京東 (JD) 2016 Q4 法說會逐字稿

Hello and thank you for standing by for the JD.com fourth quarter and full-year 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. I would now like to turn the meeting over to your host for today's conference, Ruiyu Li.

您好，感謝您出席京東 2016 年第四季度及全年財報電話會議。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。現在我想將會議交給今天會議的主持人李瑞宇。

Thank you operator, and welcome to our fourth quarter and full-year 2016 earnings conference call. Joining me on the call today are Richard Liu, CEO of JD.com; and Sidney Huang, our CFO. For today's agenda, Mr Huang will discuss highlights for the fourth quarter and full-year 2016. Following their prepared remarks, Mr Liu and Mr Huang will answer your questions.

感謝運營商，歡迎參加我們的 2016 年第四季度和全年收益電話會議。今天和我一起參加電話會議的還有京東首席執行官劉強東 (Richard Liu)；和我們的首席財務官西德尼·黃（Sidney Huang）。在今天的議程中，黃先生將討論 2016 年第四季度和全年的亮點。在劉先生和黃先生準備好發言後，將回答您的問題。

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

在我們繼續之前，我請您參閱收益新聞稿中的安全港聲明，該聲明適用於本次電話會議，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。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 are delighted to report another outstanding quarter of accelerating revenue growth and a record non-GAAP net profit. Our net revenue grew 47% in Q4 2016 thanks to our highly successful shopping events in November and the December holiday seasons.

謝謝瑞宇，大家好。我們很高興地報告另一個出色的季度收入加速增長和創紀錄的非公認會計準則淨利潤。得益於我們在 11 月和 12 月假期期間舉辦的非常成功的購物活動，2016 年第四季度我們的淨收入增長了 47%。

Our direct sales revenues grew 46% in the fourth quarter, the highest since Q4 2015, led by home furnishing, food and beverage, home appliance, and baby products. Our revenues from services and others increased 58% year-over-year, supported by higher advertising revenue as well as income from financial services, which after eliminating inter-segment revenue, surpassed 1% of our total quarterly net revenues for the first time in Q4 2016.

我們的直銷收入在第四季度增長了 46%，為 2015 年第四季度以來的最高水平，其中家居、食品飲料、家電和嬰兒用品領漲。我們的服務和其他收入同比增長 58%，這得益於廣告收入以及金融服務收入的增加，在消除部門間收入後，金融服務收入在 2019 年首次超過了我們季度淨收入總額的 1%。 2016 年第四季度。

Our GMV, excluding virtual items, grew 50% year-over-year in the fourth quarter. GMV from general merchandise categories, excluding virtual items, grew 59% during the quarter. Food and beverage, home furnishing, cosmetics and baby products were the fastest growing general merchandise categories, with apparel and footwear remaining the largest category with a solid growth momentum. As a percent of the total, general merchandise GMV contributed 52.4%, another record high level for JD Mall. GMV from electronics and home appliance products grew 42% during the quarter, led by the home appliance category.

我們第四季度的 GMV（不包括虛擬物品）同比增長 50%。本季度，一般商品類別（不包括虛擬物品）的 GMV 增長了 59%。食品飲料、家居、化妝品、母嬰是增長最快的百貨品類，服裝鞋帽仍是最大品類，增長勢頭強勁。百貨商品GMV佔比達52.4%，再創京東商城歷史新高。本季度電子和家電產品的 GMV 增長了 42%，其中家電類別領先。

The non-GAAP gross profit increased by 58% in the fourth quarter, further demonstrating the healthy monetization of both our 1P and 3P businesses. Non-GAAP gross margin improved to 15%, up from 14% a year ago, reflecting continued gross margin expansion in our first-party business due to increased economies of scale across all key categories. Gross margin on direct sales revenue again improved over 100 basis points on a year-over-year basis in Q4 2016.

第四季度非 GAAP 毛利潤增長了 58%，進一步證明了我們 1P 和 3P 業務的健康貨幣化。非 GAAP 毛利率從一年前的 14% 提高至 15%，反映出由於所有關鍵類別的規模經濟增長，我們的第一方業務毛利率持續增長。 2016年第四季度直銷收入毛利率同比再次提高100多個基點。

Non-GAAP fulfillment expense ratio was 7.5% in Q4 compared to 8.2% in the same quarter last year. The lower fulfillment expense ratio was mainly due to a higher base in Q4 2015, as we started to move aggressively into the consumable product category. A second factor affecting the fulfillment expense ratio was the exceptional sequential growth in the seasonally strong fourth quarter, which drove down our average fulfillment expense per order.

第四季度非 GAAP 履行費用率為 7.5%，而去年同期為 8.2%。較低的履行費用率主要是由於 2015 年第四季度的基數較高，因為我們開始積極進軍消費品類別。影響履行費用比率的第二個因素是季節性強勁的第四季度的異常環比增長，這壓低了我們每筆訂單的平均履行費用。

As a result of the stronger seasonal effect and exceptional performance in Q4, all other non-GAAP operating expense ratios also saw improvement on a year-over-year basis. This is likely a one-time event in the near term, but provides a good indication for potential operating leverage in the medium to long term.

由於較強的季節性影響和第四季度的出色表現，所有其他非公認會計原則運營費用率也同比有所改善。這在短期內可能是一次性事件，但為中長期潛在的運營槓桿提供了良好的指示。

The non-GAAP operating margin was 0.6% in the fourth quarter, compared to a non-GAAP operating loss in the same quarter last year. Excluding the new businesses, our core JD Mall operations had an operating margin of 0.8% on a non-GAAP basis, with an improvement of over 70 basis points over the same period last year mainly driven by the higher gross margin.

第四季度非 GAAP 營業利潤率為 0.6%，而去年同期則為非 GAAP 營業虧損。剔除新業務後，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0.8%，較去年同期提高了70多個基點，主要是由於毛利率較高。

Our non-GAAP net income attributable to ordinary shareholders reached a new record of RMB566 million, with a net margin of 0.7% in the fourth quarter. The non-GAAP EBITDA also set another record at RMB1.1 billion, with an EBITDA margin of 1.3%. For full-year 2016 our non-GAAP net margin was 0.4% and the non-GAAP EBITDA margin was 1.1%. Our free cash flow remained strong. For the trading 12 months ended December 31, 2016, free cash flow totaled RMB15.6 billion, up 121% from the previous trading 12 months.

我們的非美國通用會計準則歸屬於普通股股東的淨利潤創下人民幣5.66億元的新紀錄，第四季度淨利潤率為0.7%。非美國通用會計準則 EBITDA 也再創新高，達到 11 億元人民幣，EBITDA 利潤率為 1.3%。 2016 年全年，我們的非 GAAP 淨利潤率為 0.4%，非 GAAP EBITDA 利潤率為 1.1%。我們的自由現金流仍然強勁。截至2016年12月31日止的12個月交易中，自由現金流總額為人民幣156億元，較前12個月交易增長121%。

Now I would like to update you the progress of the JD Finance reorganization. As disclosed in our earnings release, we just signed the definitive agreements yesterday with a group of domestic investors, after receiving approval from our Independent Audit Committee and the Board of Directors for the reorganization plan. Under the agreements, JD.com will dispose its remaining 68.6% equity stake in JD Finance in exchange for RMB14.3 billion in cash and 40% of the pre-tax profits of JD Finance after it achieves cumulative profitability in the future.

下面我向大家介紹一下京東金融重組的最新進展。正如我們在財報中披露的那樣，在獲得獨立審計委員會和董事會對重組計劃的批准後，我們昨天剛剛與一群國內投資者簽署了最終協議。根據協議，京東將在京東金融未來實現累計盈利後，出售其剩餘的68.6%股權，換取現金143億元及京東金融40%的稅前利潤。

We will also have the option to convert a 40% profit sharing right back into JD Finance equity when it's permitted by the applicable regulations. As part of the transaction, Richard Liu, our Chairman and CEO, will acquire a 4.3% equity stake in JD Finance and will obtain the majority voting rights in the entity through his equity stake and voting proxy with other investors and ESOP participants. We're very pleased with the terms of the agreements.

在適用法規允許的情況下，我們還可以選擇將 40% 的利潤分享權轉換回京東金融股權。作為交易的一部分，我們的董事長兼首席執行官劉強東將收購京東金融 4.3% 的股權，並將通過其股權和投票代理與其他投資者和員工持股計劃參與者一起獲得該實體的多數投票權。我們對協議條款非常滿意。

In addition to the strategic objectives I mentioned on our last earnings call, upon the transaction closing, JD.com will receive RMB14.3 billion, or $2.1 billion in cash, which will be a tremendous financial gain over the RMB2.1 billion of capital that we have invested in JD Finance.

除了我在上次財報電話會議上提到的戰略目標外，交易完成後，京東將獲得 143 億元人民幣（即 21 億美元的現金），這對於 21 億元人民幣的資本來說將是巨大的財務收益我們投資了京東金融。

As JD.com and JD Finance will be both under voting control of Richard after this transaction, from the accounting perspective the deal will be accounted for as an under common control transaction, with the economic gain recorded directly in the equity section of the financial statements, without any impact on the P&L. Nevertheless, this is a real economic gain to our shareholders, which effectively more than offsets the total GAAP losses over the past two years.

由於本次交易後，京東和京東金融均將受到理查德的投票控制，從會計角度來看，本次交易將作為同一控制下交易進行會計處理，經濟收益直接計入財務報表權益部分，對損益表沒有任何影響。儘管如此，這對我們的股東來說是真正的經濟收益，有效地抵消了過去兩年公認會計原則的總損失。

In addition, the 40% profit sharing right does not bear any downside risks associated with the JD Finance business. But it does allow our shareholders to continue enjoying 40% of its potential upside. Therefore, from a valuation perspective, the 40% profit sharing right is actually more valuable than a 40% straight equity interest.

此外，40%的利潤分享權不承擔與京東金融業務相關的任何下行風險。但它確實讓我們的股東能夠繼續享受其 40% 的潛在上漲空間。因此，從估值角度來看，40%的利潤分享權實際上比40%的直接股權更有價值。

For many TMT and consumer-focused investors, the transaction can also remove the complexity and perceived risks associated with a financial services company, so you can better evaluate the core e-commerce and the related businesses.

對於許多TMT和以消費者為中心的投資者來說，交易還可以消除與金融服務公司相關的複雜性和感知風險，因此可以更好地評估核心電子商務和相關業務。

Finally, let's discuss our financial outlook. We expect Q1 net revenue growth to be between 34% and 38% on a year-over-year basis. This guidance reflects our solid growth momentum for a seasonally slow quarter.

最後，讓我們討論一下我們的財務前景。我們預計第一季度淨收入同比增長將在 34% 至 38% 之間。這一指導反映了我們在季節性放緩的季度中的強勁增長勢頭。

For the non-GAAP net income, we expect an overall non-GAAP net margin between break-even and positive 1% for the full-year 2017, assuming JD Finance will be deconsolidated in the second-half of this year and the New Dada equity loss pickup is maintained at its current run rate.

對於非 GAAP 淨利潤，我們預計 2017 年全年非 GAAP 淨利潤率將在盈虧平衡點和正 1% 之間，假設京東金融將在今年下半年分拆，新達達將實施股本損失回升保持在當前運行速度。

This guidance reflects our continued focus on the growth of our business and our commitment to gradually improving the operating margin, while still maintaining sufficient flexibility to invest and compete in this highly dynamic sector.

該指引反映了我們對業務增長的持續關注以及我們對逐步提高營業利潤率的承諾，同時仍保持足夠的靈活性來在這個充滿活力的行業進行投資和競爭。

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

我準備好的發言到此結束，接線員，我們現在可以進入問答環節了。

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 Eddie Leung of Merrill Lynch. 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美林證券的Eddie Leung。請提出你的問題。

Good evening. Thank you for taking my questions and congratulations on a very solid quarter. Just two quick questions. The first one is about your marketing business. Could you give us an update on the progress of your marketing business -- about your marketplace? Are we seeing the proportion to your marketplace and others revenues going up from this business model? Then secondly, just some clarification on some recent news about expansion into offline stores in the rural areas. Any more color would be helpful. Thank you.

晚上好。感謝您回答我的問題，並祝賀您度過了一個非常充實的季度。只是兩個簡單的問題。第一個是關於您的營銷業務。您能給我們介紹一下您的營銷業務（即您的市場）的最新進展嗎？我們是否看到這種商業模式在您的市場和其他收入中所佔的比例有所上升？其次，對最近一些關於向農村地區擴張線下商店的消息進行一些澄清。任何更多的顏色都會有幫助。謝謝。

Eddie, I assume you're asking about the advertising business on the other revenues. So we have definitely seen our advertising business growing at a faster pace than our overall [revenue] growth. However, we have also refrained from aggressively monetizing at the expense of the user experience. So our growth in our advertising program with merchants and suppliers is definitely moving ahead at a fast speed, but at the same time it's quite a measured pace.

埃迪，我猜你問的是廣告業務的其他收入。因此，我們確實看到我們的廣告業務增長速度快於我們的整體[收入]增長速度。然而，我們也避免以犧牲用戶體驗為代價來激進地貨幣化。因此，我們與商家和供應商的廣告計劃的增長無疑正在快速推進，但與此同時，這是一個相當謹慎的步伐。

For the second question on offline stores, I assume you're asking about our franchised stores that we just recently announced. It will be an extension of our rural program. It's not really for JD to setting up physical stores, but we will work with local businesses to set up franchised small stores. It's a one level actually below our Jingdong [Bang] business model, which is at the county level, and the 10,000 stores that we mentioned is really working with villages at one level below the county level so we can reach to broader consumers in the rural area. But it's actually an asset-light business model.

關於第二個問題，關於線下商店，我想你問的是我們剛剛宣布的加盟店。這將是我們農村計劃的延伸。京東並不是真的要開實體店，而是會和當地的商家合作開一些加盟小店。它實際上比我們京東[邦]的業務模式低一級，這是在縣級，我們提到的萬家店實際上是在與縣級以下一級的村莊合作，這樣我們就可以接觸到更廣泛的農村消費者。區域。但這實際上是一種輕資產的商業模式。

Your next question come from the line of Alicia Yap from Citigroup. Please ask your question.

您的下一個問題來自花旗集團的 Alicia Yap。請提出你的問題。

Hi, thank you. Good evening, Richard, Sidney, and Ruiyu. Thanks for taking my questions and congrats on the strong results. My questions are related to your gross margins. So we're actually seeing, there are some -- despite a year-over-year it's an increase, but on the sequential base it's actually a decline.

嗨，謝謝你。晚上好，理查德、西德尼和瑞宇。感謝您回答我的問題，並祝賀取得了優異的成績。我的問題與你們的毛利率有關。所以我們實際上看到，有一些——儘管同比有所增加，但從環比來看，實際上是下降的。

It also seems like on the 1P margins itself sequentially seems to be about 70 basis points decline. So is that mainly because of the FMCG categories being bigger, or is it related to the seasonal aggressive promotional discount? Related to that, how much are we targeting to spend on the sales and marketing to promote Yihaodian and also the FMCG category and when will this category achieve a break-even target? Thank you.

1P 利潤率本身似乎也連續下降了約 70 個基點。那麼這主要是因為快消品類更大，還是與季節性的促銷折扣有關？與此相關的是，我們計劃在銷售和營銷上花費多少資金來推廣一號店以及快速消費品品類？該品類何時能實現盈虧平衡目標？謝謝。

Sure, Alicia. So on the gross margin, you're right that normally in Q2 and Q4 during those major promotion events, gross margin tends to be slightly lower than the first quarter and the third quarter. So that's the reason. So that's why we always look at the gross margin trend on a year-over-year basis, which is more apples-to-apples.

當然，艾麗西亞。所以就毛利率而言，你是對的，通常在第二季度和第四季度的重大促銷活動期間，毛利率往往會略低於第一季度和第三季度。這就是原因。這就是為什麼我們總是逐年觀察毛利率趨勢，這是比較的。

For the Yihaodian business, we continued to invest as part of our broader FMCG effort and we have encouragingly seen that from our own business, that is the margin has been moving in the right direction, despite the massive promotional activities that we are running during the fourth quarter, which we're seeing very, very encouraging results.

對於一號店業務，我們繼續進行投資，作為更廣泛的快速消費品業務的一部分，我們令人鼓舞地看到，從我們自己的業務來看，儘管我們在春節期間開展了大規模的促銷活動，但利潤率一直在朝著正確的方向發展。第四季度，我們看到了非常非常令人鼓舞的結果。

The reason for that is really because of the scale of economies, as I mentioned earlier. The gross margin has seen meaningful improvement and, at the same time, we are also optimizing our fulfillment infrastructure and also on the order economics [driven by], for example, minimal order size required for free delivery. So we have seen -- beginning to see a very meaningful improvement in both growth and order economics for the consumer product category.

正如我之前提到的，其原因實際上是由於經濟規模。毛利率得到了有意義的改善，同時，我們也在優化我們的履行基礎設施以及訂單經濟性，例如免費送貨所需的最小訂單規模。因此，我們已經看到，消費品類別的增長和訂單經濟效益開始出現非常有意義的改善。

Your next question comes from the line of Alex Yao from JP Morgan. Please ask your question.

您的下一個問題來自摩根大通的 Alex Yao。請提出你的問題。

Hi, good morning and good evening, everyone. Thank you for taking the question and congrats on the solid quarter. Two quick ones. One is regarding the strong top line growth momentum, particularly for Q1, which is usually [assumed] a weak quarter for you guys. Can you talk about what's driving the revenue momentum there?

大家好，早上好，晚上好。感謝您提出問題，並祝賀本季度表現穩定。兩個快的。一個是關於強勁的營收增長勢頭，特別是第一季度，這通常被認為是你們的疲軟季度。您能談談是什麼推動了那裡的收入增長嗎？

Then secondly, I just want to clarify that your 2017 net margin guidance is between 0% to 1%, including Dada loss pickup, which is about RMB1.4 billion this quarter. So assuming annualized RMB6 billion loss, you still expect to be profitable next year - sorry, this year?

其次，我想澄清一下，你們2017年淨利潤率指引在0%到1%之間，包括達達虧損回升，本季度約為14億元人民幣。因此，假設年化虧損 60 億元人民幣，您仍然預計明年能夠盈利 - 對不起，今年？

So on the first quarter revenue guidance, we do see the seasonal slowdown in growth rate. I guess, you're comparing our growth rate to perhaps other industry players. From our perspective, we always strive to grow much faster than the industry average. So the current growth rate in our minds is -- we hope it will be even stronger. So to us, this is only -- we hope it's a comfortable base and with our internal effort we can outperform.

因此，在第一季度收入指引中，我們確實看到增長率出現季節性放緩。我想，您正在將我們的增長率與其他行業參與者進行比較。從我們的角度來看，我們始終努力以遠高於行業平均水平的速度增長。因此，我們認為當前的增長率是——我們希望它會更加強勁。所以對我們來說，這只是——我們希望這是一個舒適的基礎，通過我們的內部努力，我們可以超越。

For the 2017 net margin guidance, I don't know how you get to the RMB1.5 billion New Dada loss. As I mentioned in the past, you should assume about RMB100 million monthly run rate in loss pickup from New Dada. So that would be the run rate I'm referring to.

對於2017年淨利潤率指引，我不知道新達達15億元人民幣的虧損是如何得出的。正如我過去提到的，你應該假設新達達的虧損彌補每月約1億元人民幣。這就是我所說的運行率。

(Operator Instructions). Your next question comes from the line of Mr Alan Hellawell from Deutsche Bank. Please ask your question.

（操作員說明）。您的下一個問題來自德意志銀行的 Alan Hellawell 先生。請提出你的問題。

Thank you very much. Just quickly, now that we have moved through a near calendar year of anti-brushing and decline in the sale of virtual items, given that it's now rear view mirror I was wondering if you could quantify how much of a tailwind this translates in 2017 for us? Also we would just love a little more color around the free cash flow turning negative, increase in inventory that is in the fourth quarter, and what we might take on board as it relates to 2017? Thank you.

非常感謝。很快，既然我們已經經歷了近一年的反刷和虛擬物品銷售下降的情況，鑑於它現在已經成為後視鏡，我想知道你是否可以量化這在 2017 年會帶來多大的推動力我們？此外，我們還希望對自由現金流轉負、第四季度庫存增加以及與 2017 年相關的內容有更多的了解？謝謝。

Sure, Alan. So for our GMV growth in 2017 by the second quarter basically we will have the enhanced anti-brushing efforts that we announced last year. So all else being equal you will see a more normalized growth rate. I can't promise you for an acceleration, but at least by that time it will be more apples-to-apples.

當然，艾倫。所以我們2017年第二季度的GMV增長基本上會像去年宣布的那樣加強反刷單力度。因此，在其他條件相同的情況下，您將看到更加正常化的增長率。我不能向你保證會加速，但至少到那時，情況會更加一致。

We continue to work very hard to improve the quality of the products we list through our marketplace. So that ongoing effort we hope will pay off and both our customers and the quality merchants will benefit.

我們繼續努力提高我們通過市場列出的產品的質量。因此，我們希望持續的努力能夠得到回報，我們的客戶和優質商家都將從中受益。

On the free cash flow, as I mentioned on my previous earnings call, that there was some seasonal timing effect in Q3. So by Q4 we effectively reversed that timing difference. Again, for cash flow, because you could easily make some impact at quarter-end, so any single quarter cash flow will not reflect your ongoing cash flow momentum. So that's why we always like to use the trading 12 months as a better metric to measure free cash flow.

關於自由現金流，正如我在之前的財報電話會議上提到的，第三季度存在一些季節性時間效應。因此，到第四季度，我們有效地扭轉了這種時間差異。同樣，對於現金流，因為你很容易在季末產生一些影響，所以任何單季度現金流都不會反映你持續的現金流勢頭。這就是為什麼我們總是喜歡使用 12 個月的交易作為衡量自由現金流的更好指標。

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

你的下一個問題來自匯豐銀行的Chi Tsang。請提出你的問題。

Hi, good evening. Thank you very much for taking my question, and congrats on the nice set of results. I was just wondering if you can give us an update on how Yihaodian is going both from a 1P and a 3P perspective? Thank you.

嗨，晚上好。非常感謝您提出我的問題，並祝賀取得了很好的結果。我只是想知道您能否從 1P 和 3P 的角度向我們介紹一下 1 號店的最新進展？謝謝。

So, as we mentioned in the last quarter, actually beginning November 1, we took over the first-party business, while still utilizing the Yihaodian entity and its team to run the procurement for us. So the business has been very healthy. We see healthy growth on a year-over-year basis and it also contributed roughly RMB1.8 billion in the fourth quarter during those two months.

因此，正如我們在上個季度提到的，實際上從 11 月 1 日開始，我們接管了第一方業務，同時仍然利用 1 號店實體及其團隊為我們進行採購。所以生意一直非常健康。我們看到同比健康增長，第四季度這兩個月也貢獻了約 18 億元人民幣。

So it's a very healthy business and we look to further innovate utilizing this separate e-commerce platform and by the time the plan is finalized, we will announce to the market. So we will have a new positioning for Yihaodian to better serve the local communities. But in terms of category focus, it will continue to be focused on the FMCG and food and beverage categories.

因此，這是一項非常健康的業務，我們希望利用這個獨立的電子商務平台進一步創新，當計劃最終確定時，我們將向市場宣布。所以我們會對一號店有一個新的定位，更好地服務當地社區。但在品類聚焦上，仍將聚焦快消品和食品飲料品類。

(Operator Instructions). The next question comes from the line of Jin Yoon of Mizuho Securities. Please ask your question.

（操作員說明）。下一個問題來自瑞穗證券的 Jin Yoon。請提出你的問題。

Hi, good evening. On the $2.1 billion that you're going to receive, is that going to come in stages, or should we expect that one payment, one lump sum payment? Second of all with that, is there a spending horizon for that cash flow you're going to see, any CapEx cycle that we may see going forward? Thanks.

嗨，晚上好。你們將收到的 21 億美元是分階段支付的，還是我們應該期望一次性付款、一次性付款？其次，您將看到的現金流是否有支出期限，我們未來可能會看到任何資本支出週期？謝謝。

So the RMB14.3 billion -- oh yeah, you mean, $2.1 billion - yes, we will receive that in a lump sum payment upon closing. So, we should expect to receive that in the middle of 2017. We have not any specific use of the proceeds. But as part of our ongoing investment there will be CapEx requirements this year. I did mention last time that CapEx for 2016 was artificially low. Some of the projects were delayed due to the local land readiness.

因此，143 億元人民幣——哦，是的，你的意思是 21 億美元——是的，我們將在交易結束時一次性收到這筆款項。因此，我們預計會在 2017 年中期收到這筆資金。我們沒有對所得款項進行任何具體用途。但作為我們持續投資的一部分，今年將會有資本支出要求。我上次確實提到過 2016 年的資本支出被人為壓低。由於當地土地準備情況，一些項目被推遲。

So you will see higher CapEx in 2017. But it will be covered by our operating cash flow in any event. Now, the additional cash proceeds that we got from this transaction, obviously we can also use it for strategic investments in our ecosystem and other general corporate purposes that we deem appropriate.

因此，2017 年您將看到更高的資本支出。但無論如何，它都將由我們的運營現金流覆蓋。現在，我們從這次交易中獲得的額外現金收益，顯然我們也可以將其用於我們的生態系統的戰略投資以及我們認為合適的其他一般企業目的。

Your next question comes from the line of Ronald Keung of Goldman Sachs. Please ask your question.

你的下一個問題來自高盛的羅納德·姜（Ronald Keung）。請提出你的問題。

Thank you for taking my questions, and thank you Sidney. Just a question on the supermarket initiatives. Do you have any further cooperations or strategic plans with Walmart and Yonghui, mainly across supply chain sourcing and O2O this year? Thank you.

感謝您回答我的問題，也謝謝西德尼。只是關於超市舉措的問題。今年與沃爾瑪、永輝有什麼進一步的合作或戰略計劃，主要是在供應鏈採購和O2O方面？謝謝。

So we have developed -- we have a very healthy relationship with those two strategic partners. In particular, our New Dada entity is forming a closer partnership with those two companies. We disclosed that a number of stores that are linked to our New Dada -- Jingdong Dada platform and, in particular, increasingly we have established separate [picking] centers in those stores so that when a customer place an order the items can be very quickly packaged and delivered.

因此，我們與這兩個戰略合作夥伴建立了非常健康的關係。特別是，我們的 New Dada 實體正在與這兩家公司建立更緊密的合作夥伴關係。我們透露，很多門店都與我們的新達達——京東達達平台有關聯，特別是我們越來越多地在這些門店建立了獨立的[揀貨]中心，這樣當顧客下訂單時，商品可以很快得到。包裝並交付。

So for JD Daojia program, the current commitment is delivering within two hours. But if you look at the actual -- in most of the stores the delivery time is actually now down to about one hour. So the customer service level has been continuously improving with the closer partnership with those two supermarket partners. There are also potential -- other potential collaborations, which is yet to be announced.

所以對於京東到家計劃，目前的承諾是兩小時內送達。但如果你看一下實際情況——在大多數商店中，送貨時間實際上已縮短至大約一小時。因此，隨著與這兩家超市合作夥伴的密切合作，客戶服務水平不斷提高。還有潛在的——其他潛在的合作，但尚未公佈。

Your next question comes from the line of Ming Zhao of 86Research. Please ask your question.

您的下一個問題來自86Research的趙明。請提出你的問題。

So my question is, JD Finance is spun-off from the company but JD is generating a lot of cash. So for a lot of retail companies the free cash flow is plenty and they use that to do investment and generate returns. So if JD Finance is spun-off what can JD do to generate returns from those cash flows you generate? What's a business model for that free cash flow generation? Thank you.

所以我的問題是，京東金融是從該公司剝離出來的，但京東卻產生了大量現金。因此，對於許多零售公司來說，自由現金流充足，他們用它來進行投資並產生回報。那麼，如果京東金融被分拆出來，京東可以做什麼來從你產生的現金流中獲得回報呢？產生自由現金流的商業模式是什麼？謝謝。

That's an interesting question. In fact, even before we spun-off JD Finance, we had committed to the market that JD Finance starting 2016 would be self-funded. So we actually didn't use JD.com's free cash flow to fund JD Finance. We disclosed in the cash flow section of our earnings release, the total cash inflow and cash outflow for JD Finance business and you can see that inflow actually was higher than the outflow during the year.

這是一個有趣的問題。事實上，甚至在我們分拆京東金融之前，我們就向市場承諾，從2016年開始，京東金融將採用自籌資金。所以我們實際上並沒有使用京東的自由現金流來為京東金融提供資金。我們在財報的現金流部分披露了京東金融業務的現金流入和現金流出總額，大家可以看到年內流入實際上高於流出。

So that has been our philosophy, that the Finance business should be independently run. JD.com has not either subsidized or deployed our capital to support the business beyond the initial investment. I actually mentioned about RMB2.1 billion, that was the capital that we invested.

因此，我們的理念是，財務業務應該獨立運營。除了初始投資之外，京東還沒有補貼或部署我們的資金來支持業務。我實際上提到了大約21億元人民幣，這是我們投入的資金。

On top of that, we did have a line of credit to JD Finance. That's capped at around RMB10 billion and that line of credit is still available. But as you can see in last year, that line of credit did not move up. So that's basically our separation of risk between JD.com and JD Finance.

最重要的是，我們確實有京東金融的信用額度。上限約為100億元人民幣，而且該信貸額度仍然可用。但正如你在去年看到的那樣，信貸額度並沒有增加。這基本上就是我們京東和京東金融之間的風險分離。

As far as the free cash flow, we do have actually many investment opportunities for the e-commerce ecosystem, so we have been very active in discussing strategic partnerships with many of the potential partners in either retail or on the product side, and we expect more of those investment opportunities to come up.

就自由現金流而言，我們實際上在電商生態系統方面確實有很多投資機會，因此我們一直非常積極地與零售或產品方面的許多潛在合作夥伴討論戰略合作夥伴關係，我們預計更多這樣的投資機會將會出現。

Once again participants are requested to ask one question at a time. Your next question comes from the line of Zhiran Zhou of Credit Suisse. Please ask your question.

再次要求參與者一次提出一個問題。你的下一個問題來自瑞信周志然。請提出你的問題。

Hi, good evening Sidney. Thank you for taking my questions. Congrats on a very strong quarter. The question is regarding our FMCG category growth, I think a couple of days ago we announced that we had roughly like RMD100 billion of GMV in the [quality] finance and CG category for this year. Is there a number that we can reference our citation here for this year? Also in terms of the contribution from the loss, or in terms of the margin drag from the FMCG segment or JD supermarket. Can you provide some color to quantify that for this year? Thank you.

嗨，西德尼，晚上好。感謝您回答我的問題。祝賀一個非常強勁的季度。問題是關於我們的快速消費品類別的增長，我想幾天前我們宣布今年[優質]金融和CG類別的GMV大約為1000億令吉。有沒有一個數字可以供我們參考今年的引文？同樣是從虧損的貢獻來看，或者從快速消費品部門或京東超市的利潤拖累來看。您能提供一些顏色來量化今年的情況嗎？謝謝。

Sure, yeah. I believe the RMD100 billion is the three-year target. Oh for this year, okay. Yeah, so this is obviously announced by our business unit and it should be a number that's pretty comfortably achievable. On the margin profile it is, as I mentioned earlier, we do see a trend of improving operating margin or narrowing operating loss for that business, which is driven by both expanding gross margin due to the economies of scale and also improving all the economics for the higher ticket [size] and the more efficient fulfillment.

當然，是的。我相信1000億令吉是三年的目標。哦，今年，好吧。是的，這顯然是我們的業務部門宣布的，而且應該是一個可以輕鬆實現的數字。在利潤率方面，正如我之前提到的，我們確實看到了該業務營業利潤率提高或營業虧損縮小的趨勢，這是由規模經濟帶來的毛利率擴大以及所有經濟狀況改善所推動的。票[尺寸]越大，履約效率越高。

So it is definitely improving but at the same time this remains the last major category that's money losing and we do believe because the characteristics of this unique category it is worthwhile for us to continue to invest in this category, at least in the next two years. And there will be obviously profitability potential for this business, again, both from further improvement in the gross margin and also on all the economics.

所以它肯定在改善，但同時這仍然是最後一個虧損的主要類別，我們確實相信，由於這個獨特類別的特點，我們值得繼續投資這個類別，至少在未來兩年內。而且，無論是毛利率的進一步提高還是所有經濟效益的進一步提高，該業務都將具有明顯的盈利潛力。

The next question comes from the line of Natalie Wu from CICC. Please ask your question.

下一個問題來自中金公司的Natalie Wu。請提出你的問題。

Hi, good evening Sidney. Thanks for taking my question and congratulations on a very solid quarter. So my question is regarding actually the average order (technical difficulty) to be stabilized in the fourth quarter. Also the fulfilment cost per order stabilizing as well. So just wondering, is it merely due to a seasonality phenomenon or shall we expect the trend to carry on in this year?

嗨，西德尼，晚上好。感謝您提出我的問題，並祝賀這個季度表現非常出色。所以我的問題實際上是關於第四季度穩定的平均訂單（技術難度）。每個訂單的履行成本也穩定下來。所以只是想知道，這僅僅是由於季節性現像還是我們應該期望這種趨勢在今年繼續下去？

Actually both. So normally [you do] see somewhat higher average order sales because of the promotion or events. But also for certain categories, as I mentioned about FMCG, some of the new policies will actually [guide] (technical difficulty) consumers to the ticket size gradually. So that trend will continue, we hope. But on the other hand, because the low ticket size categories like FMCG and apparel and home furnishing are growing faster than the electronics and home appliance categories, so on a blended basis, you may not see average ticket size improving every quarter. So there's two forces in getting to a blended average.

實際上兩者都有。因此，通常情況下，由於促銷或活動，[您確實]會看到平均訂單銷售額有所提高。但同樣對於某些品類，正如我提到的快速消費品，一些新政策實際上會逐漸[引導]（技術難度）消費者到票價規模。我們希望這種趨勢將繼續下去。但另一方面，由於快速消費品、服裝家居等低門票規模類別的增長速度快於電子產品和家電類別，因此在混合基礎上，您可能不會看到平均門票規模每個季度都有所改善。因此，有兩種力量可以達到混合平均值。

Hello everyone. This is Richard Liu. I will try my best to speak English but (inaudible) maybe we will help you offline later -- translate my English to you all. I know a lot of investors care about our FMCG category and also a lot of competitors gave a lot of rumors on the market. They said look at me, I'm made of so much money. If I only reduce a little bit of my money and I take Jingdong to (inaudible) a price war, it would never ever have been possible. They will die, sooner or later.

大家好。這是理查德·劉。我會盡力說英語，但（聽不清）也許我們稍後會在離線狀態下幫助您——將我的英語翻譯給大家。我知道很多投資者都關心我們的快消品類，也有很多競爭對手在市場上給出了很多謠言。他們說看看我，我有這麼多錢。如果我只減少一點點錢，然後讓京東打（聽不清）價格戰，那是永遠不可能的。他們遲早會死。

It's definitely wrong, I will now give you two points. Firstly, if most of our suppliers, we have margin protection item. (Inaudible), Jingdong will remain the lowest price. If any competitor reduces a price we have our right to reduce our price [on the same time], on the same level.

這肯定是錯誤的，我現在給你兩點。首先，如果我們的大多數供應商，我們都有保證金保護項目。 （聽不清），京東將保持最低價格。如果任何競爭對手降低價格，我們有權[同時]在同一水平上降低價格。

But the supplier will give [us] the same gross margin. So we're not losing any money. To be honest sometimes it does impact our gross margin a little bit because [at the same time] we are not only reducing our price, we are also (inaudible). We give a lot of coupons to our customers. It's our money but not a significant [impact], just only a little bit.

但供應商會給[我們]相同的毛利率。所以我們不會損失任何錢。說實話，有時它確實會影響我們的毛利率，因為[同時]我們不僅降低了價格，而且（聽不清）。我們向顧客提供很多優惠券。這是我們的錢，但影響並不大，只是一點點。

Second, actually price war is very good for our Company. I can give you two examples. The first one is about books in 2009. We got into a price war with Dangdang in the books category. So after six years later, I can tell you last year, the books category has been profitable by quarterly. And in 2012 we also launched a price war with Suning about the large home appliance. In one day we lost huge money because at that time we had no margin protection item at that time. It's our money. One day we lost hundred million and I'm sure every investor cried on that night. But five years later we are (inaudible) number one, largest retailer in China, both online and offline and it has been profitable for some years.

其次，實際上價格戰對我們公司來說非常有利。我可以給你舉兩個例子。第一個是2009年的書籍，我們和噹噹在書籍領域打了價格戰。所以六年後，我可以告訴你去年，圖書類別已經按季度實現盈利。 2012年我們還和蘇寧在大家電上展開了價格戰。有一天我們損失了一大筆錢，因為當時我們沒有保證金保護項目。這是我們的錢。有一天我們損失了一億，我相信那天晚上每個投資者都哭了。但五年後，我們（聽不清）成為中國第一大、最大的零售商，無論是線上還是線下，並且多年來一直盈利。

Today we are also in a price war on the FMCG category. But always, the price war is bad news to our (inaudible) -- we will recommend my shareholder, anytime when you hear there is some price war with Jingdong, you should open a luxury brand of champagne and cheers for that. Because it means, sooner or later, we will be number one and it will be profitable. It can make a lot of money for our shareholders. So I'd like to make it simple, no war, no win, no profit and no worry. Thank you.

今天我們也在快速消費品品類上打價格戰。但價格戰對我們來說總是壞消息（聽不清）——我們會推薦我的股東，任何時候當你聽說京東有價格戰時，你都應該開一瓶奢侈品牌香檳並為此歡呼。因為這意味著，遲早我們會成為第一，並且會盈利。它可以為我們的股東賺很多錢。所以我想讓事情變得簡單，沒有戰爭，沒有勝利，沒有利潤，沒有憂慮。謝謝。

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

你的下一個問題來自麥格理的溫迪·黃（Wendy Huang）。請提出你的問題。

Thank you. So you mentioned that if you want to convert the profit sharing 40% to the equity ownership there is some regulatory approval you need to go through. So can you give some detail on what kind of government approval that you need to obtain in order to achieve that? Also, you mentioned that you will get a profit share only after the Company actually achieved the cumulative profit. So what is the cumulative loss as of now? Thank you.

謝謝。所以您提到，如果您想將 40% 的利潤分享轉換為股權，則需要獲得一些監管部門的批准。那麼您能否詳細說明您需要獲得什麼樣的政府批准才能實現這一目標？另外，您提到，只有在公司實際實現累計利潤後，您才會獲得利潤分成。那麼目前累計損失是多少呢？謝謝。

Sure. So if we keep in mind the thing of, in the first place, is done to facilitate JD Finance to, one, to apply for certain licenses. For example, the securities license. That will require strict domestic shareholder base. And second the domestic shareholding structure will facilitate a future domestic listing. So for those two areas as of now it, you know, the regulation will not permit us to convert to 40% profit sharing rate back into equity. However, in the future should the regulations become -- should the regulations change in those two areas for example then clearly, we would have the option to convert back into equity.

當然。因此，如果我們記住，首先，這樣做是為了方便京東金融，第一，申請某些許可證。例如，證券許可證。這需要嚴格的國內股東基礎。其次，境內股權結構將有利於未來境內上市。因此，就目前而言，對於這兩個領域，法規不允許我們將 40% 的利潤分享率轉回股權。然而，將來如果法規改變——例如，如果這兩個領域的法規發生變化，那麼顯然，我們將可以選擇轉換回股權。

We have -- on your second question we have not disclosed our cumulative losses. We will, however, disclose more segment information in our annual report where you will see at least the operating losses for our new business lines, which will give you a fairly good idea on the JD Finance profile. It is a private company so we are not disclosing the exact loss amount at this point.

關於你的第二個問題，我們尚未披露我們的累計損失。不過，我們將在年報中披露更多分部信息，您至少會看到我們新業務線的運營虧損，這將使您對京東金融的概況有一個很好的了解。這是一家私營公司，因此我們目前不會透露確切的損失金額。

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

您的下一個問題來自大和的 John Choi。請提出你的問題。

Good evening and good morning and thanks for taking my question and congratulations on a great set of results. I have a couple of questions here. Sidney, I was wondering if you could clarify or give more color on the strategic area of investment that you mentioned that you said, given that JD Finance has now been officially spun off, you say you're going to invest in retail and products, et cetera. I was wondering what kind of areas and how big kind of investments are you thinking of and how we should think in the longer term?

晚上好，早上好，感謝您提出我的問題，並祝賀取得了一系列出色的成果。我在這裡有幾個問題。 Sidney，我想知道您能否對您提到的戰略投資領域進行澄清或給予更多的說明，鑑於京東金融現已正式分拆，您說您將投資零售和產品，等等。我想知道您正在考慮什麼樣的領域、有多大的投資以及我們應該如何長遠考慮？

The second question is in your fulfilment area. I mean if you look at the fulfilment you see nice operating leverage. But as you can see recently a lot of the third-party logistics providers have been coming to the market with IPO and we've heard a lot of aggressive investment plans from them. So is JD required to further step up investment in order to compete or maintain its competitive advantage verses these players and should we be thinking about additional CapEx related to this? Thank you.

第二個問題是在你的履行領域。我的意思是，如果你看看履行情況，你會發現良好的運營槓桿。但正如你所看到的，最近許多第三方物流提供商已經通過 IPO 進入市場，我們聽到了他們很多積極的投資計劃。那麼，京東是否需要進一步加大投資，以與這些參與者競爭或保持其競爭優勢，我們是否應該考慮與此相關的額外資本支出？謝謝。

Sure. So for investment we always maintained that all of our investments will be strategic and we are very focused to invest only in the ecosystem around our e-commerce business and also on the new technologies. As we also mentioned in our earnings release that Richard actually laid out our next 12-year strategic plan to invest further into the technologies, in particular in artificial intelligence and big data for example. So some of the investments will potentially be invested in these technology areas but they will all be very much related to our core business.

當然。因此，對於投資，我們始終認為我們所有的投資都將是戰略性的，我們非常專注於僅投資於我們的電子商務業務的生態系統以及新技術。正如我們在財報中提到的那樣，Richard 實際上製定了我們下一個 12 年的戰略計劃，以進一步投資於技術，特別是人工智能和大數據等領域。因此，一些投資可能會投資於這些技術領域，但它們都與我們的核心業務密切相關。

On your second question, we addressed this before that our logistic network is actually quite different from (inaudible), which is purely a delivery company. So for us we -- it's an integrated warehousing network and last mile delivery which -- it's very unique for the e-commerce model. And in fact, the speed of delivery is determined by the warehouse network, not by the last mile itself. Also the quality is very, very different because JD's deliveryman, for those of you who live in China, you will know that because of our training and our corporate culture, JD deliverymen are essentially a customer representative. They are very, very committed to be very thoughtful and provide service beyond just a simple delivery.

關於你的第二個問題，我們之前已經說過，我們的物流網絡實際上與（聽不清）純粹的快遞公司有很大不同。因此，對於我們來說，這是一個集成的倉儲網絡和最後一英里交付，這對於電子商務模式來說是非常獨特的。事實上，配送速度是由倉庫網絡決定的，而不是由最後一英里本身決定的。而且質量非常非常不同，因為京東的送貨員，對於那些住在中國的人來說，你會知道，由於我們的培訓和我們的企業文化，京東送貨員本質上是客戶代表。他們非常非常致力於提供周到的服務，而不僅僅是簡單的送貨。

So it's a very different model in terms of both the speed, determined by the warehousing work, and the personal touch by our well trained delivery staff, which we believe is still and will remain very, very differentiated with the third party network utilizing the delivery companies.

因此，從速度（由倉儲工作決定）以及我們訓練有素的送貨人員的個人風格來看，這是一種非常不同的模式，我們相信這仍然並將繼續與使用送貨的第三方網絡非常非常不同公司。

The next question comes from the line of Ella Ji of China Renaissance. Please ask your question.

下一個問題來自華興資本的Ella Ji。請提出你的問題。

Thank you. For your current customer base I wonder if you can share a breakdown between the male and the female? And for the new customers that you added, I wonder what are the categories that are attracting these new customers coming to you for the first time. Also, just regarding your advertising, I understand that you won't go aggressive in terms of adding more ad inventories, but can you talk about what's your efforts in the advertising targeting? So for example, to improve the click rate et cetera. Can you just assure us with some updates on that? Thank you.

謝謝。對於您目前的客戶群，我不知道您是否可以分享一下男性和女性之間的細分？對於您添加的新客戶，我想知道是什麼類別吸引了這些新客戶第一次來找您。另外，就你們的廣告而言，我知道你們不會在增加更多廣告庫存方面採取激進的做法，但您能談談你們在廣告定位方面做了哪些努力嗎？例如，提高點擊率等等。您能否向我們保證一些最新情況？謝謝。

Sure. So for the male/female customer base we've done some analysis internally because we don't require customers to identify their gender when they register so we could only get a proxy. Definitely the female customers have been increasing in proportion. Based on different analysis they are at least very close but we believe the male customers are still slightly higher in our overall customer base. So this is actually one of the key areas of new customer acquisition that we will be -- this year one of our key strategic focus is to attract female customers through both our existing FMCG effort and also our enhanced apparel category effort.

當然。所以對於男性/女性客戶群，我們在內部做了一些分析，因為我們不要求客戶在註冊時識別他們的性別，所以我們只能得到一個代理。毫無疑問，女性顧客的比例一直在增加。根據不同的分析，他們至少非常接近，但我們相信男性客戶在我們的整體客戶群中仍然略高。因此，這實際上是我們獲取新客戶的關鍵領域之一——今年我們的關鍵戰略重點之一是通過我們現有的快速消費品工作和增強的服裝類別工作來吸引女性客戶。

One of the initiatives in fact is to break out the apparel business from our existing apparel and home business unit. So we will form a separate apparel business group led by a new leader and we will implement a number of measures to enhance the platform to attract new female users.

事實上，其中一項舉措是將服裝業務從我們現有的服裝和家居業務部門中分離出來。因此，我們將組建一個獨立的服裝業務集團，由新的領導者領導，我們將採取一系列措施來增強平台，以吸引新的女性用戶。

So your second question is actually related. So it's how, for example, the FMCG category is one of those we believe can attract many new customers, specifically female customers. Obviously the existing promotional activities, our superior service level, our channeled penetration into the lower tier cities, all of these efforts will help attract new customers to our platform.

所以你的第二個問題實際上是相關的。因此，例如，快速消費品類別是我們認為可以吸引許多新客戶，特別是女性客戶的類別之一。顯然，現有的促銷活動、我們卓越的服務水平、我們對低線城市的渠道滲透，所有這些努力都將有助於吸引新客戶到我們的平台。

On your last question, I think it is actually somewhat related to our effort to invest in technologies and artificial intelligence. So we have been investing in this area to better target our customers and also provide more personalized recommendations to a product to our consumers. Honestly, we are still far away from reaching a satisfactory stage for this area so it's -- on the other hand it is actually a great opportunity if we can improve in customer targeting and advertising effectiveness for example, and also just organic traffic utilization. We actually can see much better conversion rates for example down the road. So it is one area for our further improvement.

關於你的最後一個問題，我認為這實際上與我們對技術和人工智能的投入有一定的關係。因此，我們一直在這一領域進行投資，以更好地瞄准我們的客戶，並向我們的消費者提供更個性化的產品推薦。老實說，我們在這個領域還遠未達到令人滿意的階段，因此，另一方面，如果我們能夠提高客戶定位和廣告效果，以及有機流量利用率，這實際上是一個很好的機會。事實上，我們可以看到更好的轉化率，例如未來的情況。所以這是我們需要進一步改進的一個領域。

The next question comes from the line of Jialong Shi of Nomura. Please ask your question.

下一個問題來自野村證券的施嘉龍。請提出你的問題。

Hi, good evening Richard, Sidney, Ruiyu. Thanks for taking my questions. I just wonder how do you think of your relationship with Walmart. We know Walmart has kept buying your shares from the [open] market in the past few months. So I just wonder, if Walmart tries to seek a Board directorship in the future will you reject this move or you would welcome Walmart to become your new Board director? Also how much operating loss you've booked from FMCG category into Q4 and how much you expect to invest in FMCG in this year? Thank you.

嗨，理查德、西德尼、瑞宇，晚上好。感謝您回答我的問題。我只是想知道您如何看待您與沃爾瑪的關係。我們知道過去幾個月沃爾瑪一直在[公開]市場購買你們的股票。所以我想知道，如果沃爾瑪未來試圖尋求董事會董事職位，您會拒絕這一舉動還是歡迎沃爾瑪成為您的新董事？另外，您在第四季度從快速消費品類別中記入了多少經營虧損，以及您預計今年在快速消費品領域的投資是多少？謝謝。

Sure. So on the Walmart ownership, well we actually disclosed the last quarter -- on the last earnings quarter, Walmart had reached 10% stake in JD.com and has a Board observer seat. In fact, there's no further development from a share perspective. However, at the same time, the two companies have developed closer ties during the past quarter. Our Sam's Club flagship store on JD.com has seen very, very encouraging results during the quarter. We are also collaborating other new initiatives which is yet to be announced.

當然。所以關於沃爾瑪的所有權，我們實際上在上個季度披露了——在上個財報季度，沃爾瑪已經達到了京東 10% 的股份，並擁有一個董事會觀察員席位。事實上，從股價的角度來看，並沒有進一步的發展。然而，與此同時，兩家公司在過去一個季度建立了更緊密的聯繫。我們在京東的山姆會員店旗艦店在本季度取得了非常非常令人鼓舞的業績。我們還正在合作其他尚未宣布的新舉措。

I mentioned about the Dada collaboration. We are already, in a very short period of time, there are dozens of Walmart stores have been connected through the Dada program to our JD.com program. So many exciting initiatives are being discussed and implemented.

我提到了達達主義的合作。我們已經在很短的時間內，有幾十家沃爾瑪商店通過達達計劃連接到我們的京東計劃。許多令人興奮的舉措正在討論和實施。

Your next question comes from the line of Eric Wen from Blue Lotus. Please ask your question.

您的下一個問題來自藍蓮花的Eric Wen。請提出你的問題。

Thanks management for taking my questions. I'm asking on behalf of Eric Wen. Please allow me to ask in Chinese first and then I will translate it into English. [Speaks in foreign language]. I'd like to ask two questions. First, compared to other Alibaba's new retail, how much GMV do other new China businesses [you reach to achieve] in 2017? And second, what's the difference between Alibaba's (inaudible) and other new China business unit. Thank you.

感謝管理層回答我的問題。我代表埃里克·溫（Eric Wen）提問。請允許我先用中文詢問，然後我將其翻譯成英文。 [用外語說話]。我想問兩個問題。第一，與阿里巴巴其他新零售相比，2017年其他中國新業務的GMV是多少？其次，阿里巴巴的（聽不清）和其他新的中國業務部門有什麼區別。謝謝。

Yeah, sure. First of all, I don't think that the two models are comparable. In fact, we believe we have explored the so called new retail model far ahead of our competition. In fact, the overall model, the JD home model, was an online to offline initiative that leveraged the offline strength with the online customer reach. So we have seen very, very encouraging results in our JD home business and especially after the merger into the New Dada. The average ticket size, the service level to our customers, have seen a significant improvement over the past six or seven months. So from our perspective we do see tremendous opportunities in an integrated model between online and offline.

好，當然。首先，我認為這兩個模型沒有可比性。事實上，我們相信我們已經遠遠領先於競爭對手探索了所謂的新零售模式。事實上，整個模式，即京東到家模式，是一種線上到線下的舉措，利用線下優勢和線上客戶覆蓋面。因此，我們在京東家居業務上看到了非常非常令人鼓舞的成果，特別是在合併到新達達之後。在過去的六七個月裡，平均門票金額和對客戶的服務水平有了顯著改善。所以從我們的角度來看，我們確實看到了線上線下一體化模式的巨大機遇。

For the (inaudible) it's actually a completely separate business. That's aiming to support the [mom and pop] shops in the cities and also rural areas so it's actually quite a different model but we are still in the fairly early development stage. But given that JD.com has this highly sophisticated supply chain capabilities and also our own last mile delivery network, we believe our model is superior to any competition.

對於（聽不清）它實際上是一個完全獨立的業務。其目的是支持城市和農村地區的[夫妻店]，所以這實際上是一個完全不同的模式，但我們仍處於相當早期的發展階段。但鑑於京東擁有高度複雜的供應鏈能力以及我們自己的最後一英里配送網絡，我們相信我們的模式優於任何競爭對手。

The next question comes from the line of Mr Thomas Chong from BOCI. Please ask your question.

下一個問題來自中銀國際的Thomas Chong 先生。請提出你的問題。

Hi, thanks management for taking my question. I have a quick question about the synergies with Tencent. Can management provide some color about the percentage of new customers for mobile QQ? Thanks.

您好，感謝管理層回答我的問題。我有一個關於與騰訊的協同效應的快速問題。管理層能否提供一些關於手機QQ新客戶比例的信息？謝謝。

Yes, the collaboration has been very, very fruitful. If you look at the number of new customers attracted in the fourth quarter it remained above 25%, so it's a very, very solid new customer acquisition channel. So we also, in addition to those two channels and the new customer acquisitions, we also have a number of other collaborations including, [Jin Ten Ji Hua] which is a joint marketing and advertising program working with key brands that we mentioned in the past. So we also have seen very encouraging results out of that program.

是的，雙方的合作非常非常富有成果。如果你看看第四季度吸引的新客戶數量，它仍然保持在 25% 以上，所以這是一個非常非常可靠的新客戶獲取渠道。因此，除了這兩個渠道和新客戶獲取之外，我們還有許多其他合作，包括[金十計劃]，這是一個與我們過去提到的主要品牌合作的聯合營銷和廣告計劃。因此，我們也看到了該計劃的非常令人鼓舞的結果。

Your next question comes from the line of Tian Huo of Barclays. Please ask your question.

你的下一個問題來自巴克萊銀行的田火。請提出你的問題。

Hi Sidney, Richard and Ruiyu, good evening. So the question is related to your growth margin. So as you are expanding in your FMCG business and apparel business, so the ticket value compared with the home appliances that you see can be smaller. So the ticket, the size, each ticket, each deliver, the economics can be, you know, worse than before. So how do you manage the gross margin growth going forward?

嗨，西德尼、理查德和瑞宇，晚上好。所以問題與你的增長率有關。所以當你在擴大你的快消品業務和服裝業務時，那麼它的票面價值與你看到的家電相比可能會更小。因此，門票、尺寸、每張門票、每次交付，經濟效益可能比以前更差。那麼，您如何管理未來的毛利率增長呢？

First of all the gross margin is actually less affected by the ticket size itself but the operating margin will. For gross margin, as Richard actually mentioned earlier, that on the customer side we will always maintain everyday low price plus very aggressive promotions and coupons. The gross margin will purely come in from our enhanced scale economies. For example, for FMCG, we are today even, you know, we are actually not the largest FMCG retailer yet in China. So as we continue to grow in scale it is fairly natural to see more and more scale economies slow, better purchasing price and more volume base for rebate and that will continue to drive expanding gross margin without compromising our everyday low price and the promotions.

首先，毛利率實際上受門票規模本身的影響較小，但營業利潤率會。對於毛利率，正如理查德之前提到的，在客戶方面，我們將始終保持每日低價以及非常積極的促銷和優惠券。毛利率將完全來自我們增強的規模經濟。比如說快消品，我們今天甚至，你知道，我們實際上還不是中國最大的快消品零售商。因此，隨著我們規模的不斷擴大，很自然地會看到越來越多的規模經濟放緩，更好的採購價格和更大的回扣數量基礎，這將繼續推動毛利率的擴大，而不會影響我們每天的低價和促銷活動。

But I think your question is more on the operating side. There are ways for sure to enhance the order economics. So one example, one simple example, is through, as I mentioned earlier, requiring higher ticket size for free delivery, for example. And there are other methodologies to encourage customers to buy more through a certain promotion or initiatives. So over time the order economics will be improved through higher ticket size. And you are right that it will probably never get to the electronics and home appliance categories, but on the other hand both apparel and consumer products do tend to carry higher gross margins than the electronics category.

但我認為你的問題更多是在操作方面。肯定有一些方法可以提高訂單經濟效益。因此，一個例子，一個簡單的例子，正如我之前提到的，例如，通過要求更高的票數來免費送貨。還有其他方法可以通過某些促銷或舉措來鼓勵客戶購買更多商品。因此，隨著時間的推移，訂單經濟效益將通過提高訂單規模而得到改善。你是對的，它可能永遠不會進入電子和家用電器類別，但另一方面，服裝和消費品確實往往比電子類別具有更高的毛利率。

The next question comes from the line of Rodney Hull of SunTrust. Please ask your question.

下一個問題來自 SunTrust 的羅德尼·赫爾 (Rodney Hull)。請提出你的問題。

Yes, good evening. Thank you for taking my question. I wondered if you could discuss the logistics monetarization as you move forward on starting to monetize some of your logistics network for your 3P providers. If you can provide any updates of the traction there to date and maybe what we should think about for the coming year in 2017. Thank you.

是的，晚上好。感謝您回答我的問題。我想知道當您開始為 3P 提供商將部分物流網絡貨幣化時，您是否可以討論物流貨幣化問題。您能否提供迄今為止的任何最新進展以及我們在 2017 年應該考慮的問題。謝謝。

Sure. So we are pretty aggressively expanding our service to our merchants. In the fourth quarter for example the merchants -- the number of merchants adopting our service has increased quite meaningfully and in terms of number of orders that were served by our warehouse network, it's now moving into a high single digit which is a quite meaningful improvement.

當然。因此，我們非常積極地向商家擴展我們的服務。以商戶為例，在第四季度，採用我們服務的商戶數量顯著增加，就我們的倉庫網絡服務的訂單數量而言，現在已進入高個位數，這是一個非常有意義的改進。

So we have mentioned in the past that warehouse and delivery, the integrated service involving both, will differentiate the customer experience because of the speed and also the personal touch of the JD delivery staff. But for many smaller merchants it's not necessarily an easy decision so it will be a natural progression that increasingly, starting from more sizeable merchants, and then to mid-size merchants. But we are seeing definitely a very encouraging trend in our key merchants adopting the service.

因此，我們過去曾提到，倉儲和配送這一涉及兩者的綜合服務，將因京東配送人員的速度和個人風格而帶來差異化的客戶體驗。但對於許多較小的商家來說，這不一定是一個容易的決定，因此這將是一個自然的進程，逐漸從大型商家開始，然後到中型商家。但我們確實看到我們的主要商家採用該服務的趨勢非常令人鼓舞。

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。

Thanks operator. Once again thank you for joining us today. Please feel free to contact us if you have any further questions. We look forward to talking with you in the coming months.

感謝運營商。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。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。