On July 26th, following Dong Yuhui's resignation from Dongfang Zhenxuan (01797. HK), Yu Minhong, founder of New Oriental (NYSE: EDU), responded to the "breakup" at the shareholders' communication meeting of Dongfang Zhenxuan.
He expressed "great regret" about the divestment of "Walking with Hui", but "this result is indeed inevitable and even beneficial to the company's development".
Yu Minhong recalled that the first live broadcast of Dongfang Selection began on December 28, 2021, and was broadcast on his personal official account "Lao Yu Xianhua". The reason is that after the "double reduction", New Oriental's online education business was almost completely wiped out.
After team discussions and personal advocacy by Yu Minhong, the positioning of Dongfang Zhenxuan was formulated as "selling agricultural products, explaining culture, and promoting knowledge". In June 2022, Dong Yuhui's bilingual knowledge anchor led the popularity of Dongfang Zhenxuan, and the company was in an upward trend, with its stock price reaching a historical high.
Until the outbreak of the "Little Essay Incident" at the end of last year, which exposed internal management problems within the team and made Yu Minhong realize the seriousness of the situation, he quickly "put out the fire" and personally took on the CEO position. "Although at this age, it is a bit difficult to stand in this position, but he is still a relatively energetic person.
At the same time, after realizing the value of Dong Yuhui as a celebrity anchor, Yu Minhong said, "I put in all my efforts and, after being authorized by the board of directors, gave Yuhui a good package and worked hard to retain him
At the suggestion of Yu Minhong, Dongfang Zhenxuan established Tonghui and registered Dong Yuhui as the sole executive director and general manager. Fully hosted by Yuhui 100%.
Some shareholders also asked why some of the company's equity was not distributed to Dong Yuhui himself during registration?
Yu Minhong responded that as a listed company, Dongfang Zhenxuan's equity distribution is very attractive to its employees. If an individual already holds the rightful shares in a company, it is impossible to acquire shares in a listed company. At the same time, the company anticipates that after the establishment of both platforms, GMV and profits will increase, and the value of the company's shares will increase.
Under this premise, "holding company shares is more beneficial for personal development or income than holding subsidiary shares," Yu Minhong said, which is why he ultimately registered 100% as a shareholder of Dongfang Zhenxuan with Hui Tong.
According to its introduction, it only took 15 days from the concept to the first sale, including office decoration, personnel deployment, and registration capital, to register independently with Hui Tong.
In order to ensure the safe development of Dong Yuhui, Yu Minhong stated that there were no performance requirements for him. "If you want to sell, sell it, and it doesn't matter if you don't." Cultural dissemination, book introductions, writer interviews, cultural tourism, etc. can be done.
Yu Minhong's initial idea was that the two platforms, Dongfang Zhenxuan and Huitongtong, would not interfere with each other, and the backend would support each other. Everyone would receive satisfactory treatment and income, "which should be a good model
But the direction of things is not satisfactory.
External environmental interference combined with internal conflicts and contradictions have created a confrontational situation among fans on both platforms. Dongfang Zhenxuan and Yuhui have been facing a powerful storm on the internet in the past six months
Yu Minhong tried to reconcile the issues on both sides and please the fans on both sides. I often appear on camera, sometimes accompanying Hui and sometimes selecting in the east, but the water is not calm, and in the end, it burns on my own head
He said that in the past three months, his image has suffered huge losses due to online bullying, with constant comments about conspiracies, attacks, and employee abuse. "It seems like I have become the most vicious capitalist and boss in the world. At my age, I don't care about external comments, but these have indeed affected the company's business development
Almost everyone's mentality, including the anchor team and managers of Dongfang Selection, has been affected by this, resulting in two problems: firstly, the unstable internal personnel status of the company; The second is that small mistakes made by anchors can trigger cyber attacks, further harming the body and mind, and bringing uncertainty to the company's development.
This uncertainty is also reflected in the stock price of Dongfang Zhenxuan. Since reaching a peak of 75.55 yuan on January 26, 2023, its stock price has been fluctuating and declining. The "Little Essay" incident and Dong Yuhui's resignation are a heavy double blow, and now the stock price is less than ten yuan, with a single day drop of 23.39% on July 26th.
The stock price should have risen, but instead fell. This is the stock market's response to the uncertainty of Dongfang Zhenxuan. Any action taken by the company, including mine personally, is in a dilemma. A series of strategic layouts cannot be implemented, and once there is an action, it will receive a violent response. "Yu Minhong said that even if it is a notice, appearing in front of the camera, or a personal travel video, there will be people coming to scold.
The GMV of Dongfang Zhenxuan is increasing, but the stock price is becoming increasingly unstable.
At the end of February and beginning of March this year, Yu Minhong approached Dong Yuhui to continuously discuss the issue of whether to be independent while traveling with Hui?
On the one hand, he believes that this is a very regrettable behavior. Walking with Hui is, in a sense, a core asset of the company, and Dong Yuhui is also a rare and outstanding talent.
On the other hand, "in the face of internal conflicts, even irreconcilable, and external forces dragging internal forces, I feel that if we don't separate, we may end up killing each other in the future," said Yu Minhong. It seems that not considering independence is also not feasible. After communicating with the company's core management and directors, he decided to initiate the process of independence with Hui Tong at the end of the fiscal year, on May 31st.
Walking with Hui is because of Yuhui. Without Yuhui, it is worthless in my mind. If Yuhui leaves, we will not be able to continue valuable operations because in the era of traffic, added value lies in people, "said Yu Minhong.
Our best posture is to let Yuhui take away the company and avoid disputes. There are no conflicts of interest behind it, and we will not participate in the same industry as Hui
From this outcome, Yu Minhong believes that at least a one-time solution has been obtained to the problems involved between the two companies, internal conflicts, and the expansion of external forces, and the environmental situation will be cleaner. For Dongfang Zhenxuan, it can also carry out development layout and reform with great fanfare, without worrying about imbalance between the two sides or external public opinion pressure.
In addition, some shareholders have questioned whether it is because Dong Yuhui's earnings are too low that they are independent from Hui's peers?
Yu Minhong stated that specific data cannot be disclosed, but the remuneration approved by the board of directors is reasonable and generous. There is a net profit of 140 million yuan remaining in the accounts of Yuhui, which is after the distribution of Yuhui's income. According to the agreement, Dong Yuhui allocated 50%, leaving 140 million. In addition, he also has a decent monthly salary and equity granted by the company. Yuhui has always been grateful for this and believes that the treatment is very good
When it comes to their relationship, Yu Minhong described it as a forgetfulness of friendship, saying, "I usually agree with my opinions and suggestions on business layout, including discussions on personal issues, but this' breakup 'is indeed an unavoidable behavior
This world is not the world of the two of us, and all factors must be considered, "Yu Minhong emphasized in the end." There is no personal purpose in this. If both sides can gather and disperse well, and at the same time win better social reputation, there may be possibilities for cooperation in the future. "In addition, he personally will not participate in any capital operation, investment, or development with Hui at any time in the future.
Yu Minhong said, "New Oriental has gone through many storms. I have been doing business for more than 30 years, and this time is also an experience