Verbal disputes are common, but a dispute worth 6 billion Hong Kong dollars is not.
Since the "little composition" incident involving Eastern Selection, the company's stock price has fluctuated by about 20%, affecting a market value of around 6 billion Hong Kong dollars. As of the close on December 18, Eastern Selection's market value reached 32.5 billion Hong Kong dollars. On December 19, its stock price slightly fell by 0.62%, closing at 31.80 Hong Kong dollars per share.
On December 18, Dong Yuhui, who had been promoted to a senior partner at Eastern Selection, was once again appointed by Yu Minhong, the chairman of New Oriental and CEO of Eastern Selection, as the assistant to the chairman of New Oriental Education & Technology Group and concurrently as the vice president of New Oriental Culture and Tourism Group. Prior to this, Sun Dongxu, the former CEO of Eastern Selection, was dismissed.
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Following the consecutive release of the above news, the nearly 6 billion Hong Kong dollars in market value that Eastern Selection lost during the Dong Yuhui incident was regained within a day.
The Eastern Selection incident not only caused fluctuations in the stock prices of the company itself and its parent company, New Oriental, but also disturbed the A-share and U.S. stock markets related to internet celebrity IP (intellectual property) sectors.
In addition, the incident has also sparked discussions in the market about the relationship between top anchors and platforms. How significant is the impact of top anchor effects on platforms? How should big anchors, platforms, and teams coexist and share the profits after achieving success? Is the so-called "de-emphasizing top anchors" really necessary?
Some analysts told "Caijing" that top anchors have huge traffic and fan bases. As a symbolic figure of Eastern Selection, Dong Yuhui can not only promote sales but also affect the fluctuation of the company's stock price. Super anchors like Dong Yuhui should be given sufficient support by the company, while also ensuring that the anchors receive their due rewards. A reasonable profit distribution can ensure the stability of the team.
Brand consultants told "Caijing" that this "little composition" incident exposed the company's strategic positioning issues. In the era of short videos, the old ways of the internet are no longer suitable for the current pace, and it is necessary to learn how to communicate with fans.
A verbal dispute worth 6 billion Hong Kong dollars.Oriental Selection originated from the "short essay" questioning storm. On December 6, fans of Dong Yuhui in the Oriental Selection live broadcast room learned that the "short essay," which refers to the live broadcast video script, was mostly created by the copywriting team, not entirely by the host Dong Yuhui. This information was posted and pinned by other participants of Oriental Selection using the official account. The relevant replies triggered dissatisfaction among some of Dong Yuhui's fans, and the number of fans in his live broadcast room quickly decreased significantly.
The incident also quickly affected the stock prices of related companies. Oriental Selection's stock price fell by 21.99% from December 11 to 15. The stock price dropped from 32 Hong Kong dollars per share to 26.25 Hong Kong dollars per share, and the market value shrank from about 32.48 billion Hong Kong dollars to around 26.64 billion Hong Kong dollars, with a reduction of 5.837 billion Hong Kong dollars in one week.
The parent company of Oriental Selection, New Oriental, also saw synchronized declines in its Hong Kong and U.S. stocks, with the U.S. stocks falling by 10.41% within a week. As of December 18, the market value of New Oriental's Hong Kong stocks was about 102.7 billion Hong Kong dollars, and the U.S. stock market value was 11.9 billion U.S. dollars.
Meanwhile, Gaotu Group, a competitor listed in the United States and considered by the market to have a similar model to Oriental Selection, saw its stock price rise from a low of 2.55 U.S. dollars per share on December 6 to a high of 5.26 U.S. dollars per share on December 15, with a fluctuation of 105.86% and an interval increase of 80.86%.
Gaotu Group's competing product, Gaotu Fine Goods live broadcast room, originally had less than a thousand people, but after receiving fans who left Oriental Selection, the online number of people in the platform's live broadcast room once broke through 100,000, and the number of fans broke through one million.
The stock prices of related listed companies in the A-share market also began to move abnormally. Stocks such as Zhongguang Tianze, Longtou Shares, In-Play Group, Yinli Media, and Yuanlong Yatu, which are related to internet celebrity personal IPs, significantly outperformed the market during the same period.
On December 18, the incident was preliminarily calmed down. Sun Dongxu, the former CEO of Oriental Selection, was dismissed, and Dong Yuhui was promoted to a senior partner of Oriental Selection and the cultural assistant to the chairman of New Oriental Education & Technology Group, while also serving as the vice president of New Oriental Culture and Tourism Group.
In the evening of that day, Dong Yuhui, who had been off the air for several days, appeared again in the Oriental Selection live broadcast room. Data from Tianfeng Securities showed that on December 18, the total GMV (gross merchandise volume) of Oriental Selection's Douyin live broadcast room was 190 million yuan, of which the main account was 180 million yuan; 120 million yuan on the 17th; 80 million yuan on the 15th; and 70 million yuan on the 14th. The current main account has reached a historical high of 31.23 million fans, with the previous peak being 31.16 million. On the evening of the 18th, the highest number of people online at the same time was nearly 5 million, and the number of viewers exceeded 80 million.
On December 18, Oriental Selection's stock price rose by 21.90%, returning to 32 Hong Kong dollars per share, and it fell slightly by 0.62% the next day, closing at 31.80 Hong Kong dollars per share. New Oriental's U.S. stocks rose by 9.65% before the market on the evening of the 18th, and finally closed at 76.11 U.S. dollars per share overnight, with a gain of 5.68%, close to recovering the previous week's decline. Gaotu Group's stocks fell by more than 20% before the market that night, and finally closed down 19.44%, at 3.73 U.S. dollars per share.
The verbal dispute not only caused significant fluctuations in the market value of the involved listed companies but also affected the stock price trends of other listed companies unrelated to the incident. Liu Shuwei, a researcher at the China Enterprise Research Center of Central University of Finance and Economics, commented in her circle of friends that the incident exposed Oriental Selection's weak ability to handle crisis incidents, with the deep-seated reason coming from the company's internal control system and corporate governance capabilities.Liu Shuwei stated, "Dongfang Zhixuan is not a school, but a listed company. Listed companies must have strict internal control systems and sound corporate governance structures. Dongfang Zhixuan's main business has shifted from educational training to agricultural marketing, and the capital market supports and expects this," Dong Yuhui and Dongfang Zhixuan itself have a mutually beneficial relationship.
The "Short Essay" Controversy
Dong Yuhui has always been popular across the internet for his eloquent "short essays" during live broadcasts, showcasing his literary talent and making "short essays" a unique label for Dongfang Zhixuan's live e-commerce.
On December 5th, in a pre-heating video for Dongfang Zhixuan's recent "Jilin Trip," Dong Yuhui read a "short essay" about Jilin Province, and some netizens asked who wrote the copy. The official account of Dongfang Zhixuan pinned a reply, saying, "Most short essays are created by the copywriting team together, not written by the host alone." This response sparked dissatisfaction among some of Dong Yuhui's fans, who thought the editor was "stabbing the host in the back."
On December 9th, Dong Yuhui himself responded to the operation editor's "claiming credit" behavior, saying it was the editor's "nonsense reply" out of the assumption of understanding the business well. However, the operation editor was not convinced and left another message saying "there was no 'nonsense reply'," and listed several copywriting processes, emphasizing that the copywriting involved both collaboration with the host and independent creation by the team. In addition, Dong Yuhui's live broadcast scheduled for the afternoon of December 10th was canceled without any explanation, causing further controversy.
On December 12th, Sun Dongxu expressed during the live broadcast his intention to criticize the editor team, while acknowledging Dong Yuhui's contributions, stating that his annual salary is more than ten million, but due to a response that included the phrase "let's have a meeting," and the act of placing the phone on the table without it touching the surface, it triggered another controversy about the CEO of Dongfang Zhixuan "calling a meeting for fans" and "dropping the phone."
Since then, the "short essay" controversy has intensified. The number of followers of Dongfang Zhixuan's Douyin account and the traffic in the live broadcast room have been declining. The number of followers of Dongfang Zhixuan's Douyin account once fell below 28.4 million, while on December 9th it was 31.16 million, losing nearly 3 million followers in less than a week. According to statistics from the third-party data platform Daduoduo, the number of viewers in Dongfang Zhixuan's live broadcast room on December 12th was only 7.941 million, a decrease of nearly 9 million compared to the highest number of viewers on December 9th. In contrast, the number of followers of Dong Yuhui's Douyin account has been rising, once increasing by more than 2 million in a single day.
Faced with the crisis of public opinion, on December 14th, Yu Minhong responded by saying: "It was originally a small matter, but due to improper handling, it turned into a surging public sentiment, and there are significant loopholes in the company's management." That night, Sun Dongxu apologized for his recent "aggressive" demeanor, tone, and expression during the live broadcast, stating that mentioning Dong Yuhui's salary was an "unprofessional" act.
On December 16th, Dongfang Zhixuan announced a one-day suspension of broadcasting for introspection. That night, Yu Minhong and Dong Yuhui co-hosted a live broadcast. Yu Minhong stated that Dong Yuhui will definitely have a say in the future. Dong Yuhui also made it clear that he will not leave Dongfang Zhixuan at present. Their dialogue initially stabilized the morale. Since then, the number of followers of Dongfang Zhixuan has gradually stopped falling and stabilized.
On the evening of December 17th, Dongfang Zhixuan issued an announcement on the Hong Kong Stock Exchange stating that Sun Dongxu's positions as CEO and executive director have been revoked, and Yu Minhong has taken on the role of CEO of Dongfang Zhixuan. However, Sun Dongxu remains a non-executive director of Dongfang Zhixuan. This also confirms what Yu Minhong said in the live broadcast before, that although Sun Dongxu was relieved of his CEO duties, he still hoped that he would participate in the company's decision-making and suggestions, "Xiao Sun has done a lot, such as the supply chain, App construction, Yuhui and I are not as strong as Xiao Sun in execution."The Balance Between Live Streamers and MCN Companies
With the rapid development of the live-commerce industry, the relationship between live-streaming merchandise MCN agencies and top live streamers has become increasingly delicate. There have been frequent instances of relationships breaking down between influencers and MCN agencies due to conflicts over profit distribution and other reasons. The "short essay" incident involving Dongfang Zhixuan has also sparked thoughts about the relationship between top live streamers and platforms.
Analysts told Caijing that top live streamers possess significant traffic and a fan base. Super live streamers like Dong Yuhui should be given adequate support by companies, while also receiving their deserved rewards. Reasonable profit distribution can ensure the stability of the team.
The aforementioned individuals also admitted that over-reliance on a single top live streamer brings certain risks. "No company wants to be manipulated and threatened by an individual. Once the live streamer leaves, it will affect the platform's revenue and market value. Companies need to use high-quality resources but cannot be held hostage by them. There must be a sustainable mechanism, such as developing a diversified team of live streamers, led by a super live streamer who can drive the growth of several mid-tier live streamers."
Live-commerce practitioner Zhuo Pengju told Caijing that Dong Yuhui's role in Dongfang Zhixuan is similar to Luo Yonghao's in "Make Friends," where their contribution to traffic is greater than their actual sales. "In terms of time efficiency, Dong Yuhui is definitely number one, but the combined live-streaming hours of other small and medium-sized live streamers are more than Dong Yuhui's. Dong Yuhui's popularity makes it much easier for other live streamers on the platform to engage in e-commerce. Dong Yuhui mainly contributes to traffic and heat, continuously expanding the fan base."
"The big internet celebrities on Kuaishou and Taobao directly take a bite out of the company, but Douyin itself is decapitated," Zhuo Pengju said. "Xiao Yang Ge is already number one on Douyin, but he still can't sell as much in a year as Xin Ba does in a single super session. Companies that rely too much on individual IPs, once they reach the capital market, will be considered too risky. San Zhi Yang has been opening branches and signing talents, which is also a form of decentralization. They position themselves to contribute traffic and empower every signed IP with traffic. Dongfang Zhixuan can use experienced live streamers to mentor new ones, creating topics and interactions for Dong Yuhui to bring in new live streamers."
Regarding the "fan circle behavior" of Dong Yuhui's fans, Zhuo Pengju believes it is a typical phenomenon of fan culture. "The last classic case was Li Ziqi and Wei Nian. In the dispute between Li Ziqi and Wei Nian, there were also many people criticizing Wei Nian. Fans or users tend to be emotionally biased, which means people are more important than business. Because public opinion is a free market for ordinary people, and people have an absolute advantage, it is normal for companies to be criticized."
Regarding the disagreements between MCN agencies and talents in the market, Zhuo Pengju believes that it is not entirely fair to consider MCNs as unscrupulous, as most MCNs have a significant initial investment and the uncertainty of talent incubation is strong. Out of 100 talents signed, the company invests money in only about ten, and if one or two of these can succeed, it's already a cause for celebration. "MCNs can essentially be seen as investors. Signing high-priced breach of contract agreements for longer periods may seem unscrupulous, but it is actually a business behavior to hedge risks. Most of the issues that come to light are due to MCNs because the voices of talents are louder than those of MCNs, and the internet is very easy to sway public opinion."
A brand consultant told Caijing that the "short essay" incident exposed the company's strategic positioning problems. Managing internet MCN agencies with traditional strategic positioning systems and insufficient understanding of fan culture is outdated. The times have changed, and in the era of short videos, the old ways of the internet are no longer suitable for the current pace. The mechanism needs to "de-fatherize," not expecting control. Deleting posts and banning accounts will only lead to unsubscriptions. It is necessary to learn how to communicate with fans.