It's Yu Minhong's turn to save Dongfang Selection

Recently, the live streaming e-commerce company Dongfang Zhenxuan has been caught in a serious crisis. A comment about the video promotion copywriter sparked a lot of debate within the company and quickly caused controversy among fans and management. This article will review this incident and explore the lessons and inspirations from it.

Between Dong Yuhui and CEO, who should Yu Minhong choose?

Just after Simba became a hot topic because his own CEO was "forced to resign", another big brother in the live streaming e-commerce industry, Dongfang Zhenxuan, also appeared on more than ten hot searches due to company management issues.

This "small essay" crisis originated from the live broadcast of the "Jilin Trip". The issue of who wrote the promotional copy of the video triggered a multi-party debate among Dong Yuhui's fans, Oriental Selection editors, Dong Yuhui and the company's management.

Affected by this, Oriental Selection stopped broadcasting on December 13. From December 10 to 14, the number of fans dropped by 570,000 in 7 days. The company's stock price also plummeted. As of December 13, Oriental Selection closed at HK$27.2 per share, down 13.2%. On the 14th, it closed at HK$27.8 per share, slightly recovering. Currently, the total market value of Oriental Selection is HK$28.2 billion, which has fallen by more than 60% from the peak of HK$74.2 billion at the beginning of this year.

In the eyes of many industry insiders, this was originally just an operational accident within the company. The reason why it developed into an unprecedented crisis was that, in addition to the fact that Dong Yuhui's fans gave popularity to the live broadcast rooms of competitors such as "Gaotu Jiapin" and allowed Gaotu to "defeat Dongfang Zhenxuan and poach Dong Yuhui", the fundamental reason was that Dongfang Zhenxuan exposed the problem of internal management chaos, and fans were just catalysts and amplifiers of the problem.

On December 13, Dong Yuhui changed his original Douyin personal signature "I used to be a teacher, now I am a salesperson" to "Don't speculate, don't insist, don't be stubborn, don't be me". It means don't speculate at will, don't insist on this, don't be stubborn, don't be the only one. This was seen by the outside world as Dong Yuhui's statement that he was unwilling to participate in disputes, and he has indeed not appeared in live broadcasts recently.

This year is a year of frequent layout and urgent need to prove itself for Oriental Selection. However, the internal management problems highlighted by the "Little Composition" incident, the diversion and snatching of traffic by Gaotu, and the impact on sales after Dong Yuhui's absence inevitably make the outside world worry about the next step of Oriental Selection.

The "lessons" of Dongfang Zhenxuan and Xinxuan should cause the live broadcast e-commerce industry to reflect on how to properly handle the relationship between the CEO and the celebrity anchor, and the relationship between the anchor and fans and consumers, which is the basis for determining the lifeblood of the company's development. Even mature listed companies should not take it lightly.

1. The crisis caused by a short essay

Let’s first briefly review what happened.

Dongfang Zhenxuan has recently been promoting cultural tourism products in many places, and it will release short essay videos to warm up before the broadcast. On December 8, after Dong Yuhui posted a short essay video about Jilin, the editor of the official account of Dongfang Zhenxuan commented that most of the classic short essays were created by the copywriting team, not all by the host. Subsequently, Dong Yuhui's fans began to confront the editor in the comment area.

In order to quell the storm, Dong Yuhui mentioned during the live broadcast that "the editor who claimed to be very knowledgeable about the business made nonsense replies in the comment section", but the editor did not buy it, saying "I was already feeling aggrieved, and this time the comment section is so chaotic that I can't tolerate it. Yuhui said in front of the camera last night that the editor made 'nonsense replies'", and then listed in detail who wrote the short essays in each live broadcast.

Response from the official account of Oriental Selection

As a result, Dong Yuhui did not appear in the live broadcast room on December 10, the last day of the trip to Jilin. On December 11, a large number of fans with "selection team" light signs on their heads rushed into Gaotu Jiapin's live broadcast room to send "overwhelming wealth".

Things got worse. On the evening of December 12, Dongfang Zhenxuan CEO Sun Dongxu held a meeting in the Dongfang Zhenxuan live studio. First, he criticized the editorial team for working with emotions and inappropriate communication methods. Second, he tactfully criticized Dong Yuhui for temporarily deciding to stop broadcasting because of his emotions, but respected his personal wishes. Third, he expressed that the company did not treat Dong Yuhui unfairly, and revealed that his annual salary was more than tens of millions. Finally, Sun Dongxu apologized to the customers and said that he would resolutely say no to fan circle behavior.

Later, Dong Yuhui responded with a long article in the early morning of the 13th, introducing the writing mode of the short essays selected by the East, one of which is that the editor creates independently and rarely changes or does not change it. The Jilin field belongs to this kind of situation. He also mentioned that he opposes the fan circle culture and opposes stigmatizing anyone in the name of "fan circle".

All live broadcast rooms of Dongfang Zhenxuan, including those on its own APP, stopped broadcasting for one day on December 13 and resumed live broadcasting on December 14. The incident seems to have come to an end, but the impact continues.

According to the data from Xindou, the number of followers of Dongfang Zhenxuan's live broadcast room dropped from 31.16 million on December 10 to 30.59 million at present, with a loss of 570,000 fans. On December 14, the number of online users in Gaotu Jiapin's live broadcast room reached more than 100,000, and its fans increased from 320,000 on December 10 to 1.06 million at present, with an increase of 740,000 fans. At the same time, Gaotu Group's stock price rose sharply, closing at $4.77 per share on December 14, an increase of 29.27%.

At this point, New Oriental founder Yu Minhong said the key to the matter. He responded to the matter on the evening of December 12 on the "Old Yu's Chat" program, saying, "In principle, the editor-in-chief (it can be seen that it is not just the company's editor) should speak out through normal channels . Now that I have said something online, it is not particularly appropriate. We are all brothers in the same trench."

The biggest problem exposed by this short essay incident is the internal management problem of Oriental Selection, rather than the fan circle problem.

Zhou Ke, the head of operations of a certain MCN organization, concluded that there are several key points that need to be responded to in Oriental Selection. First, the anchor's speech was well received, and the team rushed to say that the manuscript was written by themselves. Where is the team collaboration of Oriental Selection reflected? Second, the editor used the company's account with millions of fans to reply to personal work. Who is responsible for the review mechanism and content risks? Does Oriental Selection have an internal power imbalance? Third, the contradiction between the behind-the-scenes team of Oriental Selection and the celebrity anchor has been made public. The company has not dealt with the relevant personnel so far. Where is the employee management of Oriental Selection reflected? Fourth, Dong Yuhui once said that the company required confidentiality of salary and benefits. Is it appropriate for the CEO to make it public now?

Zong Xing, CEO of a maternal and infant consumer brand, also said that Sun Dongxu's response criticized the two parties, but did not respond to or even reflect on the company's management issues . "This kind of response can easily provoke disputes again, and Dong Yuhui's fans have magnified the negative impact of the matter. The result is that both Dongfang Zhenxuan and Dong Yuhui lose, and the competitor gains."

In the end, it was Yu Minhong who came out to cover the bottom. On December 14, Yu Minhong released a video statement to respond to the recent controversy over the short essay. He mentioned: The editor's approach seriously lacks professionalism, which shows that there are big loopholes in the company's management. Sun Dongxu mentioned Dong Yuhui's salary when explaining the problem, which was also inappropriate. As the chairman, I have leadership responsibilities and I also expressed my apologies to Yuhui.

2. There were signs of rifts between anchors and senior management

To answer the question of "Who is more dependent on whom, Dongfang Zhenxuan or Dong Yuhui", we must first look at how Dong Yuhui became Dong Yuhui.

Back to the beginning, Dongfang Zhenxuan became popular on WeChat Moments thanks to a video of Dong Yuhui selling steaks. While selling a steak worth 299 yuan in the live broadcast room, he explained the product in both Chinese and English, while making fun of himself for having a face like a "Terracotta Warrior". The live broadcast scene with both knowledge points and jokes made him and the "Dongfang Zhenxuan" live broadcast room instantly popular.

Also popular is the copy that has been recited by countless fans: "When you are memorizing words, killer whales in Alaska are jumping out of the sea. When you are doing math problems, seagulls in the South Pacific are flying over the coast. When you are studying at night, the night sky over the Earth's Arctic Circle is colorful. Don't question the problems you are doing now and the texts you are memorizing. They will eventually take you to a farther place."

It can be said that content is the barrier of Oriental Selection. Poetry, songs, famous allusions, hot jokes, and popular quotes are the biggest killer of Dong Yuhui and the hosts of Oriental Selection.

In the later stage, Oriental Selection also deliberately magnified this characteristic of Dong Yuhui. During the live broadcast outside, Dong Yuhui read out the "short composition" to gain time for the transition. The warm-up video also mentioned that this was "a short composition written by Yuhui."

But the reason why Dong Yuhui has become what he is today is not only due to his own accumulation and hard work. Dong Yuhui's development into a major iconic IP of Oriental Selection and even Douyin live e-commerce is not entirely due to himself, but also the support of the company and platform behind him. "This process combines the background of Yu Minhong and New Oriental, the support of the Douyin platform, and the resources invested by Oriental Selection in supply chain, after-sales and advertising traffic. Many parties have jointly shaped Dong Yuhui." Zhou Ke said.

From this perspective, the company and the anchor are mutually beneficial. At the same time, in order to not be so dependent on a single anchor, Dongfang Zhenxuan has been actively "getting rid of Dong Yuhui" for a long time.

On the one hand, Dongfang Zhenxuan has gradually reduced the number of Dong Yuhui's live broadcasts this year. The Dongfang Zhenxuan book account, which used to focus on personal IP, has removed the "Yuhui push" label. Dongfang Zhenxuan's image on the steak packaging of its own brand has also disappeared, and Taobao's first broadcast did not use the "leading anchor" Dong Yuhui. All this shows that the company wants to highlight the "goods" rather than the anchor.

On the other hand, in September this year, the "2,000 Dong Yuhui sliced ​​accounts" incident caused dissatisfaction among fans, who believed that Dongfang Zhenxuan was constantly squeezing their commercial value. For this, Yu Minhong also apologized specifically and pointed out the operational problems of his company, "There was no communication with me in advance, no communication with the anchors in advance, and no pre-prepared regulatory measures for bad businesses." Perhaps at that time, the company's operational and management loopholes had begun to emerge.

At the beginning, it was Oriental Selection that spared no effort to deify Dong Yuhui, but when Dong Yuhui became Dong Yuhui, new challenges for the company began.

Li Hao, founder of Kas Consulting, said that Dongfang Zhenxuan is essentially an MCN company . The business model of MCN is very challenging to human nature. On the one hand, if the top influencers have too much influence on the performance and account for too much, the boss will not be able to sleep well. On the other hand, if the influence of the influencers is too great, their mentality will also change. How much is enough?

Dong Yuhui mentioned many times that he is still just an employee. At the 30th anniversary celebration of New Oriental some time ago, Dong Yuhui said: "There are no seats for performers, and I couldn't get in. As a result, Teacher Yu found out that I didn't have a ticket and temporarily arranged a seat for me. In the end, the executives sang together, and I refused to go on stage because I was not an executive. As a result, I was forced to go up to disrupt the performance."

In addition, regarding Dong Yuhui's income, according to Shenzhen Net, Dong Yuhui's income consists of annual salary plus options, and his actual annual salary is about several million after tax, but the options have not yet been issued, and the first batch of options is expected to be released in April next year. According to the provisions of most companies' option contracts, if Dong Yuhui leaves before April next year, all his options will be reset to zero.

Some industry insiders believe that Dongfang Zhenxuan has been intentionally controlling Dong Yuhui, but the problem is that Dongfang Zhenxuan still relies on Dong Yuhui in essence, and fans also feel that Dongfang Zhenxuan cannot do without Dong Yuhui. Under this premise, fans feel that the company has treated Dong Yuhui unfairly, and they want to seek justice and fight for Dong Yuhui's rights. This has happened many times, and there are signs of fan circleization.

Dong Yuhui’s fans’ “comment control behavior” circulated online

In essence, the success of Oriental Selection is inseparable from the support of fans. How to guide individual fans to rationally view the anchor IP and ultimately convert individual fans into brand fans is a test of the company's brand capabilities. Zong Xing said that at present, the conflict between the anchor and the senior management within the company has made things even more difficult.

"For Oriental Selection, it is not only necessary to continue to constrain and bargain with the anchors, but also to take into account the management coordination issues within the company. However, with the formation of opposition within Oriental Selection, coupled with the voices of fans "protecting Dong Yuhui", the future of Oriental Selection has an additional layer of uncertainty." Zhou Ke has the same view.

3. Eastern Selections cannot escape management issues

The “short essay incident” plunged Oriental Selection into an unprecedented public opinion crisis.

In fact, the management difficulties of MCN companies are a common dilemma faced by all "live streaming e-commerce" companies that rely on big anchors.

In the three years of rapid development of live streaming e-commerce, Qianxun Holdings and Chenfan E-commerce have experienced the tax evasion crisis of Viya and Xue Li, Liziqi and Langweixian have experienced the separation crisis with the MCN agencies behind them, Li Jiaqi and Crazy Xiao Yangge also had personal public opinion crises this year, and Xinxuan has experienced an "internal strife" crisis similar to that of Dongfang Zhenxuan.

It can be seen that the real reason behind these crises is poor management. Therefore, if a company or an industry wants to develop healthily and long-term, it cannot only focus on GMV. The lessons learned in management must be made up as soon as possible before the crisis comes.

For Dongfang Zhenxuan, which is undergoing business transformation with the support of a listed company, dealing with such difficult problems is even more critical, because the dissatisfaction of the capital market and consumers will be directly reflected in the stock price.

Throughout 2023, Oriental Selection did not have an easy time.

In July this year, the Douyin account of "Dongfang Zhenxuan's self-operated products" issued a suspension notice, saying that it would suspend operations for three days due to regulatory requirements. Subsequently, Dongfang Zhenxuan started broadcasting on its own APP and announced a 15% discount promotion. For a time, rumors of Dongfang Zhenxuan's departure from Douyin and self-operation were everywhere, but the GMV, number of users and consumer experience of the Dongfang Zhenxuan APP still need to be further improved.

Then in August, Dongfang Zhenxuan entered Taobao Live, and the GMV of the first broadcast exceeded 100 million, further strengthening its multi-platform layout. After the first broadcast, Dongfang Zhenxuan's Taobao live broadcast was tepid. It stopped broadcasting for nearly a month after Double 11 and resumed broadcasting on December 12. But at the same time, its traffic on Douyin is facing a decline. Judging from the sales data of Douyin, Dongfang Zhenxuan fell out of the top five in the sales list for two consecutive months in October and November this year.

In order to achieve performance, on October 17, Dongfang Zhenxuan launched a 199 yuan paid membership activity on its self-operated APP, which was criticized by many users on social platforms as "useless". After that, the company continued to focus on the tourism business and launched cultural and tourism products in cooperation with third-party suppliers on the APP on December 10. Relevant data showed that the sales of cultural and tourism products exceeded 16 million yuan on the first day of launch.

Oriental Selection has been making various moves this year, and announced on November 21 that the board of directors approved the sale of its education business to its parent company New Oriental for RMB 1.5 billion in cash. After the sale is completed, Oriental Selection will become an operator of self-operated products and live broadcasting business.

The completely transformed Oriental Selection is now at a critical moment where it needs to make achievements to prove itself. But just as Oriental Selection is preparing to make a big move, the management problems that were previously ignored in its development have been exposed.

Some people believe that live streaming e-commerce involves the human nature game among multiple parties. If the balance is not good or there is a slight deviation, the interests of all parties will be damaged. At present, New Oriental’s transformation is still not thorough enough.

"Even a company like New Oriental, which has decades of management experience, is still a newcomer in the live streaming circle. It still has shortcomings when faced with difficult problems such as how to distribute profits between the company and big anchors, how the company manages big anchors, and how to balance the relationship between itself, the anchors and consumers," said Zong Xing.

"But now it seems that the game between the company and the anchors has quickly escalated into a three-way battle. The crisis of dependence on big anchors has not been resolved, but a crisis of consumer trust has come instead," Zhou Ke said.

On December 14, a media outlet reported that a leaked chat record showed that Yu Minhong was currently faced with a difficult choice between Sun Dongxu and Dong Yuhui. "Sun Dongxu does not want Dong Yuhui to return to Oriental Selection, and the conflict between the two is inevitable." Immediately afterwards, Yu Minhong responded to the matter again, saying "It's okay, it's not that serious."

According to Southern Metropolis Daily, Oriental Selection said, "At present, Dong Yuhui is still working for Oriental Selection, but he will not be broadcast in the near future. Regarding the small composition incident, the company staff is currently investigating, and the follow-up information will be announced through the official website."

At the same time, Dong Yuhui has changed his Douyin profile to "Don't intend, don't be sure, don't be stubborn, don't be me", and the IP shows that he has returned to his hometown in Shaanxi.

There seems to be a rift within the team. Can Yu Minhong turn the tide? "I hope it won't turn out like Zhu Yici and Ma Xiaoce, Li Ziqi and Wei Nian, where they went from mutual achievement to mutual confrontation, and finally parted ways, with both sides suffering losses, " Zhou Ke said.

On the evening of December 14, Sun Dongxu also came out to release an apology video, saying that when he was explaining the problems of Oriental Selection live, his demeanor, tone and expression were a bit aggressive, and he would seriously correct it in the future. He also apologized to everyone for his unprofessional behavior of mentioning Yuhui's salary. At the same time, he explained that when he said that Oriental Selection rejected fan circle culture, he did not mean that the fans of Oriental Selection were fan circles, but that he really did not want a few people to lead the rhythm irrationally and affect the healthy environment of Oriental Selection.

Many interviewees believe that, no matter what, Oriental Selection has set many examples for the industry. If we say that Oriental Selection saved New Oriental and Yu Minhong, this time it is Yu Minhong's turn to save Oriental Selection with his management experience.

*At the request of the interviewees, Zhou Ke and Zong Xing are pseudonyms in this article.

Author: Su Qi; Editor: Jin Yufan

Source: Dingjiaoone (ID: dingjiaoone), deeply influencing innovation.