討論的履約和研發費用的增加以及我們對一號店平台的支持所抵消。

The new businesses, on the other hand, incurred a non-GAAP operating loss of nearly RMB0.3 billion during the quarter, mainly from JD Finance and technology initiatives. With the improved JD Mall operating margin and the reduced new business losses, we are reporting a non-GAAP net income attributable to ordinary shareholders of RMB289 million, with a new margin of 0.5%.

另一方面，新業務本季度產生了近 3 億元人民幣的非 GAAP 運營虧損，主要來自京東金融和科技舉措。隨著京東商城營業利潤率的提高和新業務虧損的減少，我們報告的非美國通用會計準則歸屬於普通股股東的淨利潤為人民幣2.89億元，新利潤率為0.5%。

The non-GAAP EBITDA for the Company set another record, at RMB932 million, with an EBITDA margin of 1.5%.

公司非美國通用會計準則 EBITDA 再次創下紀錄，達到人民幣 9.32 億元，EBITDA 利潤率為 1.5%。

Our free cash flow remained very strong. For the trailing 12 months ended September 30, 2016, free cash flow totaled RMB16.7 billion, or $2.5 billion, up 200% from the previous trailing 12 months. While there is certain short-term timing effect in our favor, this robust cash flow is once again a strong validation of our financial strength and solid performance.

我們的自由現金流仍然非常強勁。截至 2016 年 9 月 30 日的過去 12 個月，自由現金流總額為 167 億元人民幣（即 25 億美元），比之前的過去 12 個月增長 200%。雖然短期時間效應對我們有利，但強勁的現金流再次有力證明了我們的財務實力和穩健的業績。

In light of the strong cash flow, we stepped up our stock repurchase activities and bought back approximately 26 million ADS, or 1.8% of our total shares outstanding as of September 30, 2016.

鑑於強勁的現金流，我們加強了股票回購活動，回購了約 2600 萬股美國存託股，佔截至 2016 年 9 月 30 日已發行股份總數的 1.8%。

Next, I would like to give you an update on the collaboration with Walmart and the development of Yihaodian.com. As disclosed previously, we launched the Sam's Club flagship store, as well as a Walmart global flagship store on JD.com in October. The initial results have been encouraging and both parties are working very hard to raise awareness and deliver a great user experience.

接下來我向大家介紹一下與沃爾瑪的合作以及一號店的發展情況。正如之前所披露的，我們於 10 月份在京東推出了山姆會員店旗艦店以及沃爾瑪全球旗艦店。初步結果令人鼓舞，雙方都在努力提高認知度並提供出色的用戶體驗。

Our O2O platform, Dada, which is now also a Walmart investee, has launched nearly 50 stores on its app as of early November.

我們的O2O平台達達現在也是沃爾瑪投資的公司，截至11月初已在其應用程序上推出了近50家商店。

In addition, Walmart increased its stake in JD.com during the third quarter to approximately 10%. And Walmart's Asia CEO, Dirk Berghe, has joined our Board as an observer to further strengthen our strategic alliance. As the two companies develop closer ties, beginning November 1 this year, JD has been taking the primary responsibilities of Yihaodian.com's first-party business while using the previous Yihaodian 1P entity and its team as our purchasing agent to ensure the same merchandise selection and procurement.

此外，沃爾瑪第三季度增持京東股份至約10%。沃爾瑪亞洲首席執行官 Dirk Berghe 已作為觀察員加入我們的董事會，以進一步加強我們的戰略聯盟。隨著兩家公司的聯繫越來越緊密，從今年11月1日開始，京東開始承擔一號店第一方業務的主要職責，同時使用原一號店1P實體及其團隊作為我們的代購，保證相同的商品選品和服務。採購。

As a result, we have begun to recognize the first-party revenue on Yihaodian.com since November 1. And we expect the business to contribute roughly 2% to 2.5% to our fourth-quarter total revenue.

因此，我們從11月1日起開始確認一號店的第一方收入。我們預計該業務將占我們第四季度總收入的大約2%至2.5%。

As a result of this operational change, together with the promotional support in October, as announced previously, we expect a total operating loss relating to Yihaodian.com of approximately RMB0.6 billion in the fourth quarter. We believe this investment is worthwhile as Yihaodian has a terrific online supermarket brand with a loyal customer base in the eastern and southern regions of China.

由於這一運營變化，加上之前宣布的 10 月份的促銷支持，我們預計第四季度與 1 號店相關的總運營虧損約為人民幣 6 億元。我們相信這項投資是值得的，因為一號店擁有出色的在線超市品牌，在中國東部和南部地區擁有忠實的客戶群。

Our first priority remains to preserve Yihaodian's premium product selection, competitive pricing strategy and a unique user experience. Over time, we'll also use this platform to experiment some of the new innovations in FMCG categories to strengthen its differentiated market position.

我們的首要任務仍然是保持一號店的優質產品選擇、有競爭力的定價策略和獨特的用戶體驗。隨著時間的推移，我們還將利用這個平台來嘗試一些快消品類的新創新，以加強其差異化的市場地位。

Now I would like to share with you some color on the newly proposed JD Finance reorganization. As disclosed in our earnings release, the Board of Directors today approved a preliminary reorganization plan for JD Finance. JD.com intends to dispose its remaining equity stake in JD Finance, which is approximately 68.6% on a fully diluted basis after taking into account the series A shares and the reserved ESOP pool through a series of equity sale license and business collaboration agreements. If the plan is successful, JD will receive cash at fair market value and 40% of the pre-tax profit of JD Finance in the future.

現在我想跟大家分享一下關於京東金融重組的新提議。正如我們在財報中披露的，董事會今天批准了京東金融的初步重組計劃。京東擬通過一系列股權出售許可和業務合作協議，出售其在京東金融的剩餘股權，考慮到 A 輪股份和預留員工持股計劃池後，其在完全稀釋的基礎上約佔 68.6%。如果計劃成功，京東未來將獲得按公平市價計算的現金以及京東金融40%的稅前利潤。

There are four key objectives of this proposed transaction; two for JD.com, the listed company, and two for JD Finance.

此次擬議交易有四個主要目標；兩家為上市公司京東，兩家為京東金融。

So for JD.com, the transaction will eliminate the downside risk associated with the finance business that some of you have been concerned about while still keeping 40% of its upside through the various service agreements and the conversion write back into equity, if permitted, by the regulations.

因此，對於京東來說，此次交易將消除你們中一些人一直擔心的與金融業務相關的下行風險，同時仍然通過各種服務協議保留 40% 的上行空間，並且在允許的情況下將轉換回寫為股權，按規定。

The second benefit for JD.com is to unlock shareholder value by taking some cash off the table and allowing our investors, mostly TMG and consumer specialists, to focus on our core business without getting distracted by the perceived riskier financial business.

京東的第二個好處是通過拿走一些現金來釋放股東價值，並允許我們的投資者（主要是 TMG 和消費者專家）專注於我們的核心業務，而不會因被認為風險較高的金融業務而分心。

For JD Finance, the proposed transaction would allow its management to expand into broader areas of financial services without the constraint from its more risk averse parent company. It would also facilitate its application of certain restricted licenses in areas such as securities and the mutual fund.

對於京東金融來說，擬議的交易將使其管理層能夠擴展到更廣泛的金融服務領域，而不受其更厭惡風險的母公司的限制。它還將促進其在證券和共同基金等領域應用某些限制性許可證。

Lastly, by restructuring JD Finance into a domestic entity it would help its next round of financing as more domestic investors require the entity to be legally eligible in terms of corporate structure for a future domestic listing. Result of domestic structure, it may become increasingly difficult to raise new capital above the previous valuation level in light of the general decline in private equity valuation in recent months.

最後，通過將京東金融重組為境內實體，將有助於其下一輪融資，因為越來越多的境內投資者要求該實體在未來境內上市的公司結構方面具有合法資格。由於國內結構的原因，鑑於近幾個月私募股權估值普遍下降，籌集新資本至高於先前估值水平可能會變得越來越困難。

While the last two points are JD Finance related, as the 40% indirect beneficiary, JD.com would also benefit. Therefore, we believe this is a thoughtful win-win solution to both our shareholders and the JD Finance business.

雖然最後兩點與京東金融有關，但作為40%的間接受益者，京東也將受益。因此，我們相信這對我們的股東和京東金融業務來說都是一個深思熟慮的雙贏解決方案。

As disclosed, Richard Liu, our Chairman and CEO, will be required to participate in this transaction to help reassure third-party investors and also ensure long-term close partnership between the two companies. He would purchase a minority portion of the disposed shares at the same fair market value as third-party investors. To further ensure alignment of interests, Richard's economic interest in JD Finance will be similar to his economic stake in JD.com.

據透露，我們的董事長兼首席執行官劉強東將被要求參與本次交易，以幫助安撫第三方投資者，並確保兩家公司之間的長期密切合作夥伴關係。他將以與第三方投資者相同的公平市場價值購買所處置股份的少數部分。為了進一步確保利益一致，Richard 在京東金融的經濟利益將與其在京東的經濟利益相似。

Please be aware that this proposed plan is very preliminary and there is no assurance that the transaction will be completed. The preliminary terms discussed above are also subject to change as we begin to search and negotiate with potential investors. Given Richard's participation, the transaction will require approval by the independent Audit Committee of the Board.

請注意，該擬議計劃非常初步，不能保證交易一定會完成。隨著我們開始尋找潛在投資者並與之談判，上述初步條款也可能發生變化。鑑於理查德的參與，該交易需要獲得董事會獨立審計委員會的批准。

Finally, let's discuss our financial outlook. We expect Q4 net revenue growth to be between 37% and 42% on a year-over-year basis. This guidance reflects our successful November 11 promotion season, as well as the expected 1P revenue contribution from Yihaodian.com discussed earlier.

最後，讓我們討論一下我們的財務前景。我們預計第四季度淨收入同比增長將在 37% 至 42% 之間。該指引反映了我們 11 月 11 日促銷季的成功，以及前面討論的 1P 收入貢獻。

This concludes my prepared remarks and we can now move to the Q&A session.

我準備好的發言到此結束，我們現在可以進入問答環節。

Operator, questions please.

接線員，請提問。

Thank you. The question and answer session of this conference call will start in a moment. (Operator Instructions). Your first question comes from the line of Alan Hellawell of Deutsche Bank. Please ask your question.

謝謝。本次電話會議的問答環節馬上開始。 （操作員說明）。你的第一個問題來自德意志銀行的艾倫·海拉威爾（Alan Hellawell）。請提出你的問題。

Yes. Hi. Sorry about that. We'd love to get a better sense as to, as we look forward, some of the levers that we have at our disposal to drive up margins further.

是的。你好。對於那個很抱歉。展望未來，我們希望更好地了解我們可以利用的一些槓桿來進一步提高利潤。

Sidney, you've historically reflected on the business units working with new KPIs which are more oriented for profitability. You also, in your prepared remarks, discussed improving input pricing. And there's obviously, theoretically at least, the ability to improve pricing on the customers. As we move forward say over the next year, which of these -- how would you prioritize these or other levers in improving margins further? Thank you.

Sidney，您過去曾反思過採用新 KPI 的業務部門，這些 KPI 更注重盈利能力。您還在準備好的發言中討論了改善投入定價。顯然，至少從理論上來說，我們有能力提高對客戶的定價。當我們展望明年時，您將如何優先考慮這些或其他槓桿來進一步提高利潤率？謝謝。

Sure, Alan. As we discussed previously, I think the key lever will continue coming from our scale economies with suppliers. If you look at our gross margin for the 1P business comparing to the top offline retailers, our gross margin remains to be extremely low, with more than 10 percentage points' difference on average. So this obviously partially is because of our scale, has not reached the number one in all categories, which -- but over time will happen.

當然，艾倫。正如我們之前討論的，我認為關鍵槓桿將繼續來自我們與供應商的規模經濟。如果你看我們1P業務的毛利率與頂級線下零售商相比，我們的毛利率仍然非常低，平均相差10個百分點以上。因此，這顯然部分是因為我們的規模，尚未達到所有類別中的第一，但隨著時間的推移，這種情況將會發生。

And so when we continue to work towards that objective, we will receive more and more economies of scale through more vendor rebates. I think that would be the primary source of future margin expansion. We are not in any hurry and no plan to increase prices to consumers except for certain optimization internally, for example, promotion strategies and various other operational levers.

因此，當我們繼續努力實現這一目標時，我們將通過更多的供應商回扣獲得越來越多的規模經濟。我認為這將是未來利潤率擴張的主要來源。我們並不著急，也沒有計劃向消費者提價，除了內部的某些優化，例如促銷策略和其他各種操作手段。

Thank you very much.

非常感謝。

And your next question comes from the line of Eddie Leung of Merrill Lynch. Please ask your question.

你的下一個問題來自美林證券的埃迪·梁（Eddie Leung）。請提出你的問題。

Just a question on margins as well. We have seen the marketing expenses. It's doing quite well in the quarter in terms of control. I'm just curious on how much of that is about seasonality and how that can be affected by our promotion into the third quarter, as well as our commitments to JD supermarket. Any color would be helpful. Thanks.

這也只是關於利潤率的問題。我們已經看到了營銷費用。本季度在控制方面表現相當不錯。我只是好奇其中有多少與季節性有關，以及我們進入第三季度的促銷活動以及我們對京東超市的承諾會如何影響季節性。任何顏色都會有幫助。謝謝。

Sure. So our marketing expenses, yes, there is some seasonality. You see in the past, normally Q2 and Q4 tend to have higher marketing spending in relation to the promotions, and Q1 and Q3 tend to have a lower expense ratio. But, in reality, in Q3 we're also putting a lot of investments in the FMCG category through both Yihaodian and JD platforms. So this quarter it's manageable at a fairly consistent level I guess, fairly higher than last year's level.

當然。所以我們的營銷費用，是的，有一些季節性。您在過去看到，通常第二季度和第四季度與促銷相關的營銷支出往往較高，而第一季度和第三季度的費用比率往往較低。但實際上，在第三季度，我們還通過一號店和京東平台對快速消費品類別進行了大量投資。因此，我認為本季度的管理水平相當穩定，遠高於去年的水平。

So as far as the marketing goes, we also mentioned before that we do spend quite a bit of money on branding, which is discretionary. And really, at this point the market is still very, very large. If you look at our user base, now nearly 200 million, but we still have a huge room to continue to expand. So branding and advertising continues to be an important investment area, but over time, obviously there could be operating leverage on that front.

所以就營銷而言，我們之前也提到過，我們確實在品牌上花了很多錢，這是可自由支配的。事實上，目前市場仍然非常非常大。如果你看看我們的用戶群，現在已經接近 2 億，但我們還有巨大的空間繼續擴大。因此，品牌和廣告仍然是一個重要的投資領域，但隨著時間的推移，顯然這方面可能會產生運營槓桿。

Thank you.

謝謝。

The next question comes from the line of Erica Werkun of UBS. Please ask your question.

下一個問題來自瑞銀 (UBS) 的艾麗卡·韋爾昆 (Erica Werkun)。請提出你的問題。

Hello. Thank you. Sidney, I would like to just talk to you about the 3P mix. The contribution, it's at 45%, which is better than expectation. Does that signal the end of the NT brushing effort? And also, could you just share with us what is your current thinking on what is the optimal in terms of 1P and 3P mix?

你好。謝謝。 Sidney，我想和你談談 3P 組合。貢獻率為45%，好於預期。這是否標誌著 NT 刷牙工作的結束？另外，您能否與我們分享一下您目前對於 1P 和 3P 組合的最佳組合有何看法？

And just also a quick question on JD Finance, if you don't mind sharing what is your current thinking on timing on this deal. And if you can also share some financial matrix, for example, topline matrix and profitability, that would be very helpful. Thank you.

還有一個關於京東金融的簡單問題，如果您不介意分享一下您目前對這筆交易時機的看法。如果您還可以分享一些財務矩陣，例如營收矩陣和盈利能力，那將非常有幫助。謝謝。

Sure. And so for 1P and 3P mix, we do see continued growth momentum from both areas. For 1P, for example, we continue to see a lot of scale economies, and brands love to work with us. Also, as we continue to grow our scale, even in general merchandise categories, we see opportunities to develop 1P business.

當然。因此，對於 1P 和 3P 組合，我們確實看到這兩個領域的持續增長勢頭。例如，對於 1P，我們繼續看到很多規模經濟，品牌喜歡與我們合作。此外，隨著我們規模的不斷擴大，即使是在日用百貨品類中，我們也看到了發展 1P 業務的機會。

And 3P, on the other hand, is also -- given the anti-brushing initiatives, it's actually underappreciated this year. So we actually see, all else being equal, we should have a better momentum next year and it will not only from the traditional categories, such as apparel and general merchandise, but we're actually going to develop the electronics category as well for certain long tail products.

另一方面，3P 也——考慮到反刷單舉措，今年它實際上沒有得到足夠的重視。因此，我們實際上看到，在其他條件相同的情況下，明年我們應該會有更好的勢頭，這不僅來自傳統類別，例如服裝和日用百貨，而且我們實際上還將發展電子類別。長尾產品。

So we do see both 1P and 3P continue to have a very strong momentum over time, but one -- as we mentioned improvements, 3P will eventually going up in mix towards 50%, 50/50 at least.

因此，隨著時間的推移，我們確實看到 1P 和 3P 繼續保持非常強勁的勢頭，但是，正如我們提到的改進，3P 最終將達到 50%，至少是 50/50。

So on JD Finance reorganization, we don't have a definitive timing, but we certainly want it to move ahead as quickly as we can. It is still losing money. We also disclosed quite a bit of the financial metrics in the earnings release. You can see that it is trying to expand into more areas, and some of those areas may be perceived as risk, as risky for an ecommerce company. So we can discuss more separately, but you can first take a look at what we disclosed in the earnings release.

所以對於京東金融的重組，我們還沒有一個確定的時間，但是我們當然希望它能盡快推進。它仍然在虧損。我們還在收益報告中披露了相當多的財務指標。你可以看到它正在嘗試擴展到更多領域，其中一些領域可能被視為風險，對於電子商務公司來說是有風險的。所以我們可以單獨討論更多，但你可以先看看我們在財報中披露的內容。

Thank you very much.

非常感謝。

Sure.

當然。

(Operator Instructions). The next question comes from the line of Alicia Yap of Citigroup. Please ask your question.

（操作員說明）。下一個問題來自花旗集團的 Alicia Yap。請提出你的問題。

Hi. Good morning, Sidney, Richard. Thanks for taking my questions. I have a question regarding your electronic category. So with your electronic categories growing 36% in 3Q, I just wonder, how should we look at these segments into 4Q? And not too sure whether you have disclosed what are the growth rates for these electronic categories during the single phase period, if you can share some of the thoughts.

你好。早上好，西德尼，理查德。感謝您回答我的問題。我有一個關於你們的電子類別的問題。因此，隨著您的電子類別在第三季度增長了 36％，我只是想知道，我們應該如何看待第四季度的這些細分市場？不太確定您是否披露了這些電子類別在單階段期間的增長率是多少，如果您可以分享一些想法。

And then also, just a follow-up on the Yihaodian. Is there any revenues and GMV contribution from Yihaodian in the third quarter? And then also, the RMB1 billion targeted expenses that you budgeted for Yihaodian increased. How much of that was recognized in 3Q? Thank you.

然後，也是1號店的後續。 1號店第三季度有營收和GMV貢獻嗎？還有，你們為1號店預算的10億元定向支出也增加了。其中有多少在第三季度得到了認可？謝謝。

Sure. So on the electronics products, in -- during November 11 promotion it actually performed surprisingly well across all categories, not only, say, the mobile phones. Even the digital products and computers performed exceptionally well. And then home appliance has been the strongest performer throughout the year, so as we continue to see above average growth rate.

當然。因此，在電子產品方面，在 11 月 11 日的促銷期間，它實際上在所有類別中表現出奇的好，而不僅僅是手機等。就連數碼產品和電腦也表現得異常出色。家用電器是全年表現最強勁的，因此我們繼續看到高於平均水平的增長率。

So we're very, very excited about this business even though we are, especially the consumer electronics, we have been a market leader. And in some cases we are the market leader combining both online and offline businesses.

因此，我們對這項業務非常非常興奮，儘管我們，尤其是消費電子產品，我們一直是市場領導者。在某些情況下，我們是結合線上和線下業務的市場領導者。

So it remains to be very strong, but having said that, these are more mature categories. So if you're looking -- if you look ahead, the growth rate will tend to be slower, but we'll make up that through other categories. That's why we're investing in apparel, investing in FMCG. And clearly, home appliance category gets a longer runway given our market share is still not dominant.

所以它仍然非常強大，但話雖如此，這些都是更成熟的類別。因此，如果你展望未來，增長率往往會變慢，但我們將通過其他類別來彌補。這就是我們投資服裝、快速消費品的原因。顯然，鑑於我們的市場份額仍然不占主導地位，家電類別的跑道更長。

On Yihaodian, we did have a very small revenue contribution in Q3 for the -- from the marketplace business and some incremental small revenue from the fulfilment services we provide. And we did -- I mentioned earlier that, given that we were supporting its promotional activities on Yihaodian.com, which is our platform, so we incurred nearly RMB0.3 billion in Q3 in relation to Yihaodian. And I also mentioned that we expect to incur RMB0.6 billion in Q4. So adding those two numbers together, it gets you to RMB0.9 billion, fairly close to the RMB1 billion number I mentioned on the last call.

在一號店，我們在第三季度確實從市場業務中獲得了非常小的收入貢獻，並且從我們提供的履行服務中獲得了一些增量小額收入。我們確實做到了，我之前提到過，考慮到我們支持1號店在我們的平台上的促銷活動，所以我們在第三季度為1號店帶來了近3億元人民幣。我還提到，我們預計第四季度將產生 6 億元人民幣。因此，將這兩個數字加在一起，就是 9 億元人民幣，與我上次電話會議中提到的 10 億元人民幣相當接近。

Okay. That's very helpful. Thank you.

好的。這非常有幫助。謝謝。

(Interpreted) Yes. So let me just add a point, that I've heard investors concerned about price wars in various categories. And as I stated in the past, for the principal 1P business, as soon as it passed a critical mass, when it turns profitable, the profit will be sustainable and will not be affected by the price war.

（翻譯）是的。所以我想補充一點，我聽說投資者擔心各個類別的價格戰。而且我過去也說過，對於主要的1P業務來說，一旦過了臨界點，盈利的時候，盈利是可持續的，不會受到價格戰的影響。

So, for example, our electronics category, we have been maintaining superior growth rates far much higher than the competition. And despite of this growth rate and the competition in decline, we have achieved profitability, very sustainable profitability, again also in contrast to the other industry participants who are mostly losing money.

因此，例如我們的電子產品類別，我們一直保持著遠高於競爭對手的優異增長率。儘管增長率如此高，競爭也在下降，但我們仍然實現了盈利，非常可持續的盈利，這也與大多數虧損的其他行業參與者形成鮮明對比。

Yes, so we can assure you that in the category such as electronics, where we reached the market leadership position, we will continue to grow significantly faster than competition while sustaining a very healthy profitability. And despite of the competition, no matter the price war or else or the incurring losses, our profit will be sustainable. And this will rotate through all other new categories, including FMCG, which we are in the investing phase at this point.

是的，所以我們可以向您保證，在電子產品等領域，我們已達到市場領先地位，我們將繼續以比競爭對手快得多的速度增長，同時保持非常健康的盈利能力。儘管有競爭，無論價格戰還是其他，或者虧損，我們的利潤都是可持續的。這將輪換到所有其他新類別，包括我們目前正處於投資階段的快速消費品。

So if you take FMCG category, most people worry about price war. I can tell you that we have been investing in this category for several years and the growth rate has been tremendous. However, our loss ratio has been steadily improving every year.

所以如果拿快消品類來說，大多數人都會擔心價格戰。我可以告訴你，我們多年來一直在這個類別上進行投資，並且增長率是巨大的。然而，我們的損失率每年都在穩步改善。

So regardless of how fierce is the price war, or perceived the price war could be, it will not affect our growth and it will not affect our profitability. I think we have now three quarters of track record to prove that as well.

因此，無論價格戰有多激烈，或者人們認為價格戰可能有多激烈，它都不會影響我們的增長，也不會影響我們的盈利能力。我認為我們現在有四分之三的業績記錄也可以證明這一點。

Operator, the next one, please.

接線員，請下一位。

Thank you. The next question comes from the line of Alex Yao of JPMorgan. Please ask your question.

謝謝。下一個問題來自摩根大通的 Alex Yao。請提出你的問題。

Hi. Good evening, everyone. Thank you for taking the question. I have a quick one regarding the fourth-quarter revenue guidance. It seems to me the revenue is accelerating even excluding Yihaodian basis. Can you guys talk about what's driving the revenue acceleration? And then if it's a relatively lower profitability category such as FMCG, would that impact the overall profitability outlook? Thank you.

你好。各位晚上好。感謝您提出問題。我有一個關於第四季度收入指導的快速報告。在我看來，即使不包括一號店，收入也在加速增長。你們能談談是什麼推動了收入加速嗎？那麼如果是快消品等盈利能力相對較低的品類，是否會影響整體盈利前景？謝謝。

Sure. So yes, I think this is mainly attributable to the intense seasonality pattern that I had mentioned previously. What we observed is increasingly you see consumers buying more during the promotional seasons, so Q2 and Q4. Even though the same quarters last year were already strong, you continue to see stronger performance versus Q1 and Q3, even though the baseline was low, but you still have a relatively slower growth rate. So it's really, I think, mostly a stronger seasonality pattern.

當然。所以，是的，我認為這主要歸因於我之前提到的強烈的季節性模式。我們觀察到，越來越多的消費者在促銷季節購買更多商品，因此第二季度和第四季度也是如此。儘管去年同一季度已經很強勁，但與第一季度和第三季度相比，您仍然看到更強勁的表現，儘管基線較低，但增長率仍然相對較慢。所以我認為這實際上主要是一種更強的季節性模式。

We don't see -- it's not purely due to FMCG, obviously which is a market-leading growth -- is a leader in terms of growth categories within our Company. But as I mentioned earlier, during the November 11 promotions, we actually see very, very strong growth rates across all categories, including electronics and home appliance.

我們不認為——這不僅僅是因為快速消費品（顯然是市場領先的增長）是我們公司內部增長類別的領導者。但正如我之前提到的，在 11 月 11 日的促銷期間，我們實際上看到所有類別（包括電子產品和家用電器）的增長率都非常非常強勁。

Your next question comes from the line of Jin Yoon of Mizuho Securities. Please ask your question.

您的下一個問題來自瑞穗證券的 Jin Yoon。請提出你的問題。

Hi. Good evening, guys. So it's a question going back to the gross margins. I think you alluded to the fact that I think rebates contributed to the gross margin upside. Can you talk about how the accounting works for a rebate? First of all, do you see rebates for that particular quarter, or is there a one quarter lag on the rebates so what we're seeing today what happened in the last quarter? Can you clarify that for us? Thanks.

你好。晚上好，伙計們。所以這是一個回到毛利率的問題。我想你提到了這樣一個事實，即我認為回扣對毛利率的上升做出了貢獻。您能談談回扣的會計工作原理嗎？首先，您是否看到該特定季度的回扣，或者回扣是否有四分之一的滯後，那麼我們今天看到的上一季度發生了什麼？您能為我們澄清一下嗎？謝謝。

Sure. Yes, so the rebates will take a few forms. For some it will be negotiated at the beginning of the year. It's based on the volume. So the higher the volume you sell, the higher the rebate, which is, in contracts, very clearly defined. So that's one. And we do accrual on accounting basis of those rebates on a -- based on a historical pattern on a quite conservative basis.

當然。是的，所以回扣將採取幾種形式。對於一些人來說，這將在今年年初進行談判。這是基於音量的。因此，您銷售的數量越大，回扣就越高，這在合同中是非常明確定義的。這就是其中之一。我們在相當保守的基礎上根據歷史模式對這些回扣進行應計計算。

And then another type of rebate will be promotion-event driven, so you could negotiate with suppliers on rebates that are given to a particular promotion, such as November 11 or anniversary sales. And there will be also other areas where if sometimes suppliers would work with us on a joint marketing campaign, so there will be also rebates associated with those marketing activities. But most of the --

另一種類型的回扣將是促銷活動驅動的，因此您可以與供應商就特定促銷活動（例如 11 月 11 日或週年銷售）的回扣進行協商。還有其他領域，有時供應商會與我們合作開展聯合營銷活動，因此也會有與這些營銷活動相關的回扣。但大多數——

So are the majority of --? Go ahead.

那麼大多數是——？前進。

Yes, mostly it's driven by volume, so it has a direct connection to volume and it also has a direct connection to the various promotional activities.

是的，主要是由銷量驅動的，所以它與銷量有直接聯繫，也與各種促銷活動有直接聯繫。

But it's all recognized, most of it, in the same quarter then?

但大部分都在同一季度得到了認可？

Yes. It's based on accrual basis, so it's not cash basis. Yes, so it will -- there is very a mature, very established methodology to approve those rebates, which is very standard in the retail industry.

是的。它基於權責發生製，因此不是收付實現制。是的，它會的——有一種非常成熟、非常成熟的方法來批准這些回扣，這在零售行業是非常標準的。

Got it. Thank you.

知道了。謝謝。

Sure.

當然。

(Interpreted) Yes, so I can tell you another way to observe and make a judgement call on our category profitability. If we have a dominant market position, such as a computer category, you can be assured that we will have very healthy profit margin for that business.

（解釋）是的，所以我可以告訴你另一種方法來觀察和判斷我們的品類盈利能力。如果我們擁有主導市場地位，例如計算機類別，那麼您可以放心，我們將在該業務中擁有非常健康的利潤率。

For mobile phone, another example is we are also the market leader in China and for home appliance we are likely to surpass Gomet this year and will also be on an equal -- relatively equal footing with [Sooning] this year. We're confident that we can surpass Sooning in -- next year.

再比如手機方面，我們也是中國市場的領導者，家電方面，我們今年可能會超過高美特，今年也會和[很快寧]處於平起平坐的地位。我們有信心明年能夠超越 Sooning。

Another category is books. So this year our run rate is now on par with dangdang.com, the market leader and based on the current growth rate and the momentum we expect our books category will also become number one in China next year.

另一類是書籍。所以今年我們的運行率現在與市場領先者噹噹網持平，根據目前的增長率和勢頭，我們預計明年我們的圖書類別也將成為中國第一。

So for the FMCG categories, because the offline retailers tend to sell a broader selection, including apparel and electronic products, so it may appear that we are much smaller. But if you only look at the FMCG categories alone, we believe our FMCG business could be also one of the largest next year, if not the largest.

所以對於快速消費品品類來說，因為線下零售商往往銷售更廣泛的選擇，包括服裝和電子產品，所以看起來我們的規模要小得多。但如果你只看快速消費品類別，我們相信我們的快速消費品業務即使不是最大的，也可能是明年最大的業務之一。

The other categories, like home furnishing products, automobile products, will continue to take market share and also is growing tremendously. Our strategy has been that for any category that we are not the market leader yet growth will be our top priority, but once we achieve market leadership position we should have -- we should generate profitability on a sustainable basis.

其他品類，如家居產品、汽車產品，將繼續佔據市場份額，並且增長速度驚人。我們的戰略是，對於任何類別，我們不是市場領導者，但增長將是我們的首要任務，但一旦我們取得市場領導地位，我們就應該——我們應該在可持續的基礎上產生盈利。

And despite of the profit -- sustainable profit orientation I mentioned earlier we are confident that we can continue to outperform the competition from a growth perspective.

儘管我之前提到了利潤——可持續利潤導向，但我們有信心從增長的角度繼續超越競爭對手。

For apparel, we are building a team to operate this category on the first-party basis and we will push ahead next year especially on the more standardized portion of this category.

對於服裝，我們正在組建一個團隊來在第一方的基礎上運營這個品類，我們將在明年推進，特別是在這個品類更加標準化的部分。

So in the earlier years, the contribution could be very small for the 1P business, but we are confident that it will be a very promising business with great growth and profitability prospects. As long as we can ensure the best customer experience, we can win in all categories.

所以在早些年，1P業務的貢獻可能很小，但我們有信心這將是一個非常有前途的業務，具有巨大的增長和盈利前景。只要我們能夠確保最好的客戶體驗，我們就能在所有類別中獲勝。

The next question comes from the line of Wendy Huang of Macquarie. Please ask your question.

下一個問題來自麥格理的 Wendy Huang。請提出你的問題。

Thank you. My first question is to follow up on your comments about different categories. So given the market positioning that JD is having at the FMCG and home furnishing, can you give us the update on the gross margin of these two categories? And also you mentioned that rebates may help the home appliance business, so how is the latest margin on that category as well?

謝謝。我的第一個問題是跟進您對不同類別的評論。那麼考慮到京東在快消品和家居領域的市場定位，您能否介紹一下這兩個品類毛利率的最新情況？另外您提到返利可能會對家電業務有所幫助，那麼該品類的最新利潤率又如何呢？

And also you touched upon the apparel category. You mentioned that you are going to build your own merchandise team, but in my understanding the SKU of the apparel category is actually massive and most of the other e-commerce platforms choose to do it via the market-based model. So right now the most accessible merchandize team in the apparel space is probably Vipshop. So my question is what kind of the confidence do you have to tap into the apparel market via this kind of model? And also with this kind of model does that mean you may actually consider to collaborate with Vipshop? That's my first question.

您還談到了服裝類別。您提到要建立自己的商品團隊，但據我了解，服裝品類的SKU其實很大，其他電商平台大多選擇市場化模式。因此，目前服裝領域最容易接觸到的銷售團隊可能是唯品會。那麼我的問題是，你們有什麼樣的信心通過這種模式進入服裝市場？那麼這樣的模式是否意味著你們真的會考慮與唯品會合作呢？這是我的第一個問題。

The second question is about your --

第二個問題是關於你的——

(Interpreted) So first let me reiterate that for all categories we will pursue both marketplace and first-party models, including, for example, electronics, we are also expanding in the marketplace business.

（解釋）因此，首先讓我重申，對於所有類別，我們都將追求市場和第一方模式，包括電子產品，我們也在擴大市場業務。

So by operating a first-party apparel business there is -- clearly, it does not preclude us from continuing to work with all apparel marketplace merchants and brands. And in fact we will work even closer with these third-party marketplace participants. So despite of the relatively large-sized color sort of long tail nature of the apparel business, we've found the model to operate this business.

因此，通過經營第一方服裝業務，顯然，這並不妨礙我們繼續與所有服裝市場商家和品牌合作。事實上，我們將與這些第三方市場參與者更加密切地合作。因此，儘管服裝業務具有相對較大規模的顏色類型的長尾性質，但我們已經找到了運營該業務的模式。

But it will take time for us to accumulate experience, so at this point we are mostly focusing the male apparel segment, which has basically generally more standardized. If you look at both online and offline, look at successful retailers, there's ample evidence that a 1P model for apparel is clearly a workable model.

但我們需要時間來積累經驗，所以目前我們主要關注的是男裝領域，這個領域基本上已經比較標準化了。如果你看看線上和線下，看看成功的零售商，就會發現有充分的證據表明服裝的 1P 模式顯然是一種可行的模式。

On your earlier question, we don't disclose gross margin for each category. But again, coming back to the slide I showed you before, just on a blended basis our gross margin is still significantly lower than the top five, or any top offline retailers.

關於你之前的問題，我們不會透露每個類別的毛利率。但再次回到我之前向您展示的幻燈片，僅在混合基礎上，我們的毛利率仍然明顯低於前五名或任何頂級線下零售商。

(Interpreted) This is actually the perfect evidence that, despite of a significant lower gross margin versus offline peers, we can still be profitable. That validates how effective our business model is. If your profitability is coming from higher gross margin than your industry peer, then the model is not sustainable.

（解釋）這實際上是一個完美的證據，表明儘管我們的毛利率比線下同行低得多，但我們仍然可以盈利。這驗證了我們的商業模式的有效性。如果您的盈利能力來自於比同​​行更高的毛利率，那麼該模式是不可持續的。

One example, if you look at electronics industry, just by looking at the cost structure of the offline competition you can know that it's very difficult for these competitors to reverse the current trend.

舉個例子，如果你看一下電子行業，只要看看線下競爭的成本結構就知道，這些競爭者很難扭轉目前的趨勢。

Thank you. My second question is on your cooperation with a social networking platform, like Tencent, and also the media platform, like Taobao. So how has been the traffic conversion or sales conversion in the past quarter? Thank you.

謝謝。我的第二個問題是關於你們與騰訊這樣的社交平台以及淘寶這樣的媒體平台的合作。那麼上一季度的流量轉化或銷售轉化情況如何？謝謝。

Yes, I think we have mentioned that our partnership with Tencent has been very, very productive. The two channels both Weixin and Mobile QQ over Q2 have continued to provide tremendous traffic. The conversion ratio has been improving. We don't disclose exact conversion ratio, but it is -- they are definitely improving.

是的，我想我們已經提到我們與騰訊的合作非常非常富有成效。微信和手機QQ兩個渠道在第二季度繼續提供巨大的流量。轉化率不斷提高。我們沒有透露確切的轉化率，但它們確實在改善。

Taobao is a new partnership. It's more on the digital marketing collaboration, basically utilizing their technology and our marketing technology to better -- to improve the advertising efficiency and -- so it's still in the early stage, but the result has also been quite encouraging.

淘寶是一個新的合作夥伴。更多的是數字營銷合作，基本上是利用他們的技術和我們的營銷技術來更好地提高廣告效率，所以還處於早期階段，但結果也相當令人鼓舞。

(Interpreted) So we do expect similar collaborations as the Taobao collaboration with more other partners down the road. This is really from a project we call -- internally call the Kepler -- project Kepler that we started two years ago and we are really seeing more and more projects coming out of that project.

（解釋）因此，我們確實期望未來與更多其他合作夥伴進行類似淘寶合作的合作。這實際上來自我們兩年前啟動的一個項目——內部稱為開普勒——開普勒項目，我們確實看到越來越多的項目來自該項目。

(Operator Instructions). Your next question comes from the line of Robert Peck of SunTrust. Please ask your question.

（操作員說明）。您的下一個問題來自 SunTrust 的 Robert Peck。請提出你的問題。

Yes, thank you. Just two quick ones. First on logistics. Given the robust growth in GMV and category expansion, could you talk to us a little bit more about the capital intensity for the business, for logistics, going forward 2017 and beyond?

是的，謝謝。就兩個快的。首先是物流。鑑於 GMV 和品類擴張的強勁增長，您能否與我們多談談 2017 年及以後業務、物流的資本密集度？

And then, Sidney, just on procedurally from the steps here for the JD Finance spin, could you tell us just some of the milestones we should be looking for? I know you mentioned the audit approval. Is there a shareholder vote, regulatory approval? How do we think about the various checklists of things we should be looking for? Thank you.

然後，Sidney，就京東金融旋轉的程序步驟而言，您能否告訴我們一些我們應該尋找的里程碑？我知道你提到了審計批准。是否有股東投票、監管部門批准？我們如何看待我們應該尋找的各種清單？謝謝。

Yes, sure. So on logistics most of the -- on the operating expense side it will still grow with the scale.

是的，當然。因此，在物流方面，在運營費用方面，它仍然會隨著規模的增長而增長。

On CapEx there is some delay in terms of building out some of the larger warehouses really because of the readiness of the land. So when I mentioned earlier about certain timing difference for our cash flow purpose, CapEx was one factor.

在資本支出方面，由於土地準備就緒，一些大型倉庫的建設出現了一些延遲。因此，當我之前提到我們的現金流目的存在一定的時間差異時，資本支出是一個因素。

So we do expect -- so this year the CapEx was below our original budget and we do expect -- you should also model in a much higher CapEx next year. We don't have the exact number, but you should consider that some of the CapEx was moved from this year to next year, but again this should be clearly within our cash flow -- our operating cash flow, okay, so free cash flow will remain to be strong and clearly positive.

因此，我們確實預計 - 今年的資本支出低於我們最初的預算，我們確實預計 - 您明年也應該建立更高的資本支出模型。我們沒有確切的數字，但你應該考慮到一些資本支出從今年轉移到了明年，但這應該清楚地在我們的現金流範圍內——我們的運營現金流，好吧，所以自由現金流仍將保持強勁且明顯積極。

For process on JD Finance reorganization, the next step is to go out and talk to investors and once we get enough investor interest then we will prepare a plan for the independent audit committee to approve, which we will then in turn submit for Board approval. There is no shareholder approval, neither any regulatory approval.

對於京東金融重組的流程，下一步是出去與投資者交談，一旦我們獲得足夠的投資者興趣，我們將準備一份計劃供獨立審計委員會批准，然後我們將提交董事會批准。沒有股東批准，也沒有任何監管部門批准。

The next question comes from the line of Chi Tsang of HSBC. Please ask your question.

下一個問題來自匯豐銀行的Chi Tsang。請提出你的問題。

I just wanted to get your sense on some of the growth drivers for 2017 in terms of 1P and 3P GMV and maybe, framing that, some of the different categories or different initiatives that will driving your top line, and also framing versus direct sales versus services and advertising, because advertising has been growing very rapidly. Thank you.

我只是想讓您了解 2017 年 1P 和 3P GMV 方面的一些增長驅動因素，也許，框架內，一些不同的類別或不同的計劃將推動您的收入，以及框架與直銷與服務和廣告，因為廣告增長非常迅速。謝謝。

Yes, so I feel we are still in the process of doing our 2017 budget. At this point, as we mentioned earlier, we should continue to see clearly above industry growth rate across all categories, whether it's a profitable category or it's a growth stage category, there will be difference.

是的，所以我覺得我們仍在製定 2017 年預算。在這一點上，正如我們前面提到的，我們應該繼續清楚地看到所有品類的行業增長率，無論是盈利品類還是成長期品類，都會有差異。

Obviously, more mature categories may see slower growth, but for each and every category we should grow significantly faster than other industry peer in that category. So we will report to you in more details next quarter when we guide our 2017 growth rate.

顯然，更成熟的類別可能會出現較慢的增長，但對於每個類別，我們的增長速度都應該比該類別的其他行業同行快得多。因此，我們將在下個季度指導 2017 年增長率時向您詳細報告。

For 1P, 3P, I mentioned earlier we continue to see growth from both, really both models, because for each and every category we wanted to have healthy 1P business but also have a very healthy marketplace ecosystem, so we have clearly demonstrated it is achievable.

對於 1P、3P，我之前提到過，我們繼續看到這兩種模式的增長，實際上是兩種模式的增長，因為對於每個類別，我們都希望擁有健康的 1P 業務，但也擁有非常健康的市場生態系統，因此我們已經清楚地證明這是可以實現的。

(Interpreted) Yes, so I wanted to reiterate this. Maybe I wouldn't respond so many questions maybe in the future. But I wanted to reiterate that our strategy has been very consistent for all these years that we will continue to grow both 1P and 3P. And even for -- within 3P business we will work the brands, work with specialty stores and work with distributors. We work with all of these various forms of third-party merchants to ensure the success of the platform.

（翻譯）是的，所以我想重申這一點。也許以後我就不會回答這麼多問題了。但我想重申，這些年來我們的戰略非常一致，我們將繼續發展 1P 和 3P。甚至在 3P 業務中，我們將與品牌合作，與專賣店合作，並與經銷商合作。我們與所有這些不同形式的第三方商家合作，以確保平台的成功。

The next question comes from the line of Sean Zhang of 86Research. Please ask your question.

下一個問題來自 86Research 的 Sean 張。請提出你的問題。

Thank you for taking my question and congratulations on a solid quarter. Just want to shift gear a little bit to the user growth. You had very rapid user growth, 57% in the quarter. Just want to get your stance on how you balance the user growth potential with -- for example, you talked about customer experience. What do you think about customer experience? Is it user engagement, or is it helping users to make fast, very efficient shopping decisions? So maybe just share your thought on that in line with our competitor increasing every user [com spend].

感謝您提出我的問題，並祝賀您在本季度取得了不錯的成績。只是想稍微調整一下以促進用戶增長。用戶增長非常快，本季度增長了 57%。只是想了解您對如何平衡用戶增長潛力的立場 - 例如，您談到了客戶體驗。您對客戶體驗有何看法？是用戶參與度，還是幫助用戶做出快速、非常高效的購物決策？因此，也許只是分享您對此的想法，以與我們的競爭對手增加每個用戶 [com 支出] 一致。

Another small question will be we are seeing a lot of domestic courier, such as DGO SF going public, so with more capital raised from the market we are seeing these guys are improving, upgrading their logistics system, so how do we think our competitive edge in the logistics area? Thank you.

另一個小問題是我們看到很多國內快遞公司，比如DGO SF上市，所以隨著從市場籌集更多的資金，我們看到這些人正在改進，升級他們的物流系統，那麼我們如何看待我們的競爭優勢在物流領域？謝謝。

So, on the user experience, for any retailer it's really about product quality, about product selection and it's about the service. I think these are really the core elements of user experience, so our focus has been on these three areas, making sure that quality is solid.

所以，就用戶體驗而言，對於任何零售商來說，真正重要的是產品質量、產品選擇和服務。我認為這些確實是用戶體驗的核心要素，所以我們的重點一直在這三個領域，確保質量可靠。

Customers don't have to worry about counterfeits. They can also return the products they don't like. This is about service. The speed of delivery, the -- these are also about the -- about service. Selection that we continue to expand into more and more categories with more and more product selections. I think we focus on -- yes, and price.

顧客不必擔心假貨。他們還可以退回他們不喜歡的產品。這是關於服務的。交貨速度，這些也與服務有關。我們的選擇不斷擴大，品類越來越多，產品選擇也越來越多。我認為我們關注的是——是的，還有價格。

So we'll focus on this core retail experience. I don't think we care too much about what the competition is doing. I think in the end it's really about each business has its own core elements and you should ask consumers what they care most.

因此，我們將重點關注這一核心零售體驗。我認為我們不太關心競爭對手在做什麼。我認為最終每個企業都有自己的核心要素，你應該問消費者他們最關心什麼。

Yes, sorry. Every time you ask two questions I got -- lost track on the second one. I think that getting listed for the third-party logistic companies should be healthy for the industry. As you know, it's been fiercely competitive in terms of pricing and also the quality has been pretty sub-par -- sub-standard with a lot of these third-party companies, because they adopt a franchised model.

是的，抱歉。每次你問兩個問題時，我都會對第二個問題迷失方向。我認為第三方物流公司上市應該對該行業有利。如您所知，它在價格方面競爭非常激烈，而且質量也相當低於標準——許多第三方公司都低於標準，因為它們採用特許經營模式。

But with these companies becoming listed companies there will be better oversight, whether from the investors' point of view, from a lot -- government regulation point of view. So we do believe hopefully the quality will improve, but at the same time the pricing environment will improve so in the end, consumers will be willing to pay for that service. So right now because of the price competition and low quality, there is actually artificially low pricing environment for logistic services.

但隨著這些公司成為上市公司，無論是從投資者的角度，還是從政府監管的角度來看，都會有更好的監管。因此，我們確實相信質量會提高，但同時定價環境也會改善，因此最終消費者將願意為該服務付費。所以現在由於價格競爭和質量低下，物流服務實際上存在人為壓低價格的環境。

(Interpreted) So regarding the customer experience, I wanted to give you my view. There will be different segments of consumers. Some customers may prefer a very easy and convenient shopping experience and in this respect JD.com is clearly the best choice, where consumers can come and find a product very quickly and also get [delivery] very quickly.

（解釋）關於客戶體驗，我想給大家講一下我的看法。會有不同的消費者群體。有些顧客可能更喜歡非常簡單方便的購物體驗，從這方面來說，京東顯然是最好的選擇，消費者可以很快地找到產品，也可以很快地獲得[送貨]。

For this segment of customers, what we care about is the frequency of their shopping on JD.com, or the frequency of the coming browsing the products. So one of the initiatives, for example, is we launched this JD Toutiao platform to engage consumers with daily necessities so people come to shop on a daily basis.

對於這部分客戶，我們關心的是他們在京東購物的頻率，或者說來瀏覽產品的頻率。例如，其中一項舉措是我們推出了京東今日頭條平台，讓消費者接觸日常生活必需品，以便人們每天都來購物。

There will be another type of customers who wanted to spend more time on a platform, whether it's to -- going through various selections, browsing and more like window shopping and finding surprises. So with these type of customers we are also designing new interface, including video streaming and direct broadcasting to allow these consumers to find their own shopping experience on JD.com.

還有另一類客戶希望在平台上花費更多時間，無論是進行各種選擇、瀏覽還是更多地喜歡逛街和尋找驚喜。所以針對這類客戶，我們也在設計新的界面，包括視頻流和直播，讓這些消費者在京東找到自己的購物體驗。

But if you look at these models back in one, two decades, you see a lot these products have its own lifecycle and lifespan. So one example, (spoken in Chinese), for those of you who know in Chinese it was very hot, very popular for a while, but it got -- after a while it's no longer a very popular destination.

但如果你回顧一、二十年後的這些模型，你會發現這些產品很多都有自己的生命週期和壽命。舉個例子，（用中文說），對於那些知道中文的人來說，它曾一度非常熱門、非常受歡迎，但過了一段時間，它就不再是一個非常受歡迎的目的地了。

So there are similar phenomena in the US. I'm sure that you also experienced in your own country where these new forms come and go. And so the direct broadcasting model, for example, we believe it could be something popular in the short term, but it's not necessarily something -- it's not necessarily the main forms of retail business down the road. So we should come back the fundamentals and look for what customers really want from -- in terms of shopping experience. The fundamentals should never change.

所以美國也有類似的現象。我相信您在自己的國家也經歷過這些新形式的來來去去。以直播模式為例，我們相信它可能會在短期內流行，但它不一定是流行的東西——它不一定是未來零售業務的主要形式。因此，我們應該回歸基本面，尋找顧客真正想要的東西——購物體驗。基本面永遠不應該改變。

Our next question comes from the line of John Choi of Daiwa. Please ask your question.

我們的下一個問題來自大和的 John Choi。請提出你的問題。

Thanks for taking my question. Just quickly on the -- or JD Finance. I think you guys mentioned that you got more JD Finance allow management to expand into more broader areas. So in the longer term what is management thinking about how this business is going to evolve just from the current consumer and the supplier financing?

感謝您提出我的問題。很快就可以上——或者京東金融。我想你們提到京東金融讓管理層能夠擴展到更廣泛的領域。那麼，從長遠來看，管理層對這項業務如何僅從當前的消費者和供應商融資中發展有何看法？

And lastly, just quickly, on the Dada equity investees. It seems to be a bit less than what we expected. Can you give any comments on this part? Thank you.

最後，簡單介紹一下達達股權投資對象。似乎比我們預期的要少一些。您能否對這一部分提出一些意見？謝謝。

Sure, yes. So for JD Finance, again, this may be a very mature business for -- in western countries, but in China this is still a very emerging industry. So there are a lot of opportunities, a lot of areas that could be interesting. One example we mentioned in the earnings release is because we have been doing asset-backed securities to raise the [Dongfang] funding we became expert. And then so they\ actually started a practice to advise other companies securitizing their portfolio.

當然，是的。因此，對於京東金融來說，這在西方國家可能是一個非常成熟的業務，但在中國這仍然是一個非常新興的行業。所以有很多機會，很多有趣的領域。我們在財報中提到的一個例子是，因為我們一直在做資產支持證券來籌集我們成為專家的[東方]資金。然後他們實際上開始了一項實踐，為其他公司將其投資組合證券化提供建議。

So examples like this, in the west you may say any bank could do it, but in China there are a lot of these emerging opportunities, so you have to be -- just have to stay innovative and you want to take risks whenever you think it's warranted. But with a big ecommerce parent company we are actually very risk averse, so sometimes we may impose restrictions on those new business models.

像這樣的例子，在西方你可能會說任何銀行都可以做到，但在中國有很多這樣的新興機會，所以你必須保持創新，只要你想，你就願意承擔風險這是有保證的。但對於一家大型電子商務母公司來說，我們實際上非常厭惡風險，所以有時我們可能會對這些新的商業模式施加限制。

And on Dada there is -- remember that there is a one quarter lag in terms of picking up equity losses, so we are picking up only two months of losses occurred in Q2. So next quarter you should expect a higher loss from Dada.

在 Dada 上，請記住，在彌補股權損失方面存在四分之一的滯後，因此我們只彌補了第二季度發生的兩個月的損失。因此，下個季度你應該預計達達會出現更高的損失。

We are now approaching the end of the conference call. I will now turn the call over to JD.com's Ruiyu Li for closing remarks.

我們現在電話會議即將結束。現在我將把電話轉給京東的李瑞宇致閉幕詞。

Thank you, operator. Once again, thank you for joining us today. Please feel free to contact us if you have any further questions. Thank you for your continued support and we are looking forward to talking with you in the coming months.

謝謝你，接線員。再次感謝您今天加入我們。如果您還有任何疑問，請隨時與我們聯繫。感謝您一直以來的支持，我們期待在未來幾個月與您交談。

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

感謝您參加今天的會議。演示到此結束。您現在可以斷開連接。再會。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring the Event.

該文字記錄中標記（翻譯）的部分是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。