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JD.com appoints new president, founder to focus on long-term strategy

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Richard Liu, founder and chief executive officer of JD.com.

Billy H.C. Kwok | Bloomberg | Getty Images

GUANGZHOU, China — JD.com’s founder and CEO Richard Liu is stepping back from day-to-day operations while the Chinese e-commerce giant said it has created a new president role.

Xu Lei, who was previously CEO of JD Retail, will take up the role of president and take over day-to-day operations of JD.com and collaborative development of various business units of the company.

Meanwhile, Liu will remain chairman and CEO but will switch focus to formulating the e-commerce giant’s long-term strategies, mentoring younger management and “contributing to the revitalization of rural areas,” the company said.

The latest moves comes as China’s technology giants, including Alibaba, ByteDance and Pinduoduo, have undergone leadership reshuffles in the past few years, with founders taking more of a long-term strategy role.

“JD has a sound management structure with a large number of excellent business leaders, who, represented by Mr. Lei Xu, have strong belief in JD’s long-term business philosophy, proven leadership capability and extensive industry experience,” Liu said in a statement.

For some time, Xu has been rumored to take over the company’s day-to-day operations. Liu has remained fairly low profile following his 2018 arrest in the U.S. on allegations of rape. Liu was not charged.

Liu still owns around 80% of the voting rights of JD.com. After starting the company in 2004, JD has grown into one of China’s biggest e-commerce companies and has expanded into areas including health and logistics.

There were two other management moves. Xin Lijun will take up the role as CEO of JD Retail after previously heading up JD Health. Jin Enlin has been appointed as CEO of JD Health, after previously being in charge of the company’s marketplace business.

“Looking to the future, the correct long-term strategic design, the growth and development of young talents, and the healthy and coordinated development of various business units will continue to be the driving force for JD in doing the hardest and most challenging, but right and most valuable things for the industry,” Liu said.

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China developer Evergrande’s debt crunch and U.S. markets: Ed Yardeni

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A debt crunch involving China’s second largest properly developer has caught investors’ attention in the past week.

Evergrande, the Shenzhen-based company, is facing a default on its debt burden of roughly $300 billion. The crisis has echoes to the Lehman Brothers bankruptcy, which marked its 13-year anniversary last week, a development that at the time sent shockwaves through global markets.

Ed Yardeni, president of Yardeni Research, says it’s unlikely Evergrande will have a fallout quite as severe as the Lehman bankruptcy when the global economy and credit markets collapsed. Instead, he sees it as analogous to a different event a decade even earlier.

“If it’s similar to anything,  it’s similar to Long-Term Capital Management, which is the calamity that occurred in 1998 but that was dealt with very quickly by the Federal Reserve and the major banks and it didn’t have any global implications,” Yardeni told CNBC’s “Trading Nation” on Friday.

Like with hedge fund Long-Term Capital Management, Yardeni sees government intervention in Evergrande preventing any collapse and contagion.

“The reality is it is too big to fail, and I think the Chinese government is going to intervene big time. I don’t think they’re going to save management… but it will be restructured and in a way that won’t harm the economy too much over there and won’t affect the global economy or financial markets the way Lehman did,” said Yardeni.

Even if a crisis tied to Evergrande is avoided, Yardeni does not see Chinese markets rebounding anytime soon. He says Evergrande is just one reason for investors to avoid the region.

“If you’re invested in Chinese stocks, there have been lots of reasons to get out, quite honestly,” said Yardeni. “The Chinese Communist Party which runs the government over there has been meddling, intervening in the markets, interrupting corporate governance, telling companies how they should manage their businesses. And so I think it’s a good opportunity here just to lie low. I would not be buying on the dips in China.”

Beijing has tightened regulations on industries such as technology and private education in recent months. That increased scrutiny has taken their markets and U.S.-listed Chinese stocks lower.

Continued uncertainty in China could be a benefit for U.S. markets, he adds.

“There are lots of global investors that want to be invested in areas where they feel comfortable, where there’s corporate governance rules, where there’s contract laws that are obeyed. I think a lot of money that has gone global and might have been tempted to go to China may very well come to the U.S.,” he said.

Yardeni has a 5,000 price target on the S&P 500 for the end of 2022, though he says the benchmark index could reach that level sooner. The S&P 500 closed Friday at 4,433.

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Covid is call to act on Southeast Asia’s food waste crisis: Experts

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Fruits and vegetables thrown into a waste bin

Peter Dazeley | The Image Bank | Getty Images

SINGAPORE — Covid-19 is a wake-up call that’s highlighted the urgency to fight the world’s food waste crisis, experts and industry players told CNBC.

Amid global lockdowns and halted travel, the pandemic exposed the vulnerabilities of supply networks, as disruptions created bottlenecks in farm labor, transport and logistics and sparked global food shortages and price hikes.

“The pandemic is a very good wake-up call,” said William Chen, director of the Food Science and Technology Program at Nanyang Technological University in Singapore.

“Before Covid-19, people took climate change less seriously because food came by easily. But now this issue starts to surface in people’s minds,” he added. “I don’t see it as a lost cause, but a good opportunity to do a house-cleaning of the current system.”

Food waste remains one of the biggest global challenges.

The Food and Agriculture Organization of the United Nations (FAO) estimates that one third of all food produced — or 1.3 billion tonnes — ends up lost or wasted every year. Food waste also accounts for 8% to 10% of global greenhouse gas emissions, another UN report showed.

Reducing food waste could yield $700 billion in savings, according to Boston Consulting Group. And businesses in Southeast Asia are jumping on the bandwagon and going into food waste prevention, as well as redistribution and recycling of excess food.

Growing appetite to tackle food waste

In 2020, Singapore generated 665,000 tonnes of food waste, making up about 11% of the total waste generated in Singapore 

Coming out of the pandemic, more hotels and airlines are now tackling food waste and putting sustainability “front and center” on their priority list, said Rayner Loi, co-founder and chief executive of Singapore-based AI food waste management start-up, Lumitics.

This was a stark change from a few years back when food waste was “barely on the radar” and it was “incredibly challenging” to have conversations with industry players, said Loi.

The growing receptiveness is thanks in part to increased education, new government regulations and sustainability being high on the corporate agenda, he said.

The firm developed an artificial intelligence-powered tracker installed in dustbins to measure and track all food waste. By learning in real time what and how much food waste was generated, chefs could take action to reduce the amount produced for certain dishes on the buffet line.

This reduces food waste by up to 40%, and food costs by up to 8%, Lumitics found.

From 2024 onwards, owners and occupiers of commercial and industrial premises in Singapore that generate large amounts of food will be required to segregate their food waste for treatment, according to a new legislation.

Lumitics partners large hotel chains like Accor, Hyatt, Marina Bay Sands, as well as carriers such as Singapore Airlines and Etihad Airways.

It plans to expand to 1,000 locations in the next five years across Asia-Pacific starting with Hong Kong, Malaysia, Indonesia and Australia.

“The entire industry is starting to wake up to this idea that food waste is one of the largest untapped cost saving opportunities for any kitchen,” said Loi.

Turning food waste into ‘surprise boxes’

Most of the food businesses we’ve met think they don’t waste much. When they start making quick calculations of what 6% to 14% of extra revenues mean, we usually get a call back.

Louis-Alban Batard-Dupre

founder, Yindii

Industry players themselves have highly underestimated the problem.

“Most of the food businesses we’ve met think they don’t waste much. When they start making quick calculations of what 6% to 14% of extra revenues mean, we usually get a call back,” he said.

Mindsets of merchants are changing too, as more brands prepare for a sustainable post-Covid tourism future, he said.

Back then, they were “shy to say they generate food waste because it reveals their stores don’t sell out every day or because it’s a dirty word,” said Batard-Dupre. “But telling the world you’re fighting for the planet is so much more powerful than trying to hide such a systemic problem every business has.”

Watermelons discarded near the Brahmaputra river, Bangladesh

Andrea Pistolesi | Stone | Getty Images

To date, Yindii has seen over 20,000 surprise boxes bought up. Redistributing the food that would have been thrown out also helps many living under the poverty line, he said.

Yindii’s partners include hotels such as Hilton Sukhumvit Bangkok, Grand Hyatt Erawan Bangkok, Sofitel Bangkok Sukhumvit and JW Marriott. Over the next few months, it is looking to expand to other cities in Thailand and South East Asia.

Technology as a way forward

Technology is starting to play a bigger role in tackling food waste.

Southeast Asia is particularly vulnerable to food waste because it has many small-scale farm holdings that rely on intensive livestock farming and lack the means to invest in more efficient agri-tech, said Chen from NTU, who is also a consultant to the Asian Development Bank.

The growing middle income class also consumes more.

One of the UN Sustainable Development Goals aims to halve food waste by 2030 at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest. 

The slower we are to take action on climate change, the more we will see extreme weather and the greater the likelihood of zoonotic diseases — that could consequently increase food waste.

Audrey Chia

associate professor, National University of Singapore Business School

More private-public partnerships will be key, where “enthusiastic small start-ups” can scale up with the help of technology and funding from the government, or work with big multinational corporations to plug the gaps, said Chen.

Another lucrative venture is “upcycling,” which refers to taking ingredients that would usually be thrown out and processing them into new high-quality, marketable products.

For instance, plant-based seafood firm Sophie’s Kitchen is using soybean residue okara as a culture medium for microalgae cultivation in the fast-growing alternative protein market space.

Other examples include adding higher valued ingredients like salted eggs to normally discarded fish skin or using black soldier flies to transform food waste into fertilizer, said associate professor Audrey Chia of the National University of Singapore Business School.

Likewise, predictive technology could also help restaurants and retailers estimate demand or produce for food.

“Ironically, it is a vicious cycle. The slower we are to take action on climate change, the more we will see extreme weather and the greater the likelihood of zoonotic diseases — that could consequently increase food waste,” said Chia.

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collapse could have domino effect on China properties

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The Evergrande Group or Evergrande Real Estate Group logo of a Chinese real estate company is seen on a smartphone and a PC screen.

SOPA Images | LightRocket | Getty Images

China’s “highly distressed” real estate companies are at risk of collapse as the country’s highly indebted developer Evergrande is on the brink of default, warns AllianceBernstein’s Jenny Zeng.

Speaking with CNBC’s “Street Signs Asia” on Friday, the co-head of Asia fixed income at AllianceBernstein warned of a “domino effect” from a potential Evergrande collapse.

“In the offshore dollar market, there is a considerable large portion of developers (who) are implied to be highly distressed,” Zeng said. These developers “can’t survive much longer” if the refinancing channel remains shut for a prolonged period, she added.

Evergrande, the world’s most indebted property developer, is crumbling under the weight of more than $300 billion of debt and warned more than once it could default. Banks have reportedly declined to extend new loans to buyers of uncompleted Evergrande residential projects, while ratings agencies have repeatedly downgraded the firm, citing its liquidity crunch.

The financial position of the other Chinese property developers also took a hit following rules outlined by the Chinese government to rein in borrowing costs of the real estate firms. The measures included placing a cap on debt in relation to a company’s cash flows, assets and capital levels.

While the struggling developers are tiny individually, compared to Evergrande, they make up about 10%-15% of the total market on aggregate, Zeng said. She warned that a collapse could result in a “systemic” spillover to other parts of the economy.

“Once it starts, it takes much more from a policy perspective to stop it than to prevent it from happening,” she added.

On its own, a managed default or even messy collapse of Evergrande would have little global impact beyond some market turbulence.

Simon MacAdam

Senior Global Economist, Capital Economics

Taken on its own, the financial or social risks associated directly with Evergrande itself are actually “reasonably manageable,” Zeng explained. She cited the fragmentation of the Chinese property market as a reason behind this.

“Despite Evergrande’s size – we all know it is the largest developer in China, probably the largest in the world – [it] still accounts for only 4% and now it’s even less of the total annual sales market,” Zeng said. “The debt, particularly the onshore debt, is well collateralized.”

China’s ‘Lehman moment’?

Some economists have warned that the collapse of Evergrande could become China’s “Lehman moment” – a reference to the bankruptcy of Lehman Brothers as a result of the subprime mortgage crisis, which triggered the 2008 global financial crisis.

However, Capital Economics’ Simon MacAdam described that narrative as “wide of the mark.”

Read more about China from CNBC Pro

“On its own, a managed default or even messy collapse of Evergrande would have little global impact beyond some market turbulence,” MacAdam, a senior global economist at the firm, said in a Thursday note. “Even if it were the first of many property developers to go bust in China, we suspect it would take a policy misstep for this to cause a sharp slowdown in its economy.”

As of Friday’s close, the company’s Hong Kong-listed shares have plunged more than 80% year-to-date.

— CNBC’s Weizhen Tan contributed to this report.

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