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On July 25, Dong Yuhui announced his resignation from Oriental Selection. At the same time, Dong Yuhui acquired 100% of the shares of Yuhui Tongxing from Oriental Selection at a cost of RMB 76.59 million. As a result, Yuhui Tongxing, a wholly-owned subsidiary of Oriental Selection, will officially become independent from Oriental Selection, with Dong Yuhui holding 100% of the shares. In the eyes of industry insiders, this is also a rare case where a big IP and a company can finally "break up" decently. For this, Yu Minhong gave up huge benefits and showed an "unexpected big picture."

On the afternoon of July 26, Dongfang Zhenxuan held a shareholder communication conference call. Yu Minhong said in the conference call that if Yuhui Xingxing and Dongfang Zhenxuan were not separated, they might strangle each other in the future. Yu Minhong believed that with the independence of Yuhui Xingxing, the various issues between the two companies, the internal conflicts, and the complexity of external forces' involvement were all solved at one time.

"Give Dong Yuhui a kindness" Dong Yuhui will receive all the net profits of Huixingxing

When Yihuixingxing and Dongfangzhenxuan "broke up", Yu Minhong revealed on his personal public account that in order to express his gratitude to Dong Yuhui, in addition to paying all the promised benefits, he had pleaded with the board of directors and the remuneration committee and obtained their consent to reward all the net profits of Yihuixingxing to Dong Yuhui.

How much is the reward? The announcement of the sale of Yuhuixing by Dongfang Zhenxuan also disclosed the financial data of Yuhuixing for the first time. Yuhuixingxing had a pre-tax profit of 189 million yuan and a net profit of 141 million yuan from December 22, 2023 to June 30, 2024. This also means that the reward mentioned by Yu Minhong may be as high as 140 million yuan.

However, some netizens also stated that Yuhui Tongxing (Beijing) Technology Co., Ltd. was established on December 22, 2023. The profit miracle it created in just 7 months is itself the result of the hard work of Dong Yuhui's team.

Because it can be compared with the profit of Oriental Selection. Although Oriental Selection has not yet released its latest financial report, according to the semi-annual report from June 1 to November 30, 2023, during this period, Oriental Selection's total revenue was 2.795 billion yuan, a year-on-year increase of 34.4%; net profit was 249 million yuan, a year-on-year decrease of 57.4%; during the reporting period, Oriental Selection's total GMV was 5.7 billion yuan.

The net profit of Dongfang Zhenxuan from June 1 to November 30, 2023 was 249 million yuan, while the net profit of Yuhui Xingxing from December 22, 2023 to June 30, 2024 was 141 million yuan. It is not difficult to see that Yuhui Xingxing's pull on Dongfang Zhenxuan's performance is self-evident.

Dong Yuhui also commented on this, "I personally and Yuhui Tongxing are very grateful to Mr. Yu." It is understood that in order to ensure the normal operation of Yuhui Tongxing's business, Oriental Selection, with the approval of the board of directors, will deliver the developed information system to Yuhui Tongxing free of charge.

Yu Minhong revealed that for Oriental Selection, there was no point in keeping the company Yuhui Xingxing, so it decided to give it to Dong Yuhui as a goodwill gesture. The more than 70 million yuan will be paid through some kind of cooperative relationship between New Oriental and Dong Yuhui.

"I won't explain the details, but the money was ultimately paid by New Oriental through its partnership with Dong Yuhui. It complies with all regulations for New Oriental as a listed company in the United States and does not infringe on any of Dong Xuan's interests." Yu Minhong also promised that he would not personally participate in the capital operation, investment and development of Tongxing with Hui at any time in the future. New Oriental will not hold any shares of Tongxing with Hui at any time now or in the future.

In the eyes of industry insiders, this is a rare case where a big IP and a company can finally "break up" in a decent manner. For this, Yu Minhong gave up "huge interests" and demonstrated "an unexpected big picture."

　　Why Oriental Selection needs to "de-Dong Yuhui"? Mechanism and profit distribution are the key issues facing big IPs　　

Affected by the news of Dong Yuhui's solo career, the share price of Oriental Selection plummeted after the opening on July 26. By the closing time, the share price was HK$9.5, down 23.39%. In this regard, Yu Minhong revealed that he had bought the company's shares with real money during the New Oriental Online period, which also proved that he would operate and develop the company very seriously.

"Even though he foresaw the shock in the capital market, Yu Minhong ultimately made the decision to let go of Dong Yuhui. This shows Yu Minhong's determination to cut ties this time," commented an industry insider.

However, as a company based on the Internet, the power of public opinion often affects the company's development. Yu Minhong said that there has been no obstacle in the communication between him and Dong Yuhui so far, but the complex public opinion disputes, coupled with the guidance and rumors of a few forces with ulterior motives, directly led to the estrangement between Dongfang Zhenxuan and Yuhui Xingxing. "This public opinion environment has led to huge uncertainty in the development of both companies, the stock price has fluctuated violently due to external influences, and the company's credibility and reputation have dropped sharply."

On July 21, Yuhuixingxing moved from New Oriental headquarters to the third floor of the Internet Finance Center in Haidian District, Beijing. The map shows that the location is more than 200 meters away from the New Oriental building and is next to the Douyin headquarters office area.

Although Yu Minhong and Dong Yuhui were very restrained in their statements about the reasons for their "breakup", some industry insiders believe that this is inevitable. Liu Siyi, founder of Qun Xiang, said in his video account, "IP must be independent. I can understand Dong Yuhui very well, because an IP with huge power must be involved in decision-making, otherwise no one can be his leader or boss. As an IP, he carries a lot of power, and any decision-making and any mechanism of a large company are an obstruction."

In addition to the mechanism problem, the distribution of benefits is also a focal issue faced by big IPs. At the end of last year, when the "Little Composition Incident" was fermenting, Li Hao, founder of Kas Consulting, commented that "If the top Internet celebrities have too much influence and proportion on the performance, it will be difficult for the boss to sleep well. The business model of MCN is a test of human nature. If the influence of Internet celebrities in an MCN is too great, how much is enough?"

How much profit should the top anchors take? Luo Yonghao once compared several top MCNs, "Qianxun, Xinxuan, and Xiao Yangge are all family businesses, and the profits are all in their own family, there is nothing to say about this. The founder of Mei ONE is not Li Jiaqi. Li Jiaqi originally had only a small amount of shares, but after the success, he has long been adjusted to a major shareholder (even if not the single largest shareholder), although he is definitely not a true entrepreneur today. Media reports show that Li Jiaqi takes most of the profits in the company. This is not the kindness of the boss of Mei ONE, but a fair distribution of market value."

　After the "separation", each of them faces a big test. Can Hui Xingxing maintain quality control? What is the development direction of the anchor selection of the East?　

After Dong Yuhui parted ways with New Oriental, the business development of Yuhui Tongxing and Dongfang Zhenxuan also attracted attention.

E-commerce expert Uncle Ni told Nandu reporters, "Dongfang Zhenxuan became a super company by relying on its super IP. If it loses its super IP, it will still be a good company, but not a super company."

Data shows that as of July 26, the number of followers of the main Douyin account of Oriental Selection was 29.841 million, while the number of followers of the Douyin account of Yuhuixingxing rose to 21.758 million.

From the performance point of view, on the Douyin platform, the data of Dongfang Zhenxuan's live broadcast room has almost always been crushed by Yuhui Tongxing. According to data provided by the third-party data platform Chanmama, during the Douyin 618 this year, Yuhui Tongxing ranked third in sales on the entire platform, far exceeding Dongfang Zhenxuan, which ranked 15th. And this is the first annual promotion since Yuhui Tongxing was established.

But some people also question whether it will take time for Yuhui to walk independently after leaving Dongfang Zhenxuan. Uncle Ni told Nandu reporters that from the supply chain point of view, Yuhui will not lack supply chain as long as it has traffic, and it will not be too bad no matter what it does. But quality control is still the biggest test, and whether it can maintain quality control is also the biggest challenge to whether Dong Yuhui can maintain a good reputation. Unlike Yuhui, which continues to carry third-party products, Dongfang Zhenxuan has been focusing on its own products. Up to now, the total number of Dongfang Zhenxuan's self-operated products exceeds 400, and 260 products are on sale during the same period. More than 100 products are ranked in the top three of Douyin's product rankings.

In addition, Yuhuixingxing has only one live broadcast room so far, while Dongfangzhenxuan has established multiple matrix accounts on multiple platforms. This year, Dongfangzhenxuan will add more than 10 vertical accounts on Douyin and will gradually launch live broadcasts.

On the side of Youhuixingxing, Dong Yuhui obviously values ​​the output of cultural and tourism content more than the sales itself. As he himself said, "I am very resistant to selling things. To be honest, I still don't enjoy this job today." But now, he has to transform from a worker and anchor to an entrepreneur, boss, and manager. As Dong Yuhui said in his response, "Leaving the protection of the port, Youhuixingxing will sail alone to the vast sea from today. The future is unpredictable, and we can only go all out."

Yu Minhong also learned some lessons from this incident. He revealed that just as he never allowed famous teachers to set up independent studios at New Oriental, in the future Oriental Selection will give anchors good enough treatment, but there will no longer be similar things like anchors setting up independent platforms, "because this will lead to some kind of rift and also lead to some unattainable. I can say with certainty that the direction of our anchors' development in the future is to develop together, share difficulties and happiness, and develop together and become prosperous together."

Written by: Southern Metropolis Daily reporter Wang Chenchen