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A graceful breakup between two intellectuals.

Text | Chen Shoucheng

Editor | Director‍

Dong Yuhui still resigned. It was sudden, but also expected.

On 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.

According to Yu Minhong's open letter, the two sides "broke up" in March this year. Yu Minhong met with Dong Yuhui several times to discuss the company's subsequent development plan and finally reached a consensus. Both parties agreed to formally propose to the board of directors on May 31, the end of the fiscal year, and after a two-month process, the "breakup" was officially realized.

For bystanders, the atmosphere between Dong Yuhui and Dongfang Zhenxuan had become subtle earlier. On one side, there was the "super anchor" who was hard to replicate, and on the other side, there was the "online Sam" who was determined to follow the brand route. The two sides had formed a "route dispute" within Dongfang Zhenxuan, and the small essay incident at the end of last year caused this conflict to erupt completely.

The independent operation of "Traveling with Hui" temporarily put an end to the conflict. However, since then, Yu Minhong, Dongfangxuan, and Dong Yuhui have often been on the hot search for various reasons.As Yu Minhong said in his open letter, "complex public opinion disputes" have led to huge uncertainty in the development of both companies, and the company's credibility and reputation have declined sharply.

A decent breakup may be the best ending for Dongfang Zhenxuan and Walking with Hui.

Yu Minhong, let go gracefully

In this breakup incident, Yu Minhong acted as decently as possible.

On the one hand, Dong Yuhui received a considerable "breakup fee".

According to the announcement, in addition to paying all the promised benefits and compensation to Dong Yuhui, Yu Minhong also sought the approval of the board of directors and the remuneration committee to distribute all remaining undistributed profits of Huixingxing to Dong Yuhui.

According to Yu Minhong's open letter, the promised benefits and compensation are the income agreed upon with Dong Yuhui when "Yi Hui Tong Xing" was established separately. One part is equivalent to a no-responsibility base salary, and Dong Yuhui can get an "attractive guaranteed base income" (cash + equity) regardless of the operating conditions of Yi Hui Tong Xing; the other part is equivalent to a performance commission, and Dong Yuhui can be allocated half of the net profit of Yi Hui Tong Xing.

As for the "all remaining undistributed profits", it is an additional bonus because it is obviously greater than the agreed "50% net profit". According to the announcement, the net profit of Huixingxing in the past six months is 140 million yuan.

On the other hand, Dong Yuhui acquired the ownership of "Yuhui Xingxing" at almost no cost.

In legal terms, even if Dong Yuhui is the core figure of "Walking with Hui", he does not completely own "Walking with Hui". Moreover, even if Dong Yuhui's popularity has led to the rapid development of Dongfang Zhenxuan's live broadcast room, it cannot be denied that Dongfang Zhenxuan, as a platform, has brought multiple benefits to Dong Yuhui, including the supply chain.

Early live broadcast of "Dong Yuhui"

In addition, according to Yu Minhong, Dongfang Zhenxuan vacated more than 1,000 square meters of office space for Yihui Xingxing, reorganized a mature team of about 60 people, provided a sales system, pallet supply and a large amount of equipment and facilities support. Even though Dong Yuhui's departure was confirmed in May, the New Oriental Asset Management team helped Yihui Xingxing complete the site search, transaction negotiation and decoration of the new work area. Yu Minhong himself has also been helping to connect government resources and business opportunities to Yihui Xingxing, etc.

In many aspects of the above situation, it is difficult to settle the accounts between Dongfang Zhenxuan and Dong Yuhui. According to common sense, even if Dong Yuhui needs to pay for Dongfang Zhenxuan's investment in these aspects, it is completely reasonable. But Yu Minhong almost wrote it off with a wave of his hand. In the end, the price of Huixingxing was 76.58 million, which was "arranged" by Yu Minhong and "given to Yuhui" by the company.

In order to ensure the normal operation of Yuhui Tongxing's business, Dongfang Zhenxuan, with the approval of the board of directors, will deliver the developed information system to Yuhui Tongxing for free. This is considered a bonus.

Between the lines, Yu Minhong also expressed his high recognition of Dong Yuhui, including saying that "Dong Yuhui has made a significant contribution to the development of Oriental Selection" and "If Dong Yuhui had not ignited Oriental Selection, there would be no rapid development of Oriental Selection" and so on.

At the end of the open letter, Yu Minhong said with a touch of sentimentality: "I miss the time when I fought side by side with Yuhui, the time when we drank big bowls of wine, ate big chunks of meat, and sang loudly together." At the Oriental Selection shareholders meeting on the afternoon of the 26th, Yu Minhong answered shareholders' questions and said: "There is no way to break up, because this world does not belong to the two of us."

Oriental Selection, is all the bad news over?

The day after the announcement, Oriental Selection's share price fell by more than 25%, and its total market value reached HK$12.8 billion, which is roughly consistent with the data in June 2022. In other words, Oriental Selection has lost all its gains since its strong rise in June 22, and returned to its original share price.

However, this does not mean that Oriental Selection will never recover from this setback. Instead, it can be seen as a new beginning for Oriental Selection.

For a long time, Dong Yuhui's strong personal IP and huge influence have become a source of both benefit and headache for Oriental Selection.

The benefit is that Dong Yuhui can indeed sell a large number of goods very easily, helping Dongfang Zhenxuan achieve its GMV target. The headache is that Dong Yuhui's existence makes users not recognize Dongfang Zhenxuan's "brand" but only care about Dong Yuhui's "personal brand", which ultimately makes Dongfang Zhenxuan's "brand route" become an empty talk.

Previously, the independent operation of Yuhuixingxing may be a new beginning for Dongfangzhenxuan. However, Yu Minhong also mentioned at the shareholders' meeting that he initially thought that the two platforms of Dongfangzhenxuan and Yuhuixingxing did not interfere with each other and the middle and the middle platforms supported each other, which was a good model. However, in fact, due to the serious interference of the external environment, the fans of the two platforms formed an irreconcilable situation. He tried to mediate, but it backfired.

Under such circumstances, "whether Dong Yuhui will leave" has become a sword of Damocles hanging over the head of Oriental Selection. Now that the stone has finally fallen, it means that the "bad news" of Oriental Selection has been exhausted. The complete separation of Dong Yuhui's assets and brands may help Oriental Selection to truly implement its brand route.

In fact, according to data revealed at the launch of Oriental Select's self-operated new products, the GMV of Oriental Select's self-operated products in the second half of fiscal year 2024 has exceeded 3.6 billion yuan, a year-on-year increase of 108%, and a repurchase rate of 59%. To a certain extent, this verifies the attractiveness of its self-operated products to users.

Since the beginning of 2024, after operating independently with Huitongxing, although Dongfang Zhenxuan's sales volume is slightly lower than Huitongxing, its main live broadcast room "Dongfang Zhenxuan" can still guarantee a monthly GMV of more than 100 million. In addition, Dongfang Zhenxuan also has multiple vertical live broadcast rooms including "self-operated products", "beautiful life" and "books", all of which perform well.

Although the GMV performance of Yuhuixingxing is strong, Dong Yuhui's personal "not here" makes the long-term development of Yuhuixingxing full of variables. In comparison, Dongfangzhenxuan does not rely on the brand route of major anchors, but has more long-term value. During the telephone conference, Yu Minhong also reiterated that it is impossible for a anchor to independently establish a platform in Dongfangzhenxuan.

Yu Minhong also revealed the next development of Oriental Selection in the shareholder conference call: "In terms of channels, in addition to the online channels developed by Oriental Selection itself, Oriental Selection is exploring a model that combines online and offline. Relying on more than 800 New Oriental ground teaching points, we are exploring a model that combines online and offline. The cost of ground stores is relatively low, and various teaching points have parental traffic, which is also a service for parents."

Zhuang Shuai, a retail e-commerce expert and founder of Bailian Consulting, commented: "This strategic direction is a steady, deterministic and sustainable development model for a retail company, which is very exciting."

Duan Yongping once said: "When you find it difficult to make a decision at the moment, you can extend the timeline to ten or twenty years, and you will find it easier."

For Oriental Selection, losing Dong Yuhui will certainly cause short-term pain, but if viewed from a longer-term timeline, this is undoubtedly a correct corporate strategic choice.

Dong Yuhui, where to go?

The fate of Oriental Selection is relatively easy to determine, but the fate of Dong Yuhui and his companions is full of variables.

The biggest variable comes from Dong Yuhui himself. As the core IP, CEO and ultimate beneficiary of "Walk with Hui", the most unclear thing about Dong Yuhui is whether he has the perseverance to continue to work in the live e-commerce industry.

In March this year, Dong Yuhui cleared his Weibo account, saying that he hated trending searches. Earlier, Dong Yuhui had expressed his dislike for "live streaming" more than once. In an interview with Huanqiu.com titled "Happiness is to love yourself first," he barely concealed his unhappiness.

Under such circumstances, Dong Yuhui may face great difficulties if he takes over the independent operation of "Yuhui Xingxing".

On the one hand, Dong Yuhui, who has changed his identity, will be further trapped by his own identity and feel a greater sense of restraint. Previously, the constraints were more about contracts and professionalism, but now, it is the survival issues and sense of responsibility of hundreds of employees in the company. For an intellectual, the latter may be much more important.

The question is, will this weight cause Dong Yuhui to have an emotional breakdown in the live broadcast room like before? You know, the last time Li Jiaqi had an emotional breakdown in the live broadcast room, he was quickly backlashed by public opinion, which brought a great brand crisis to the company.

On the other hand, Yuhui Tongxing has long shared the supply chain with Dongfang Zhenxuan, but now the two are separated. Dong Yuhui will inevitably face many problems such as rebuilding the supply chain, building infrastructure, and organizing the company structure. In the live e-commerce industry, although these problems cannot directly lead to transactions, they are closely related to whether the store can "fulfill its contract."

Furthermore, if there are problems with performance of the contract, there will most likely be more negative public opinion directed at Dong Yuhui, who has already "gone alone", causing him greater mental pressure.

Of course, since Dong Yuhui himself is the best asset in this industry, there is no shortage of institutions and organizations willing to work with him. However, how to select trustworthy people is a very skillful job.

Super anchors will have super conversions, but they will also face super attention. When Dong Yuhui cleared his Weibo, a negative trending search said: "Dong Yuhui cannot enjoy the traffic dividend and escape public opinion." In this case, whether Dong Yuhui's news is positive or negative, it will be infinitely magnified by public opinion. Dong Yuhui is bound to be more cautious.

A relatively optimistic speculation about Yuhui Xingxing is that Yuhui Xingxing will build a new MCN similar to Meione or Qianxun with Dong Yuhui as the core and become another leading sales organization. As a spiritual leader and brand spokesperson, Dong Yuhui will gradually fade out of the live broadcast room, find his own freedom, and enjoy his essential identity as a "scholar".

However, this seemingly easy description still requires overcoming numerous obstacles. Dong Yuhui can only console himself with the words "If my friends and relatives in Luoyang ask me, I will tell them that my heart is as pure as ice and as clear as a jade pot."

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