(Yicai) Sept. 17 -- JD.Com will not squeeze the profit margins of those in the hospitality industry or damage the ecosystem via a price war after launching its hotel and tourism services business, according to the founder and chairman of the Chinese online retail and logistics giant.

"We don't want to drag the hospitality industry into a price war, forcing practitioners to further lower service prices and choose between e-commerce platforms," Richard Liu said at a company event late yesterday. "Because once profit margins are squeezed, the entire industry ecosystem will be damaged."

JD.Com will launch a new hotel development model before the end of this year to promote the development of the entire sector, according to Liu.

All JD businesses revolve around the "supply chain," Liu noted. The vast supply chain behind the hospitality and catering industries is disorganized and costly, so the Beijing-based firm hopes to introduce a new business model to provide high-quality supply chain services for hotel clients, optimize supply chain expenses, and help reduce operating costs in the sector, he pointed out.

Drawing an analogy with the market situation when JD.Com entered the home appliance industry in 2006, Liu pointed out that almost all investors opposed the move and highlighted that Amazon.Com had failed to sell such products online in the United States.

But the gross profit margin of home appliance retailers at that time was as high as 18 percent, while the net profit margin of relevant brands was only about 1 percent, Liu said, noting that this was abnormal and provided an opportunity for JD.Com to enter the industry.

Regarding profits in the hospitality industry, if JD.Com can earn CNY1 (14 US cents), it will only take 70 percent and leave the rest for its partners, Liu noted. Half of the company's profit will go to its workers and half will be used for sustained development, he added.

Whether it is the food delivery, hospitality, or tourism industry, participants must oppose competition that causes everyone in the supply chain to make no money and e-commerce platforms take away all the profits, he pointed out. JD.Com hopes to see a situation where competition is about who has a better product, reasonable prices, and safety, so e-commerce sites should exercise self-restraint to achieve a win-win situation, he noted.

After entering the food delivery industry in February, JD.Com announced in June that it would expand its business scope and enter the hotel and tourism market, providing supply chain services for the sector and helping optimize costs.

Editors: Tang Shihua, Martin Kadiev