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Interface News reporter | Cha Qinjun
Jiemian News Editor | Wen Shuqi

On July 26, after Dong Yuhui resigned from Oriental Selection (01797.HK), New Oriental (NYSE: EDU) founder Yu Minhong responded to the whole process of the "breakup" at the Oriental Selection shareholder communication meeting.

He expressed "deep regret" over the spin-off of "Yuhui Xingxing", but "this result is indeed inevitable and even beneficial to the company's development."

Yu Minhong recalled that the first live broadcast of Oriental Selection began on December 28, 2021, and was broadcast on his personal public account "Lao Yu Xianhua". The reason was that after the "double reduction", New Oriental's online education business was almost wiped out.

After team discussions and Yu Minhong's personal proposal, the company positioned itself as "selling agricultural products, explaining culture, and promoting knowledge". In June 2022, Dong Yuhui became popular as a bilingual knowledge anchor for Dongfang Zhenxuan, and the company was on the rise, with its stock price reaching a historical high.

It was not until the end of last year when the "Small Composition Incident" broke out, exposing the team's internal management problems, that Yu Minhong realized the seriousness of the matter. After quickly "putting out the fire", he personally took on the position of CEO. "Although it is a bit difficult for me to take this position at this age, I am still a relatively energetic person."

At the same time, after realizing Dong Yuhui's value as a star anchor, Yu Minhong said, "I put all my efforts into giving Yuhui a good package after the board of directors authorized me to keep him."

At Yu Minhong's suggestion, Dongfang Zhenxuan established Yuhuixingxing and registered Dong Yuhui as the sole executive director and general manager. "Yuhui is 100% in charge of the work."

Some shareholders also asked why part of the company’s shares were not given to Dong Yuhui himself during registration?

Yu Minhong responded that as a listed company, the equity distribution of Dongfang Zhenxuan is very attractive to employees. If an individual already holds a share in the company, it is impossible to get shares in the listed company. At the same time, the company predicts that after the establishment of Huitongxing, the two platforms will work together, GMV and profits will increase, and the value of the company's shares will increase.

Under this premise, "holding company shares is more conducive to personal development or benefits than holding subsidiary shares." Yu Minhong said that this is the main reason why Huixingxing was finally registered as 100% held by Oriental Selection.

According to him, Yuhui Tongxing was registered independently, and it took only 15 days from the concept to the first sale of goods, including office decoration, personnel deployment, and the registered capital being in place.

In order to allow Dong Yuhui to develop with peace of mind, Yu Minhong said that he did not have any performance requirements for Dong Yuhui, "You can sell goods if you want to, and it doesn't matter if you don't want to." He can do cultural communication, book introduction, writer interviews, cultural tourism, etc.

Yu Minhong's initial idea was that the two platforms, Oriental Selection and Yuhuixingxing, would not interfere with each other, but would support each other in the background, and everyone would get satisfactory treatment and income. "It should be a good model."

But things did not turn out as planned.

The external environment interference and internal conflicts have caused the fans of the two platforms to form a confrontation. "Dongfang Zhenxuan and Yuhui Xingxing have been facing a strong storm on the Internet in the past six months."

Yu Minhong tried to mediate the issues between the two sides and please fans on both sides. "I often appeared on TV, sometimes on "Traveling with the Famous", sometimes on "Eastern Selection", but I didn't keep things even, and in the end, the fire burned on my head."

He said that in the past three months, his image has suffered huge damage due to online violence, with conspiracy, attacks, and abuse of employees. "It seems that I have become the most vicious capitalist and boss in the world. At my age, I don't care about outside comments, but these have indeed affected the company's business development."

The mentality of almost everyone, including the anchor team and managers selected by Oriental, was affected as a result, and two problems arose: first, the status of the company's internal personnel was unstable; second, the small mistakes made by the anchors would trigger cyber attacks, further harming their physical and mental health and bringing uncertainty to the company's development.

This uncertainty is also reflected in the share price of Dongfang Zhenxuan. Since reaching a peak of 75.55 yuan on January 26, 2023, its share price has been fluctuating and falling. The "Little Composition" incident and Dong Yuhui's resignation have dealt a heavy blow. Now the share price is less than ten yuan, with a single-day drop of 23.39% on July 26.

"The stock price should have risen, but it fell instead. This is the stock market's reaction to the uncertainty of Oriental Selection. Any action taken by the company, including my personal one, is in a dilemma. A series of strategic arrangements cannot be implemented, and once any action is taken, it will be met with a strong response." Yu Minhong said that even if he issued a notice, appeared in front of the camera, or posted a video while traveling personally, there would be people who would come to scold him.

Oriental Selection’s GMV is increasing, but its stock price is becoming increasingly unstable.

At the end of February and the beginning of March this year, Yu Minhong found Dong Yuhui and discussed this issue continuously - should Yu Hui Xingxing be independent?

On the one hand, he believes that this is a very regrettable behavior. In a sense, Yuhui is the core asset of the company, and Dong Yuhui is also a rare and outstanding talent.

But on the other hand, "facing internal fighting, even irreconcilability, and external forces suppressing internal forces, I feel that if we don't separate, we may strangle each other in the future." Yu Minhong said that it seems that not considering independence is not an option. After communicating with the company's core managers and directors, he decided to start the independence process of Yuhui Xingxing at the end of the fiscal year, which is May 31.

"Yihuixingtong exists because of Yuhui. Without Yuhui, (it) is worthless in my mind. If Yuhui leaves, we will not be able to continue meaningful operations if we keep the company, because in the era of traffic, added value lies in people," said Yu Minhong.

"Our best attitude is to let Yuhui take the company away to avoid disputes. There is no conflict of interest behind it, and we will not invest in Yuhui."

Judging from this outcome, Yu Minhong believes that at least the problems between the two companies, internal conflicts, and the expansion of external forces have been solved once and for all, and the environment will be cleaner. For Dongfang Selection, it can also carry out development layout and reform in a big way without worrying about imbalance between the two sides or external public opinion pressure.

In addition, some shareholders also questioned whether it was because Dong Yuhui’s profits were too little that led to his independence from Huitongxing?

Yu Minhong said that the specific data cannot be disclosed, but the treatment approved by the board of directors is reasonable and generous. Yuhuitongxing has a net profit of 140 million yuan in its account, which is left after distributing Yuhui's income. According to the agreement, Dong Yuhui distributed 50%, leaving 140 million yuan. In addition, he also has a good monthly salary and equity granted by the company. "Yuhui has always been grateful for this and thinks the treatment is very good."

Talking about their relationship, Yu Minhong described it as a close friendship regardless of age difference, "He usually agrees with my opinions and suggestions on my business layout, including discussions on personal issues, but this time the 'breakup' was really an act that could not be helped."

"This world is not a world for the two of us, and all aspects must be taken into consideration." Yu Minhong finally emphasized, "There is no personal purpose here. If both parties can part ways amicably and win a better social reputation at the same time, there may be possibilities for cooperation in the future." In addition, he personally will not participate in any capital operations, investments, and developments of Hui Xingxing at any time in the future.

Yu Minhong said, "New Oriental has gone through many ups and downs. I have been in business for more than 30 years, and this is also an experience."