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Economic Observer reporter Qian Yujuan More than 7 months after the formation of "Together with Hui", anchor Dong Yuhui bid farewell to Oriental Selection completely.

On July 25, Oriental Selection announced that Dong Yuhui has decided to no longer serve as an employee of the company and senior management of a merged affiliated entity of the company. The resignation is due to Dong Yuhui's career ambitions, commitment to his other careers and personal time arrangements, and is effective immediately.

After the announcement was issued, New Oriental founder and Oriental Selection CEO Yu Minhong and Dong Yuhui respectively issued open letters. In their respective letters, both parties expressed their recognition and gratitude to each other.

The storm caused by the "short essay", accompanied by the huge waves of Internet public opinion, eventually brought Dong Yuhui to another sea.

Some big-name internet celebrities and anchors often have fierce disputes when they break up with their original companies. For example, the MCN agency Wei Nian and its internet celebrity Li Ziqi, who has nearly 100 million fans, had a conflict at the beginning, which led to the suspension of video updates, and finally ended up in court. In comparison, the breakup of Dongfang Zhenxuan can be regarded as a breath of fresh air.

The breakup arrangement lasted nearly half a year

Leaving Oriental Selection was not a unilateral decision made by Dong Yuhui.

Since March this year, Yu Minhong and Dong Yuhui have met and discussed many times. In order to avoid business conflicts and public opinion disputes, the two have repeatedly negotiated and decided that after the end of Oriental Selection's 2024 fiscal year (May 31), Yu Minhong, as the chairman of the board of directors, will personally persuade the board of directors to agree to transfer 100% of the shares of Yuhui Xingxing to Dong Yuhui himself.

On the evening of July 25, Dong Yuhui posted a message saying that taking into account the current actual situation and development plan, after friendly consultation and unanimous decision of both parties, Yuhui Xingxing began to operate independently.

"Without New Oriental and Oriental Selection, I wouldn't be where I am today." Dong Yuhui expressed his gratitude to Yu Minhong, Sun Dongxu (former CEO of Oriental Selection) and Oriental Selection. He said that he joined New Oriental after graduating from university in 2015, and worked as a high school English teacher and teaching supervisor before joining New Oriental Online. After New Oriental Online transformed into Oriental Selection and started live streaming, he became an anchor.

Yu Minhong also affirmed and thanked Dong Yuhui for his value and contribution in his open letter. He said that without Dong Yuhui's explosion of Oriental Selection, there would be no rapid development of the company.

How are the benefits distributed?

Dong Yuhui’s significance to Oriental Selection is obvious to all, but his departure was not unexpected by the public. The focus is on how the benefits are distributed.

The money issue in this breakup mainly reflected two aspects: one was the equity transfer fee; the other was the profit distribution plan.

The announcement shows that Yu Minhong has made arrangements for the settlement price of Dong Yuhui's acquisition of Yuhui Tongxing. Dong Yuhui acquired 100% of the equity of Yuhui Tongxing for 76.5855 million yuan.

After Yu Minhong posted an open letter on his personal public account, he added an explanation in the comment section, "Yuhui holds the money needed to purchase the equity of Yuhui, and I have also arranged the payment in accordance with the rules of listed companies and the company's articles of association." This sentence means that I have arranged the money for Yuhui to purchase the company, and the company is a gift to Yuhui."

In terms of profit distribution, when Yuhui Tongxing was first established, Yu Minhong and the board of directors did not make any demands on its profits. Instead, they promised that Dong Yuhui's team could get a full guaranteed income. If Yuhui Tongxing made a profit, Dong Yuhui could continue to receive half of the company's net profit.

According to the announcement of Dongfang Zhenxuan, from its establishment on December 22, 2023 to June 30, 2024, Yuhui Xingxing achieved an unaudited pre-tax profit of approximately RMB 189 million and a net profit of approximately RMB 141 million. As of June 30, 2024, the net asset value of the unaudited accounts was approximately RMB 76.58546 million.

The final profit distribution plan was that in addition to the promised benefits that had already been paid, all remaining undistributed net profits of Huixingxing were also given to Dong Yuhui.

In addition, Yu Minhong expressed his support for the independence of Yihui Tongxing in an open letter, not only connecting with government resources and business opportunities. He mentioned that Yihui Tongxing needed a new office space, and everything from site search, transaction negotiation, to work area decoration was completed by New Oriental Asset's professional team.

In July this year, the Yuhuixingxing team moved to the Internet Finance Center in Zhongguancun, Beijing. The new work area covers an area of ​​approximately 2,100 square meters.

Dongfang Zhenxuan also stated in the announcement, "In order to maintain the normal operation of Yuhui Tongxing, the company will provide Yuhui Tongxing with its independently developed information system free of charge."

Are you all well?

Dong Yuhui said in a long article: "With Huixing, we will also be able to maintain the company's operations and expenses such as rent and employee wages for a period of time in the future."

On the other hand, from the "small composition" incident at the end of last year to Yu Minhong's remark this year that it "did a mess", its live broadcast room suffered from fan loss and sales decline due to the loss of super head anchor IP Dong Yuhui, and its stock price has fallen frequently.

However, at that time, the popularity and sales of Huitongxing continued to rise, and it was still part of Oriental Selection, further making up for Oriental Selection's performance.

Now that Dong Yuhui has left, the independent Yuhui Tongxing has become a direct competitor to Dongfang Zhenxuan, and the market is more concerned about where the latter will go.

The share price of Oriental Selection (01797.HK) unexpectedly rose, closing at HK$12.4 per share on July 25, up 4.2%.

Yu Minhong released a message in the open letter that Oriental Selection and New Oriental Group will further cooperate closely in the future to form a more complete business cooperation model. At the same time, as the major shareholder of Oriental Selection, New Oriental will continue to increase shareholder value through stock repurchases and other means.

For Oriental Selection, in addition to maintaining stability and boosting shareholder and market confidence, the future development of the live broadcast room is also particularly noteworthy.

Regarding the business development of Oriental Selection, Yu Minhong also gave a brief explanation in the open letter. In addition to designing business plans, "I will definitely redouble my efforts and devote more energy to the operation and management of Oriental Selection to repay everyone and strive to give everyone an Oriental Selection that develops better and better."

Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, focused on quantifiable data. He listed the sales of the two major live broadcast rooms, Yuhui Xingxing and Dongfang Zhenxuan, in the first four months of this year. The former was 932 million yuan, 411 million yuan, 620 million yuan, and 538 million yuan, while the latter was 639 million yuan, 269 million yuan, 329 million yuan, and 242 million yuan.

"This does not include other live broadcast rooms of Dongfang Zhenxuan." Zhuang Shuai believes that the reason why Yuhuixingxing can achieve such high sales is largely related to the supply chain support provided by Dongfang Zhenxuan. Live broadcast e-commerce is composed of anchors and supply chains. When the news of Yuhuixingxing's independence was released, he did not see Dongfang Zhenxuan mentioning in the announcement that it would provide supply chain support for Yuhuixingxing.

He believes that Yuhuitongxing also needs to solve a key problem - supply chain quality control management. If it does not build its own supply chain system and continues to cooperate with Dongfang Zhenxuan, it will inevitably face a reality: Dongfang Zhenxuan will definitely give priority to supplying its own matrix live broadcast room, and then Yuhuitongxing with which it maintains a cooperative relationship.

Copyright Statement: The above content is the original work of the Economic Observer, and the copyright belongs to the Economic Observer. Reprinting or mirroring is strictly prohibited without the authorization of the Economic Observer, otherwise the legal liability of the relevant behavior subject will be pursued in accordance with the law. For copyright cooperation, please call: [010-60910566-1260].

Qian Yujuan, reporter of Economic Observer

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