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Reporter of China Business Network: Yang Xinyi and Zhao Wenqi Editor of China Business Network: Zhang Haini

Image source: Visual China-VCG111440949709

Seven months after the "short essay" incident, Yu Minhong, the helmsman of Oriental Selection, and "top anchor" Dong Yuhui published another "short essay" about their relationship, but this time it was no longer a proof in the face of outside doubts, but a complete farewell.

On the evening of July 25, Oriental Selection (HK01797, share price HK$12.400, market value HK$12.788 billion) announced on the Hong Kong Stock Exchange that after friendly discussions with the company, Dong Yuhui has decided to no longer serve as an employee of the company and a senior management of a merged affiliated entity of the company.

The announcement showed that Dong Yuhui agreed to purchase 100% of the shares of "Yihui Xingxing" for RMB 76.5855 million. Yu Minhong also explained the source of the money in his personal Douyin account: "I arranged the money for Yuhui to purchase the company, and the company was given to Yuhui."

“Fame brings trouble.” Ever since this New Oriental teacher who looked a bit like a Terracotta Warrior became popular for selling products in both Chinese and English two years ago, he and the live broadcast room behind him have always been a success or failure because of traffic.

With sales performance setting new records again and again, Dong Yuhui has gradually become the "golden signboard" of Oriental Selection. However, his "mother-in-law" is increasingly worried that he will "overshadow his boss."

The worries came true. The "small composition" incident at the end of last year caused a lot of controversy. In the end, Yu Minhong "shed tears and executed Ma Su", dismissed the former CEO of Oriental Selection, Sun Dongxu, and let Dong Yuhui set up his own business.

Even starting a new business could not hide its edge. As soon as it was established, "Traveling with Hui" often surpassed the performance of Dongfang Zhenxuan. Along with the performance, there was also pressure. Dong Yuhui repeatedly said in public that he was "under great pressure" and "very reluctant to sell goods."

A reporter from the Daily Economic News learned from an industry insider close to "Yihui Tongxing" in early July that "because of different factions within the company", Dongfang Zhenxuan and "Yihui Tongxing" had long since "broken up", and the two teams have always been completely independent.

Finally, this summer, the star anchor chose to resign, and Yu Minhong, who nurtured him, could only help him get started and send him on his way.

"Leaving the port's protection, 'Walking with Hui' will sail alone to the vast sea from today (July 25)." In Dong Yuhui's farewell "small essay", the "Walking with Hui" that will soon be independently operated is a ship leaving the port. The boat is swaying, not knowing what the road ahead will be, but without the port of the ship, it will probably be difficult to adapt to the loneliness.

Dong Yuhui resigned, Yu Minhong gave the company more than 76 million yuan

"An earth-shattering event happened today, congratulations to Yuhui!" After the announcement of Dong Yuhui's resignation, the message area of ​​the "Walk with Hui" live broadcast room was full of words such as "congratulations" and "blessings". At 20:30 on July 25, the live broadcast room with more than 100,000 people was still filled with congratulations and online gifts.

Image source: Screenshot from the live broadcast room

On the evening of the same day (July 25), Oriental Selection announced on the Hong Kong Stock Exchange 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 departure was due to Dong Yuhui's career ambitions, commitment to his other careers and personal time arrangements.

Image source: Announcement screenshot

In the announcement, Oriental Selection stated that Dong Yuhui agreed to acquire 100% of the equity of "Yuhui Xingxing" for RMB 76.5855 million.

An e-commerce industry insider believes that this price is "too cheap." He calculated the GMV (gross merchandise volume) of 398 million yuan in the first half of July on the third-party platform "Yihui Xingtong" and the profit margin in the latest financial report of Dongfang Zhenxuan, and concluded that the annual profit of "Yihui Xingtong" is about 800 million yuan.

However, the above data are only estimates, and the difference from the actual data is unknown.

Pan Helin, a well-known economist and member of the Information and Communications Economics Expert Committee of the Ministry of Industry and Information Technology, told the reporter of "Daily Economic News" that the pricing is not based on net assets, but on the discounted estimated future cash flows. "If Dong Yuhui can maintain his popularity in the future, then this pricing is reasonable. Of course, whether Dong Yuhui can maintain his popularity, or even whether he will continue to be a live-streaming host, is not certain now."

"Mr. Yu also arranged the settlement of the equity purchase money required to acquire 'Traveling with Youhui' in a manner consistent with the rules and articles of association of listed companies." Regarding this sentence in Dong Yuhui's "small essay", Yu Minhong specially issued a second article to further explain: "This sentence means that I arranged the money for Yuhui to purchase the company, and the company is a gift to Yuhui."

Yu Minhong also stated that all the income and profits obtained by "With Hui Xingtong" since its establishment were not taken by Oriental Selection, and all were left to Dong Yuhui and "With Hui Xingtong" to support their continued development.

Image source: Screenshot of @老虞闲话 WeChat public account message

Yu Minhong's generosity was confirmed by Dong Yuhui's statement: "'Traveling with Hui' 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."

E-commerce analyst Lu Zhenwang speculated in an interview with a reporter from the "Daily Economic News" that Dong Yuhui did invest in the company "With Hui Xing Tong", including attracting traffic and fans, arranging and decorating the newly relocated office, etc., but Yu Minhong said that all the profits of "With Hui Xing Tong" were given to Dong Yuhui, "maybe he already had money in his account, and (Yu Minhong) only spent part of it to pay the acquisition price."

To the onlookers, Dong Yuhui's decision came as a surprise, especially as "Traveling with Hui" had just moved to the new work area a week ago.

On July 21, during the first broadcast after the relocation, Dong Yuhui specifically thanked Yu Minhong for his support for the team. At that time, this was interpreted as an example of dispelling rumors of "going solo": "After I decided to find a new workstation, Mr. Yu said that he would fully support me and help me do these things, so I am very grateful to him."

This live broadcast firmly topped the Douyin live broadcast sales list that night. According to data from the third-party platform Feigua, the live broadcast helped the Douyin account "Traveling with Hui" gain 167,900 followers overnight, setting a new record for the number of followers gained in a single day in the past month.

Why did Dong Yuhui, who has huge popularity, no longer want to appear in Oriental Selection?

For Oriental Selection, Dong Yuhui is a "lucky general".

At the beginning, Dongfang Zhenxuan did not achieve the expected results. However, Dong Yuhui's humorous and witty live broadcast style made Dongfang Zhenxuan a hit, and led Dongfang Zhenxuan to the top of the live broadcast sales list.

FeiGua data shows that in the first four months of this year, the sales of the "Yuhui Xingxing" live broadcast room were 932 million yuan, 411 million yuan, 620 million yuan and 538 million yuan respectively; the sales of the Oriental Selection live broadcast room were 639 million yuan, 269 million yuan, 329 million yuan and 242 million yuan respectively during the same period.

This also means that from its inception, popularity to independent operation, the traffic of Oriental Selection mainly comes from Dong Yuhui and his team. With such "huge wealth", why did Yu Minhong "think twice" and still choose not to do it?

Yu Minhong gave the answer in his latest letter to shareholders.

"What's complicated is that as a company based on the Internet, the power of public opinion often affects the company's development. Although there has been no obstacle to communication between me and Yuhui so far, the complex public opinion disputes, coupled with the guidance and rumors of a few forces with ulterior motives, have directly led to the rift between Oriental Selection and 'Walking with Yuhui'." Yu Minhong generously admitted in his letter to shareholders that there has always been a rift and contradiction between Oriental Selection and "Walking with Yuhui."

It can be seen that since the beginning of this year, Oriental Selection has repeatedly been caught in the whirlpool of public opinion. Topics such as "Oriental Selection apologized again and again" and "Is Oriental Selection an apology company?" have been on the hot search many times.

In June this year, Dong Yuhui said in an outdoor radio program: "I am very resistant to selling things. To be honest, I still don't enjoy this job to this day." Because of this remark, the share price of Oriental Selection once fell by more than 10%, and accumulated a decline of 27.17% in 7 trading days.

On May 31, when Wumart founder Zhang Wen Zhong asked Yu Minhong for advice on live streaming sales in the live broadcast room, Yu Minhong bluntly said: "Oriental Selection is in a mess now, and I don't have any ability to give you any advice." Public opinion was in an uproar for a while. On June 3, Oriental Selection's share price fell from HK$18.6 per share to HK$16.52 per share, a drop of 9.92%; then it fell for three consecutive days, with a cumulative decline of 19.57%.

Since June, Oriental Selection has also caused controversy because of incidents such as a host using an inappropriate metaphor to describe the terrain of Guizhou and another host posting a Weibo in Guizhou mocking the long legs of spiders. Yu Minhong was directly "scolded" to the point of closing the Douyin comments.

Yu Minhong said in a letter to shareholders that this public opinion environment has led to huge uncertainty in the development of both companies. The share price of Dongfang Zhenxuan has fluctuated violently due to external influences, and the company's credibility and reputation have dropped sharply. "It will not only put the company's operations in trouble, but also cause harm to the long-term development of individuals and the company." Yu Minhong said bluntly.

This may also be the key reason why Yu Minhong took the drastic measure.

Repeated public opinion storms have also directly affected the stock price of Oriental Selection. As of now, the market value of Oriental Selection is about HK$12.8 billion, which has shrunk by nearly 40% from HK$18.9 billion at the end of May and has fallen by more than 60% from early December last year.

Oriental Selection Weekly K-line Chart Image Source: Tongdaxin

However, in Lu Zhenwang's opinion, Dong Yuhui's resignation does not mean all is well for Oriental Selection. "The GMV of 'With Hui Xing' accounts for half of the entire Oriental Selection. Dong Yuhui's resignation is equivalent to losing half of this half. From the perspective of the financial report, it is a huge negative impact, at least for the time being. It is hard to say whether it can get better in the future, because after all, Dong Yuhui took away half of the users."

How far can Dong Yuhui go without Oriental Selection?

In fact, the conflict between Dong Yuhui and Oriental Selection had already erupted in the "Little Composition" incident last year. Although Dong Yuhui later became a senior partner of Oriental Selection, the internal problems of Oriental Selection were not resolved.

"They ('Eastern Selection' and 'Traveling with the Glory') are equivalent to two companies, operating completely independently." In early July, a reporter from the "Daily Economic News" learned from an industry insider close to "Traveling with the Glory" that the "Traveling with the Glory" team and Eastern Selection had previously "separated" and "Old Yu (Yu Minhong) is also very depressed because (both sides) are his people."

In Lu Zhenwang's view, it was an inevitable result for Dong Yuhui and Dongfang Zhenxuan to reach this point. Although Yu Minhong retained Dong Yuhui by giving him options and upgrading him to a senior partner after the "Little Composition" incident, conflicts had already emerged.

"The options given at that time were based on the market value of Oriental Selection of HK$30 billion. Now (the market value of Oriental Selection) is only more than HK$10 billion, and the value of the options is only 1/3 of what it was then. For Dong Yonghui personally, his salary has shrunk by 2/3. In addition, Dong Yuhui was originally quite stubborn and may have wanted to do it himself, as well as some factors of the team. Under the influence of multiple factors, Dong Yuhui eventually resigned." Lu Zhenwang analyzed.

Although he is a top star in Oriental Selection, Dong Yuhui has publicly stated more than once that he does not like the profession of anchor. Now that he has really left Oriental Selection, how far can Dong Yuhui go?

Pan Helin told the reporter of Daily Economic News that Dongfang Zhenxuan now needs to cultivate more IPs to replace the traffic loss after Dong Yuhui left, "This is quite a big pressure for Dongfang Zhenxuan." Dong Yuhui's development ambitions depend on his own.

"In fact, Dong Yuhui can still maintain his traffic by changing the platform, but judging from Dong Yuhui's public statements on his personal career plan, Dong Yuhui may not like the live streaming e-commerce industry very much, so his next plan is actually difficult to predict. It depends on his personal choice." Pan Helin analyzed.

As early as last year when Dong Yuhui's program was suspended due to the "Small Composition" incident, there were rumors that many teams wanted to "poach" Dong Yuhui, and the industry was also discussing whether Dong Yuhui would still have investment value after becoming independent.

Long Lu (pseudonym), managing partner and CEO of a well-known venture capital firm, once told a reporter from the Daily Economic News: "Anyone who starts a business is subject to a long-term comprehensive assessment of their ability. It depends on what kind of team they have built, what collaborations they have, who invested in them, etc. This is a series of overall issues, not something that can be solved by just one person."

Some investors also said that if there is a chance, they would definitely be willing to contact the top anchors. Another well-known investor, Zhou Ge (pseudonym), also told reporters that, like any entrepreneurial process, the income of key team members must match their contributions, and there must be a reasonable reward mechanism, otherwise it will not develop for a long time.

After Dong Yuhui left, what will happen to Oriental Selection next?

A senior insider in the live broadcast industry told the reporter of "Daily Economic News" that Oriental Selection became famous with the help of the personal ability of the anchor. After "getting rid of Dong Yuhui", it must put a lot of effort into operations, including how to select products, use lucky bags or welfare products to extend users' online time, control the rhythm of live broadcasts, and improve conversion rates.

"The future is unpredictable, so we have to go all out." Dong Yuhui said on his personal social media account. The two people who once made each other successful finally parted ways. The past grievances and hatreds were all turned over at this moment. The new story after parting ways is the biggest highlight of the future.