Yihaodian interview: The e-commerce journey, from Walmart to JD

How do you compare your role at a Chinese internet company with that at the other more traditional and multinational corporations (MNCs) you have been part of, such as Intercontinental, Home Depot and DHL?

My career path has been quite unconventional. Most in-house counsel work at a law firm for a few years before going into corporate. I began as a legal intern in 2000, when my alumni, who was the general counsel at Nortel Networks Asia, suggested for me to join his team and get some hands-on training.

Now that I look back, it's really industry-specific knowledge that matters most—whether it has been telecom at Nortel Networks and Ericsson, logistics at DHL, traditional retail at Home Depot, hospitality at Intercontinental, or e-commerce at Yihaodian now. Bringing expertise and legal skills to the table is one thing, but having real insight into the specific industry the company operates in is crucial.

Another difference I've noticed is company culture. In the past 16 years I've mainly worked for foreign-invested enterprises (FIEs), which usually implement two reporting lines for regional general counsel—a solid line to the general counsel at headquarters, and a dotted line to the country head—and require balancing the relationship with both managers.

But in a domestic Chinese company, this balance must be managed just as carefully, if not more. I currently directly report to the general counsel of Walmart E-commerce, and also to the Yihaodian CEO. The value of the regional or local general counsel is being the channel between these two important people and helping both make informed judgments and decisions.

Your time at Yihaodian has paralleled the Chinese e-commerce boom in recent years. How do you keep up?

I joined Walmart nearly four years ago when it became the majority shareholder (at 51%) of Yihaodian. The e-commerce industry definitely changes very quickly. New challenges arise almost every single day, as laws and regulations are constantly being issued.

It's important for a general counsel in the sector to keep improving and familiarizing yourself with the evolving internal processes. Specifically, knowing how to design and build up the legal team to adapt and manage this constant change.

I also feel strongly about the fact that you need to get so many things done with limited resources. So understanding how to build up personal influence within the company and manage relationships is another key asset. We at legal collaborate with many functions and work particularly closely with the government relationship team, which consults with the regulatory officials and relays their feedback on policy issues. Policies often change as well, which means different people have different answers. So we constantly need to share resources and make the right decisions based on varying opinions.

MOFCOM conditionally cleared Walmart's 51% acquisition of Yihaodian in 2012. Can you describe how you overcame these challenges?

Antitrust approval had been obtained by the time I joined in 2012. But even after I got on board, we spent nearly three years complying with all the conditional merger approval requirements set by the Ministry of Commerce (MOFCOM).

We had to follow certain remedies, most specifically those related to running a “marketplace” business. Walmart, as an FIE, was restricted from operating an online marketplace in China. So we split the original Yihaodian internet business into different legal entities, and set up a separate website, shopping cart, order and payment process all in about one year's time. In other words, we cut up the original Yihaodian into three parts: a key “direct sales” business, a legal entity to run the “marketplace” business, and another entity to run the logistics and supply chain.

The Shanghai Free Trade Zone (SFTZ)'s establishment in September 2013 presented a great opportunity for Walmart to take back the marketplace business through a joint venture. The SFTZ allowed a foreign investment percentage of 55% in the industry at the time. After presenting the strategy to the Yihaodian board we followed this roadmap and set up a value-added telecommunications company in the SFTZ, which enabled us to operate an online marketplace once again within China's legal framework.

The Yihaodian legal team was given the CEO's award that year for our innovative regulatory solutions and successful navigation of conditional approval.

I believe this is a really good example of how the legal team adds value to the business. You solve a regulatory challenge—one that negatively impacts the corporate business strategy—in a creative and compliant way, one that is accepted by both the company and the government.

Can you explain how the MOFCOM conditions were lifted this year?

In June, MOFCOM's anti-monopoly bureau agreed to revoke the conditions and restrictions imposed on Walmart in 2012 on running a marketplace business. One of the major developments in de-regulation was that the Ministry of Industry and Information Technology (MIIT) removed the foreign cap requirements in e-commerce, permitting 100% foreign ownership in the marketplace sector last year.

But another reason was that we gained the authorities' trust. We worked so well with MOFCOM for three years, throughout the entire merger process and the SFTZ establishment. We educated each other on FDI and national treatment issues, and maintained solid communication channels and a high level of transparency, so that it was clear to both parties there were no anti-monopoly law issues. We provided whatever documents they requested, conducted face-to-face meetings with the MOFCOM officials and were cooperative and courteous during their onsite visits to Yihaodian.

When 100% foreign ownership in e-commerce was expanded nationwide in June 2015, did you view this as an opportunity?

We were, in fact, planning to shift to a wholly foreign-owned enterprise (WFOE) before the deal with JD landed on the table.

Describe the legal journey leading up to and during the JD acquisition.

My time at Yihaodian has been relatively unique in terms of viewing M&A from the perspective of either a Chinese company or MNC. In 2012, when I joined and Walmart took majority share, Yihaodian changed from a purely domestic company to an FIE. And in July 2015, when Walmart maximized its shareholding to 100%, Yihaodian became a WFOE under an MNC. Now, Yihaodian has become a purely Chinese company again after being sold to JD five months ago.

The deal with JD was an asset deal rather than an equity deal, meaning that the business, people, contracts, systems and so on, were and will be transferred from the previous relevant Walmart legal entities to JD. We're still in the transition stage.

I'm helping coordinate between Walmart and JD. We completed the first wave of 1,260 employee transfers without having a single labor dispute. 80% of them signed their new contracts and became JD employees, and around 20% accepted severance packages. I've noticed that JD is extremely experienced in handling integrations and employment matters, which is great because the business will generally be stable as long as people-related issues are resolved.

We have another wave of around 2,000 staff in relevant business functions and in the delivery and logistics divisions. E-commerce is very technology- and capital-intensive.

What else keeps you busy? What regulatory matters do you pay most attention to?

Until this deal broke out in June, we also spent a lot of time on compliance as part of the Walmart group. For instance, we established a separate and independent compliance function with guidance from Walmart headquarters, covering areas from not only anti-corruption and commercial bribery but also food safety and product quality control, work safety and anti-monopoly.

One of our senior counsels has been promoted to head of legal in the Yihaodian legal team. I'm now gradually stepping down, taking on more of a leader role for the transition task force, as I was appointed by Walmart to coordinate with JD in this deal.

By Katherine Jo

是什么令一号店法务团队与别不同？

我们的法务团队由十人组成，其中七人是律师。我们按公司战略来划分工作，无论日常工作是涉及合同审查、诉讼、项目管理还是并购，每名律师都要支持一到两个业务部门。这有别于大多数根据专业（如争议解决或交易）指定工作的公司内部法务团队。

我相信这个方法使我们的团队成员更加全面。因为我们是一支小团队，采取全面的一般性策略有助于确保团队成员的长期职业发展。

一号店是沃尔玛在中国的电子商务平台。沃尔玛今年六月将一号店出售给京东。我们团队正在与沃尔玛和京东的各个职能部门协调，确保顺利过渡。

相比您曾工作过的更传统、更国际化的企业，例如洲际酒店、家得宝和中外运敦豪，您认为在中国互联网企业就职有何不同？

我的职业发展道路颇为特别。大多数公司法律顾问在加入企业前，会先在律所工作几年。我在2000年做法务实习生，当时我的校友是北电网络亚洲的总法律顾问，我在他的建议下加入他的团队，接受了实战培训。

现在回顾这段经历，我认为行业知识是最重要的，无论是北电网络和爱立信的电信业，中外运敦豪的物流业，家得宝的传统零售业，洲际酒店的酒店服务业，还是如今一号店的电子商务业。发挥法律专长和技能是一回事，但对公司经营的特定行业有真正的理解至关重要。

我注意到的另一个差异是企业文化。过去16年中，我主要为外商投资企业工作，地区总法律顾问一般执行两条汇报线——一条向总部总法律顾问报告的实线，一条向地区负责人报告的虚线，我们需要平衡好两者之间的关系。

在中国本土企业，至少也需要同样谨慎地处理这种平衡。我目前直接向沃尔玛电子商务的总法律顾问报告，同时也向一号店CEO汇报。区域或本地总法律顾问的价值在于成为这两个重要人物之间的渠道，帮助他们做好知情判断和决策。

您在一号店的时间伴随着中国电子商务近年来迅速增长。您如何与之保持同步？

我在接近四年前加入沃尔玛，当时沃尔玛成为一号店的大股东（51%股权）。电子商务产业确实变化迅速。新的法律法规层出不穷，差不多每天都会有新的挑战。

这个行业的总法律顾问必须不断进步，熟悉持续变化的内部程序，具体是知道怎样设计和建设法务团队来适应和管理这种变化。

另外我感触很深的一点是，你需要用有限的资源做许多事。所以，了解怎样在公司内建立个人影响和怎样管理关系是另一个关键素质。作为法务人员，我们与许多职能部门协作，与政府关系团队的合作尤其密切，他们负责向监管官员咨询，并传递他们对政策问题的反馈。政策也是经常变化的，即不同的人会给出不同的答案。所以我们要经常分享资源，基于不同的观点作正确的决策。

商务部在2012年有条件地批准沃尔玛收购一号店51%的股权。您怎样克服了这些挑战？

我2012年入职时，沃尔玛已经通过了反垄断审批。但即使在我入职之后，我们还是花了近三年时间符合商务部制定的有条件兼并批准的各项要求。

我们必须实施特定的补救措施，多数与经营类“市场”业务有关。作为一家外商投资企业，沃尔玛在中国受网上市场经营限制。因此，我们将原先的一号店网上业务拆分为不同的法律实体，并在大约一年内建立了独立的网站、购物车、订单和支付程序。换言之，我们将原来的一号店一分为三：主要“直销”业务、经营“市场”的法律实体和另一个经营物流和供应链的实体。

上海自贸区在2013年9月的成立给沃尔玛带来宝贵机遇，使其能够通过合资公司来收回市场业务。上海自贸区当时允许行业内有55%的外商投资比例。在向一号店董事会提出战略后，我们遵循战略步骤，在上海自贸区建立了增值电信公司，使我们再次能够在中国法律框架内经营网上市场。

一号店法务团队当年凭借创新的监管解决方案和成功处理有条件审批而获得CEO嘉奖。

我认为这是法务团队如何为业务增值很好的例子。你用公司和政府都接受的具创造性且合规的方式，来解决对公司商业战略有负面影响的监管难题。

您能解释商务部是如何在今年取消条件的吗？

六月，商务部反垄断局同意取消2012年对沃尔玛经营市场业务的条件和限制。一个主要的去监管化发展是工信部去年取消了电子商务的最高外资比例，允许外资100%持股。

但另一个原因是我们取得了有关部门的信任。三年来，我们通过整个兼并程序和上海自贸区建设，与商务部保持良好合作。我们就外商直接投资和国民待遇问题相互切磋，保持穏固的沟通渠道和高透明度，使双方清楚不存在反垄断法问题。我们提供商务部要求的所有文件，与商务部官员做面对面会晤，积极配合他们来一号店现场访问。

2015年6月，外资全资拥有电子商务在全国范围内扩大，您认为这是一个机遇吗？

其实，我们已计划在公开与京东的交易前转为外商独资企业。

请介绍收购京东之前和期间的法律历程。

无论是从中国公司还是跨国企业的角度来看并购，我在一号店这段时间的经历都比较特别。2012年入职时，沃尔玛持有多数股权，一号店从一家完全的本土公司转变为外商投资企业。2015年7月，沃尔玛将持股扩大到100%，一号店成为跨国企业下的外商独资企业。如今，一号店在五个月前出售给了京东，又再次变成完全的中国本土企业。

与京东的交易是资产交易，而非股权交易，意味着业务、员工、合同、系统等都将从原先相关的沃尔玛法律实体转移到京东。我们目前仍处于过渡阶段。

我正在帮助协调沃尔玛与京东之间的关系。我们完成了第一轮1,260名员工的转移，没有一起劳动纠纷。其中80% 的员工签署了新合同，成为京东员工，约20%的员工接受了解聘协议。我注意到，京东在处理整合和劳动雇佣事项方面经验非常丰富，这一点非常有利，因为只要人事相关问题处理得当，一般可以保持业务稳定。

我们还有另一轮约2,000名员工的转移，他们分布在相关业务职能部门，以及配送和物流部门。电子商务是技术和资本需求很高的行业。

您最忙碌的工作内容是哪一项？哪些监管问题最受关注？

在今年六月公布这项交易前，作为沃尔玛集团的一部分，我们也为合规工作投入大量时间。例如，我们根据沃尔玛总部的指示建立了独立的合规部门，不仅涵盖反腐败和商业贿赂问题，还涉及食品安全、产品质量控制、劳动安全和反垄断。

我们的一位资深法律顾问已晋升为一号店法务团队的法务主管。沃尔玛委派我与京东协调交易的开展，所以我目前从原先岗位上逐渐退下来，更多地履行过渡工作小组负责人的角色。

（作者：赵修敏）

What makes Yihaodian's legal team special?

We have 10 people on our legal team, seven of whom are counsels. We divide the work based on company strategy, so that each counsel supports one or two business functions, regardless of whether the daily duties involve contract review, litigation, project management or M&A. This is in contrast to most in-house legal teams, which designate work based on specialty, such as dispute resolution or transactional.

I believe our method allows our team members to be more well-rounded. And since we're part of a small team, taking a generalist and comprehensive approach helps ensure long-term career development.

Yihaodian was the e-commerce platform for Walmart in China. Walmart sold Yihaodian to JD.com in June this year. Our team is coordinating with the various functions in both Walmart and JD to ensure a smooth transition.