No breakup is ever completely clean, and commercial breakups are no exception.

On November 4, Dong Mingzhu and Yu Minhong co-streamed live, propelling Dongfang Zhenxuan to the top of the live sales chart. On the morning of November 5, some media outlets reported this news, but a third party, "Yu Hui Tongxing," was mentioned in the headline: "Dong Mingzhu and Yu Minhong co-stream for sales, Dongfang Zhenxuan tops sales chart, Yu Hui Tongxing ranks fifth."

Interestingly, on the afternoon of November 4, another media outlet published a contrasting news report, but the objects of praise and criticism were reversed: "Yu Hui Tongxing's Double 11 sales exceeded 1 billion yuan, Dongfang Zhenxuan did not make the top 10 Double 11 sales chart."

It has been 100 days since the announcement of their "breakup" on July 25, but onlookers inevitably continue to compare and comment on Yu Minhong and Dong Yuhui, as well as Dongfang Zhenxuan and Yu Hui Tongxing. Even their respective "fans" continue to engage in online debates across various platforms, including stock forums, news comment sections, and live streams.

While outsiders remain fixated, the parties involved have moved on to their own futures.

01

Two Paths

On the evening of July 25, 2024, Dongfang Zhenxuan announced on the Hong Kong Stock Exchange that Dong Yuhui had decided to step down from his position as an employee and senior executive of the company, effective immediately.

The announcement mentioned that in addition to paying Dong Yuhui all promised benefits and compensation, Chairman Yu Minhong had sought board and compensation committee approval to distribute all remaining undistributed profits of Yu Hui Tongxing to Dong Yuhui. Furthermore, in accordance with listing rules and the company's articles of association, Yu Minhong had made arrangements for Dong Yuhui to acquire the settlement consideration for Yu Hui Tongxing.

Perhaps to avoid controversy, Yu Minhong responded and explained the situation in layman's terms on his personal WeChat public account that evening, adding two comments below the article:

"'Yu Hui holds the equity purchase funds required for Yu Hui Tongxing, and I have arranged for payment in accordance with listed company rules and company regulations.' This means that I have arranged for Yu Hui to purchase the company, which is a gift to him."

Perhaps learning from a previous "breakup" years ago, Yu Minhong chose to part ways graciously and honorably this time, when conflicts were too great to reconcile and both friendship and interests could not be balanced.

Since then, Yu Hui Tongxing has gradually distanced itself from Dongfang Zhenxuan's influence. Tianyancha shows that on August 7, Beijing New Oriental Xuncheng Network Technology Co., Ltd. withdrew from its position as a shareholder of Yu Hui Tongxing (Beijing) Technology Co., Ltd., with Dong Yuhui becoming the actual controller of the company and Yu Minhong resigning as supervisor. On September 3, Wang Jielin, the former financial responsible person of Dongfang Zhenxuan, resigned, replaced by Ma Nan.

At the same time, Yu Hui Tongxing moved out of the office space originally provided by Dongfang Zhenxuan and began large-scale open recruitment for positions including videographers, short video copywriters, live audio engineers, live stream assistants, live stream scene controllers, category operators, and anchors.

Gradually, Dongfang Zhenxuan and Yu Hui Tongxing embarked on similar yet distinct paths.

They are similar in that their positioning is extremely alike, both focusing on knowledge and cultural dissemination while selling products. According to a report by China News Weekly, Yu Hui Tongxing continues Dongfang Zhenxuan's positioning, dividing its main business into three sectors: culture, cultural tourism, and agricultural products, forming four major IP content sections: "Read the Mountains and Rivers," "Read Ten Thousand Books," "Love Reading," and "Love Life."

They differ in their development paths. Dongfang Zhenxuan follows a relatively traditional traffic + product route, while Yu Hui Tongxing relies more heavily on traffic. According to media reports, in the month after its independence, Yu Hui Tongxing's account gained over 1.3 million new followers, with sales reaching approximately 700 million yuan in 30 days, averaging around 23 million yuan per day.

In a speech in October, Yu Minhong thanked Dong Yuhui, saying, "Due to the popularity of Teacher Dong Yuhui, Dongfang Zhenxuan's platform gained popularity much faster. Although Yu Hui Tongxing is now independent, which is a normal business development phenomenon, the combination of these two platforms has indeed played a significant role in promoting and developing Chinese agricultural products, so I am very happy."

The title "Teacher Dong Yuhui" is respectful yet unfamiliar, much like the relationship between Yu Minhong and Dong Yuhui, and between Dongfang Zhenxuan and Yu Hui Tongxing.

02

Drifting Apart

How have Dongfang Zhenxuan and Yu Hui Tongxing fared since their "breakup"?

Starting with Dongfang Zhenxuan, as of now, it has 29.395 million followers on its Douyin account. It is no longer frequently discussed in the media but occasionally achieves good sales performance, such as Yu Minhong's joint live stream with Dong Mingzhu on the 4th.

Inevitably, however, the "breakup" has left scars. According to New Oriental's fiscal 2025 first-quarter financial report (ending August 31, 2024), operating profit was $293 million. Excluding operating losses from the live e-commerce business, operating profit reached $303 million. Based on these calculations, Dongfang Zhenxuan's operating loss is approximately $10 million.

For Dongfang Zhenxuan, the "breakup" with Dong Yuhui was akin to "scraping the bone to cure the poison." The so-called "poison" refers to the "wound" of traffic. Yu Minhong has repeatedly discussed the impact of public opinion:

"Complex public opinion disputes, coupled with the guidance and rumors of a few malicious forces, directly led to a rift between Dongfang Zhenxuan and Yu Hui Tongxing... This public opinion environment has led to significant uncertainty in the development of both companies, with the stock price fluctuating drastically due to external influences and the company's credibility and reputation plummeting."

At a new book launch event on August 22, Yu Minhong said, "A true entrepreneur will not be easily swayed by the times and public opinion." After the "breakup," although public opinion disputes and mutual attacks under various news comments continue, they can no longer truly harm Dongfang Zhenxuan.

△Public opinion disputes continue in Dongfang Zhenxuan's stock forum, screenshot from Eastmoney.com

Yu Minhong has stated that Dongfang Zhenxuan's initial development came from the traffic economy. To this day, one of Dongfang Zhenxuan's "feet" still relies on live streaming and anchors introducing various products to attract followers and increase company revenue. However, in the future, in addition to relying on traffic, Dongfang Zhenxuan will also rely on products, spreading culture and knowledge.

Shortly after the traffic explosion, Dongfang Zhenxuan chose to operate its own products. According to the fiscal 2024 annual report, the sales volume of its self-operated products has reached about 40%, a significant increase from 30% in fiscal 2023. According to a research report released by CICC, it is estimated that self-operated products are expected to contribute more than 80% of GMV in fiscal 2025.

Having witnessed the ups and downs of the internet, Yu Minhong has developed his own understanding of the platform model—the lively business model built on external platforms is highly fragile. To solidify the foundation for long-term development, there is still a long way to go. The path of self-operated products is essential for deepening Dongfang Zhenxuan's moat.

Currently, Dongfang Zhenxuan's self-operated products are primarily agricultural products. According to information disclosed in June, under the blockbuster strategy, Dongfang Zhenxuan's self-operated products will extend from a single category to multiple categories, gradually expanding to cover all categories in the future.

Moving on to Yu Hui Tongxing, as its name suggests, it relies on Dong Yuhui's personal IP for its start and development. When Yu Hui Tongxing was established last December, its first live stream attracted an astonishing 54 million viewers and generated sales of nearly 200 million yuan, fully demonstrating the power of IP.

After the "breakup," relying on its IP, Yu Hui Tongxing once again achieved impressive sales performance. For example, according to data released by the official account of the Xinjiang Uyghur Autonomous Region's Department of Culture and Tourism, from August 17 to 20, "Yu Hui Tongxing's Xinjiang Tour" generated nearly 280 million yuan in sales, with cultural tourism products sales exceeding 17 million yuan, breaking Yu Hui Tongxing's outdoor sales record.

On November 1, according to media reports, statistics from third-party platforms revealed that Yu Hui Tongxing's total live streaming sales in October 2024 were around 1 billion yuan, setting a new monthly sales record since its establishment.

Regardless of the merits of these two approaches, they have indeed led to different outcomes for the two entities. Dongfang Zhenxuan and Yu Hui Tongxing are walking farther and farther apart on their respective paths.

03

Mud and Wilderness

In fact, it's not just Dong Yuhui and Yu Minhong; the current live streaming industry is generally facing path selection issues. Going left means focusing on traffic with products as a secondary consideration, driven by influencers. Going right means prioritizing products with traffic as a secondary consideration, driven by the supply chain.

As early as December last year, when Dongfang Zhenxuan was experiencing internal turmoil, China Galaxy Securities pointed out, "The Dongfang Zhenxuan incident is essentially a necessary setback in the process of business model adjustment for live streaming e-commerce enterprises. In the medium to long term, if this type of company wants to achieve sustained business growth, it must ultimately complete the adjustment of its business model from influencer-driven to supply chain selection-driven."

With the recent " Overturning " (downfall) of more and more major anchors, this issue has become even more apparent. Traffic is undoubtedly important in live streaming. In this attention economy era, whoever can attract and retain traffic has the power to speak. While good products are important, only with traffic can good products be seen and become good commodities.

From this perspective, the formation of Dong Yuhui's super IP has made it possible for various e-commerce explorations and good products to become good commodities.

However, traffic and IP alone are not enough.

On the one hand, traffic is easily dispersed, and IPs can easily collapse, requiring continuous and effective operation. The formation of Dong Yuhui's IP is based on his eloquent speech and good scholarship. Maintaining this IP has become a priority. During a live stream on September 30 this year, he made multiple factual errors regarding Marie Curie.

On the other hand, what ultimately tests the longevity of traffic and IP is still the "product." Recently, many major anchors have "flipped" due to issues with their products, such as overhyped mooncakes and vermicelli. Even with his traffic, Dong Yuhui has faced multiple controversies regarding his products, such as being questioned by the fake product exposer Wang Hai on October 22 about a potato he promoted not being organic.

Traffic is indeed valuable, but blindly pursuing the traffic route can only lead to a "muddy quagmire." Only with traffic and products together is the path to the wilderness ahead clear.

At the same time, as Dong Yuhui's identity shifts from an "employee" to a "boss," he faces another challenge: gradually reducing Yu Hui Tongxing's dependence on his personal IP. There are countless precedents where personal IP-based live streams, such as those of Xin Ba and Xiao Yangge, have attempted to incubate more anchors through "taking disciples" and "recruiting new members" to scale up.

04

Conclusion

The "breakup" between Dong Yuhui and Yu Minhong has taught China's live e-commerce and business community a lesson.

This lesson covers a wide range of topics, including the dual nature of the traffic economy, the choice between traffic and products, and solutions to the human element when one's contributions overshadow those of others. As traffic becomes increasingly valuable, many people understand the importance of traffic and IP operations, but due to various reasons, miracles like Dong Yuhui's may no longer occur.