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Produced by Huxiu Business Consumption Group

Author: Miao Zhengqing

Title image｜Visual China

"Yu Minhong wants a respectable job." A person familiar with Oriental Selection revealed to Huxiu on the evening of July 25.

According to exclusive information obtained by the above-mentioned person, Oriental Selection not only exempted Dong Yuhui from liquidated damages and non-compete agreements, but also provided Dong Yuhui with venues, personnel, and "a system based on pallet and supply chain management." "From the perspective of supply chain, for example, the supply chain personnel of Dong Yuhui's new team are currently transferred from Oriental Selection. If Huixingxing and Oriental Selection both live broadcast the same product, there will be no breach of contract."

Everyone knows about this. On the evening of July 25, Oriental Selection issued an announcement on the Hong Kong Stock Exchange: 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, and it will take effect on July 25. So far, the separation and reunion drama between Dong Yuhui and Oriental Selection, which has been "troubled" for more than a year, has come to an end.According to the agreement between the two parties, New Oriental will "sell" the company Yuhui Tongxing to Dong Yuhui personally, and the funds for Dong Yuhui to acquire Yuhui Tongxing come from gifts from Yu Minhong and the company.

That night, both Dong Yuhui and Yu Minhong issued statements, and Yu Minhong even released two consecutive statements on the Douyin channel.

The core reason for "Old Yu"'s continuous statements is that the earliest "sale" news caused misunderstandings from the outside world - some fans mistakenly believed that Dong Yuhui had worked hard for Dongfang Selection for a long time and finally had to "pay out of his own pocket" to buy the company. Yu Minhong finally made it clear in an open letter: "In addition to paying all the promised benefits, I have asked the board of directors and the compensation committee and obtained their consent.All the net profits from Huixingxing will be awarded to Yuhui.At the same time, Yuhui holds the equity purchase funds required by Yuhui Xingtong, and I have also arranged payment in accordance with the rules of listed companies and the company's articles of association. "In order to set the record straight, Yu Minhong also commented on Douyin:"I arranged the money for Yuhui to buy the company. The company is a gift to Yuhui."

According to information obtained by Huxiu, since the second quarter of 2023, Dong Yuhui's income structure at Dongfang Zhenxuan has gradually evolved into "guaranteed income + commission" and some additional gifts from senior executives such as Yu Minhong. An insider revealed: "All the net profits since the establishment of Youhui Xingxing, part of which has been given to Dong Yuhui through the commission model, and the other part has been given to Dong Yuhui through the current company transfer, new gifts, etc. In short, the net profit of Youhui Xingxing was rewarded to Dong Yuhui."

It is understood that the two parties had the idea of ​​breaking up in March 2024.

At that time, Yu Minhong met with Dong Yuhui several times and discussed the model of subsequent cooperation. After many exchanges, Yu Minhong and Dong Yuhui reached a consensus to allow Dong Yuhui to be independent, but due to the relevant requirements of the listed company, both parties agreed to formally propose to the board of directors on May 31, the end of the fiscal year. According to people familiar with the matter, after more than two months of process, the two parties finally "broke up" in July.

On the evening of July 25, both Dongfang Zhenxuan and Youhui Xingxing conducted live broadcasts. This was also the first time the two faced each other in public after their "breakup": judging from the data, Youhui Xingxing was better than Dongfang Zhenxuan, and judging from the rankings, audience and other data, Youhui Xingxing was in an advantageous position.

A senior Internet analyst told Huxiu: "After Dong Yuhui and Dongfang Zhenxuan broke up, their evolutionary paths will be very different. At present, Dongfang Zhenxuan has gotten rid of its reliance on super IPs and will continue to evolve towards the online Sam's Club model; Dong Yuhui's Yuhui Xingxing will evolve towards an MCN based on the model of sharing commissions between anchors."

However, the challenges facing both are not small. From Dong Yuhui's perspective, after becoming independent, he not only needs to face a series of challenges in team management and supply chain management, but also needs to face the common problems faced by all live streaming MCNs - at a time when the overall e-commerce market is affected by consumer stratification and is feeling cold, brands' attitudes towards super anchors are becoming ambiguous, and the fast-growing live streaming industry is showing signs of fatigue; and for Dongfang Zhenxuan, after losing its super IP, whether it can truly become an online Sam's Club remains to be verified, and whether Yu Minhong can truly convince investors to accept the fact that "it is difficult to keep a grown-up child" also remains to be seen.

"Judging from the feedback from netizens, both parties were happy on the evening of July 25. Fans of Dong Yuhui and fans of Oriental Selection and Yu Minhong were all happy, which was rare." complained an Internet observer.

Why did Yu Minhong let go?

Someone familiar with Yu Minhong and Oriental Selection pointed out to Huxiu that there were three reasons behind Yu Minhong's decision to break up.

First of all, super IP Dong Yuhui and Yuhui Xingxing did not really bring profits to Oriental Selection.

An insider revealed that after the public opinion incident between Dong Yuhui and Oriental Selection fermented in 2023, Oriental Selection adjusted Dong Yuhui's income structure and changed it to a guaranteed minimum + commission. The guaranteed minimum is generally in the form of cash and stocks; while the commission is a profit-sharing mechanism for anchors commonly used by many MCN agencies. After the establishment of Yihuixingxing in the fourth quarter of 2023, half of Yihuixingxing's net profit was given to Dong Yuhui according to the agreement. The above-mentioned insider revealed that "since the establishment of Yihuixingxing, Dong Yuhui's income from net profit sharing should not be less than a small target."

Another person told Huxiu that the cash portion of the guarantee given to Dong Yuhui by Oriental Selection in 2023 is quite considerable. "Since the readjustment of the income structure in 2023, the income Dong Yuhui has received from Yuhui Tongxing has accounted for a relatively high proportion of Yuhui Tongxing's profits. For Oriental Selection, Yuhui Tongxing has not actually made much money for the company."

Secondly, Yu Minhong felt the pressure from online public opinion from multiple dimensions.

A person familiar with Oriental Selection revealed that Yu Minhong would initially see some comments criticizing him in the comments during Dong Yuhui's live broadcasts or in the live broadcast room with Hui Xingxing, often with labels such as "stingy". Later, he would see some negative information during Oriental Selection and even when Yu Minhong himself was live streaming.

A person who has left the team described a detail to Huxiu: At that time, Yu Minhong arranged a 1,000-square-meter live broadcast room for Dong Yuhui's team. This live broadcast room is actually also the live broadcast venue for other anchors selected by Oriental Selection. Since it is difficult to actually operate kitchen utensils such as stoves in an office building, the company built this 1,000-square-meter venue to solve this need. Unexpectedly, in Dong Yuhui's live broadcast room, some people began to complain that the venue was small or that the venue could not be used. "In fact, this is shared by all teams in the company. It is not deliberately arranged for a certain team, but it was led by the rhythm."

Another key reason comes from the positioning and stock price of Oriental Selection. People close to Oriental Selection said that when Dong Yuhui became the super IP of Oriental Selection, the capital circle's evaluation of Oriental Selection often used "making friends" as the "target"-MCN that relies on super IP. But Yu Minhong has repeatedly stated that he does not want Oriental Selection to become an MCN. Judging from the stock price, after Oriental Selection reached a high of 75 yuan per share in January 2023, the stock price began to fall. Although it once rose back to 46 yuan per share in August 2023, it began to decline continuously since then. "Dong Yuhui's dependence is seen as one of the sources of uncertainty for this company." The above-mentioned Internet observer said.

Yu Minhong's personality is also considered one of the factors in this "breakup". "Today's Yu Minhong is more concerned about respectability. Over the past year or so, he didn't want to explain a lot in a high-profile manner, or he may not be very good at explaining things in today's traffic era."

Dong Yuhui's test may have just begun

Compared with other anchor MCNs, Dong Yuhui already has an established team: Huxiu learned that after this "breakup", Dong Yuhui obtained a complete team, supply chain resources, venues and systems.

But the first problem he faced was: where to go and what would be the future positioning of Yuhuixingxing?

The first option is to find a super internet celebrity and build a leading MCN agency for live streaming and selling goods based on this.

If Dong Yuhui is content to be a super internet celebrity and super IP, and to incubate more IPs with the MCN model to increase traffic and bring goods, then he can refer to Li Jiaqi, Simba, or Jiao Ge Pengyou at a certain stage. However, these peers have been facing new evolutionary challenges in the past two years - on the one hand, they have to continue to compete with the platform's ever-changing traffic strategies, and on the other hand, they have to face the changing trends of consumers in consumption stratification. The deeper challenge is that when many brands start to do brand live broadcasts and start to turn to KOC and private domains, the appeal of super anchors to brands tends to waver.

A deeper challenge is the category. Taking Dong Yuhui’s live broadcasts over the past six months as an example, his most common categories are snacks, beverages, fast-moving consumer goods, books, fresh food, and cultural and tourism projects. It is worth noting that among these categories, Dong Yuhui’s real "differentiation" advantage is reflected in categories such as books and cultural travel. But a fatal problem is that books and cultural travel are not representatives of high profit margins and high monetization capabilities in the entire live streaming market. Taking book live broadcasts as an example, on platforms such as Douyin and Kuaishou, this category is actually hard to call a top super category, and was even once listed as an emerging vertical category.

In other words, Dong Yuhui, who is "flying solo", needs to prove his differentiated value, and this value urgently needs to be expanded to more categories. In fact, from the actions of Huixingxing in the past six months, we can already see the clues: after the separation of Huixingxing, Dong Yuhui's frequency of bringing goods and the richness of the categories of goods he brought have increased.

The second option is corporatization, or evolving from an IP into a company, and taking the path of financing and listing. The biggest challenge for Dong Yuhui on this path is that, as of now, there are only a handful of companies in China that have successfully listed from live streaming. And most of these listed companies are still "the shell of a company, the core of an MCN." But it is undeniable that there is room for imagination for Dong Yuhui on the corporate path. For example, his ability to increase traffic for cultural content products may evolve into some new forms of content products and give the outside world more room for imagination.

But this path requires Dong Yuhui himself to transform. He not only needs to become the traffic engine supporting the company, but also needs to play the role of a CEO and a helmsman.

No matter which of the above choices he makes, it will be hard for Dong Yuhui to return to the Dong Yuhui he once was: the Dong Yuhui who could sell goods in front of the camera while describing his dream of being an intellectual. Because he at least needs to start thinking about how to support his hundreds of employees.

The market's attitude towards super IPs is also worth pondering. The anchors of several major platforms have been facing "cutting down" in the past two years: the platforms need to consider the balance between super anchors and small and medium anchors. When the platforms hope to get brands to participate in brand-owned broadcasts, this "cutting down" intention is more obvious - after all, in an era of gradually decentralized traffic, it is better to bypass super anchors and directly collect traffic fees than "middlemen make a profit from the price difference."

This means that the road ahead for Dong Yuhui is not easy.

On July 25, Dong Yuhui publicly expressed his gratitude to Yu Minhong and said that he still hopes to drink and chat with Yu Minhong in the future after "becoming independent". He also mentioned that his independence is like a ship sailing out of the harbor, no longer having the shelter of the harbor.

For Oriental Selection, Dong Yuhui, the drama is over.

For Dong Yuhui himself, an unknown plot is unfolding.

Perhaps, in a few years, Dong Yuhui and Yu Minhong will meet and smile at each other. But at the moment, they both firmly believe that "it will be better if they leave each other."