Oriental Selection stock dips 8% as top livestreaming influencer Dong Yuhui quits

Star livestreamer Dong Yuhui has decided to resign from his position as a senior partner at East Buy, also known as Oriental Selection, a subsidiary of Chinese private tutoring giant New Oriental, the company said in a filing to the Hong Kong Stock Exchange on Thursday. New Oriental Education & Technology Group shares slid 8 percent after Dong's resignation, according to yicai.com.

While Dong's departure may have some immediate negative impacts, the long-term outlook for this sector that merges culture and e-commerce remains positive, as China's e-commerce sector is booming. This business model, adopted by numerous cultural internet influencers, has great potential for growth in the sector, analysts said.

On Thursday night, Dong confirmed his resignation, stating that he will operate his namesake venture Time with Yuhui independently after reaching a mutual agreement with his former employer.

He also expressed confidence in the company's future and emphasized the importance of giving one's best efforts in the face of uncertainty. "Time with Yuhui is embarking on a new journey, setting sail into uncharted waters. The future is full of possibilities, and we are ready to face whatever challenges come our way with determination and perseverance," he said.

Both sides reached a sales agreement under which Dong agreed to purchase 100 percent of equity interest in Time with Yuhui from Beijing New Oriental Xuncheng Network Technology Co, at a price of 76.58 million yuan ($10.6 million).

In recent years, more and more livestreaming influencers in China are not only promoting new Chinese products, but also showcasing China's manufacturing prowess and cultural significance. The fusion of livestreaming e-commerce with traditional Chinese studies and Tang poetry has emerged as a powerful trend, showcasing significant potential for leveraging Chinese classical literature and cultural tourism IP, said experts, adding that top livestreamers are credited with attracting a large audience and driving online sales.

Dong, one of the representatives, has emerged as a powerful livestreaming e-commerce influencer.

He's departure has sparked heated discussion on social media. "Unlike typical internet celebrities, Dong's relatable persona and focus on meaningful content set him apart. His live broadcasts showcase the dreams and emotions of an ordinary young person, making him a unique and influential figure in today's digital age," wrote one netizen surnamed Xu.

In 2024, Dong's new channel Time with Yuhui made a splash with over 54.31 million viewers tuning into the first four-hour livestream. The channel also generated over 100 million yuan in product sales, domestic news outlets reported.

Dong's success is a vivid example of the rise of China's livestreaming e-commerce sector, which also reflects the strong consumption power of the young generation, Liu Dingding, a veteran industry observer, told the Global Times on Thursday.

According to East Buy's financial results for the 2023 fiscal year, total revenue surged by 651 percent, jumping from 601 million yuan ($84.43 million) in 2022 to 4.5 billion yuan in the 2023 fiscal year. Its net profit reached 971 million yuan.

In an open letter published on Thursday, New Oriental founder Yu Minhong elaborated on the decision, citing an unexpected dispute that took place in December last year which placed the company and Dong in an awkward situation and caused managerial disfunction. To allow Dong to better utilize his talents and have more autonomy, avoiding unnecessary conflicts and disputes, they decided to establish Time with Yuhui, with Dong serving as director and general manager, fully in charge of the company's business decisions.

The history between Dong and New Oriental goes beyond that.

East Buy marked a crucial step in New Oriental's transition to a livestreaming e-commerce company starting in late 2021. It swiftly rose to become a strong force in the domestic e-commerce industry, thanks to its star host, Dong who has a large fan base due to his outstanding selling skills and personality.

On China's X-like social networking platform Sina Weibo, Dong has over 1.5 million followers, 8.5 times the 185,000 followers of East Buy's official account. In December, 2023, Dong was also appointed as cultural assistant to the chairman of New Oriental Education and Technology Group and vice president of New Oriental Tourism Group.

It is certain that many e-commerce giants would have offered a high salary to entice Dong to join them, Liu believes, adding that Dong should have stayed focused on the cultural aspects of his work, making it the core of his endeavors with business as a complementary element, Liu said.

Livestreaming e-commerce sales jumped 60.6 percent year-on-year to 1.98 trillion yuan ($274 billion) in the first nine months of 2023, accounting for 18.3 per cent of total online shopping revenue in China, according to data from the Ministry of Commerce.