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“Yu Minhong's generosity', setting a precedent that will be more difficult for those who come after to resolve similar incidents in the future.”

Text/ Wu Xiaobo (WeChat public account: Wu Xiaobo Channel)

Before talking about the "Dong Yuhui problem", let me first talk about the "Niu Gensheng problem" from more than 20 years ago.

Niu Gensheng was born to be a cattle breeder. He was born in a poor family and was sold to another family by his parents before he was one month old. His adoptive parents, who were surnamed Niu and raised cattle, gave him this name. As an adult, Niu Gensheng worked as a bottle washer in a dairy food factory. At the age of 25, he became the deputy director of sales in the factory. In 1992, the factory was renamed Yili Group, and Niu Gensheng became the vice president in charge of operations.

The third from the left is Niu Gensheng

Yili has two leaders, Chairman Zheng Junhuai in charge of internal affairs and Vice President of Sales Niu Gensheng in charge of external affairs. In less than five years, they have become the industry leader with no rivals in the dairy industry. This is when the problem arises: from the media to distributors to consumers, "only Niu Gensheng is known, but Zheng Junhuai is not".

There are some people in the Chinese business community who are born with "power" and are like a light bulb that can shine when standing there. Among the entrepreneurs I have met, in terms of grassroots origin, eloquence, and miracles, Jack Ma ranks first, and Niu Gensheng and Li Shufu can be tied for second. Zheng and Niu have their own grudges and find it difficult to get along with each other. They form cliques and fight within the company, and finally reach a situation where there is no room for two tigers in one mountain.

In 1999, Niu Gensheng left Yili and founded Mengniu, and spent ten years building another dairy giant.

For many years afterwards, the "Niu Gensheng Problem" was the most popular discussion case in business school classrooms.

In the start-up period of any enterprise, conquering the market is the most important thing. Generally speaking, the entrepreneur is often the company's number one salesperson. However, there are also cases like Yili, where the head of the family is a strategic management or R&D expert, and the market sales are handled by other generals.As the market opens up, the latter often become more successful than their boss, becoming a huge hidden danger of internal division.

In fact, those who have read the Twenty-Four Histories are no strangers to the tactics used by successive emperors to reduce the power of the vassal states. Zhao Kuangyin "released military power with a cup of wine", Zhu Yuanzhang started a massacre, and Li Shimin strictly adhered to the "three no principles" in managing the various military governors - "no short-term appointment, no concurrent command, and no remote leadership".

In traditional enterprises before the Internet era, there were many ways to solve the "Niu Gensheng problem", such as promotion and job change, development into a core shareholder, splitting up to set up multiple sales companies, establishing independent product subsidiaries, or locking in expectations and training "Niu Gensheng" as a successor, etc.

Today's "Dong Yuhui problem" is a more daunting problem than the "Niu Gensheng problem".

The biggest challenge is: in the era of mobile Internet, people are the ultimate node of everything. They are both the receiving point and the bursting point of traffic. They are the credit endorser, disseminator and sales achiever of the product. In other words,This person is the most important, even the only strategic means of production.

When Niu Gensheng left Yili, he needed to take some key personnel with him, find investors, purchase equipment and recruit employees, redevelop products, and build sales channels. His new game will have an impact on Yili, but it is unlikely to cause devastating damage.

Today, if a person has become a super traffic star, as long as he walks out of the company's door, all resources will automatically gather around him - including internal traffic, word-of-mouth credit and data assets.This terrible "siphon effect" could be disastrous for the old club.

In 2021, the breakup between the popular internet celebrity Li Ziqi and Hangzhou Weinian was almost a preview of the Dong Yuhui incident. Since the day it lost Li Ziqi, Weinian has actually become another company.

The very cruel fact is: in a live broadcast room where traffic is its lifeline, super internet celebrities are one and everything else is zero.If this person is not the actual controller or major shareholder of the company, then he is the biggest uncertainty of the company.

In the world of Internet traffic, the emergence of the next Dong Yuhui is a high-probability event that is bound to happen, but it is extremely unlikely that Oriental Selection can create another "Dong Yuhui", and it has nothing to do with capital and investment.

In this sense, the "Dong Yuhui problem" is almost unsolvable.

Two years ago, in June 2022, Dong Yuhui stood out from New Oriental’s live broadcast room, which was an extremely accidental thing.

In the following period of time,"Dong Yuhui" is actually a "personality product" created by a large company with huge investment of money and manpower.From traffic inflow, script writing, topic creation, celebrity interaction to product selection, this is not only Dong Yuhui's personal talent and charm, but also the injection and realization of all the company's resources.

In the business world, any story of mutual achievement must be based on reasonable contracts and institutional arrangements if it is to continue.Otherwise, the good story will soon be blown into a mess by desire.

Since the "Little Composition" incident broke out in December last year, the internal turmoil of Oriental Selection has been exposed to the public. You will find that the share price of the Hong Kong Stock Exchange is like a "frightened bird", and it fluctuates at the slightest sign of trouble.

In handling this incident, we saw Yu Minhong's integrity and kindness, and he has a particularly lovely, classical moral cleanliness. "Letting go" of Dong Yuhui may be a relief for him, and it is also a choice to rebuild the company's order.

However, from the perspective of corporate governance, such an outcome is undoubtedly a failure.

"Letting Dong Yuhui go" actually caused multiple harms.

First of all, Dongfang Select has lost its most core strategic asset, and it is probably difficult to replace it in the short term. Secondly, all the employees of the company. In a sense, "Dong Yuhui" is the product they have jointly created in the past two years. Then there are the investors of Dongfang Select and the shareholders who hold its shares - there are many "mothers-in-law" who dote on Xiao Dong. The sharp drop in the stock price after the news was released is an expression of disappointment.

There is another layer of damage that is invisible, but is probably more far-reaching.

That is, from now on, tens of thousands of MCN companies and consumer goods companies that rely on traffic for their survival will be afraid of cultivating traffic stars.

Dong Yuhui's independence this time was not subject to any ban on business, and even the repurchase of shares of Donghui was "arranged and paid" by Dongfang Selection. Yu Minhong's "generosity" set a precedent for the resolution of similar incidents in the future, which will be more difficult for later comers.

This will make the "Dong Yuhui problem" even more difficult.

About the Author|Wu Xiaobo|responsibilityedit|He Mengfei

Editor-in-Chief|He Mengfei|Image source|VCG

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