New Oriental and Unit East Buy Shares Tank on Top Livestreamer Dong Yuhui's Quit

TMTPost -- The U.S.-traded shares of New Oriental Education and Technology Group tumbled around 5.5% Thursday on departure of Dong Yuhui, the most influential live host of Chinese private tutoring giant’s e-commerce unit East Buy Holding Ltd. Hong Kong-listed shares of the unit opened 15% lower on Friday.

Dong Yuhui has decided to leave East Buy and resign from his position at the senior management of the company, according to a filling with the Stock Exchange of Hong Kong (HKEX) released Thursday. The decision of leave, effective on July 25, was made based on Dong’s career aspirations, commitment to his other pursuits and personal time arrangements, East Buy said in the filling.

In addition to paying the promised benefits and compensation in full to Dong,New OrientalChairman Yu Minhonghas sought the approval of the Board and the Board's Remuneration Committee to distribute all remaining undistributed profits of Dong’s namesake venture Time with Yuhui to the influencer, according to the filling. Yu said, commenting on Dong’s quit on TikTok’s Chinese version Douyin, East Buy has not taken any of the income and profits generated by Time with Yuhui since its establishment, and has left all of them to Dong and his venture to support their further development. Yu’s remark suggested Dong may receive additional reward of more than RMB100 million. The venture raked in net profit of RMB141 million (US$19.3 million) from its founding date December 12, 2023 to Jun 30, 2024, data from East Buy showed.

In a separate filling, East Buy said New Oriental and Dong agreed on a deal that allows Dong to purchase 100% of equity interest in Time with Yuhui from a subsidiary of New Oriental based in Beijing at a price of RMB76.6 million (US$10.5 million). Dong is required to make initial payment of RMB38.29 million within 30 working days after the agreement signed, and pay the rest of RMB38.29 million in ten working days from the completion of the sale. But Yu told netizens on Douyin that he will make arrangements for Dong’s payment, which means Time with Yuhui will be a free gift to the livestreamer.

In a posted on Douyin following announcement of East Buy, Dong confirmed his resignation. Time with Yuhui will start to operate independently and sail into the vast sea alone from today, Dong wrote. He stressed his team “can only go all out”in the face of the unpredictable future.

Yu then released an open letter to shareholders of Easy Buy, blaming Dong’s departure for “the complicated public opinion disputes, coupled with the guidance and rumors of a few malicious forces”. Such public opinion environment has directly led to the rift between East Buy and Time with Yuhui and huge uncertainties of two organizations’development, therefore, the stock price fluctuated wildly and the credibility and reputation of the companies were damaged, Yu wrote.

Dong and East Buy’s first and most public dispute emerged last December. East Buy staff responded on social mediaon December 6,revealingthat all the s used for live broadcasts are collaboratively created by the hosts, the content-writing team, filming team and editing team. The reply irritated Dong’s fans, who insisted what Dong said was his own inspiration and further claimed East Buy downgraded his contribution to live-stream production. The former CEO Sun Dongxu subsequent response and apology made things even worse. Sun noted that Dong's annual salary is more than tens of millions of yuan and expressed a firm stance against the so-called fan culture.

Raging Dong’s fans then called for a boycott of East Buy. A large number of them chose to unfollow the company’s live-stream channel and many rushed to live-stream sessions of its rivals to place orders. On December 8 alone, the live-broadcast session of East Buy’s peer Gaotu Techedu received about 600,000 visitors, up from only 27,000 viewers the previous day. East Buy lost more than 100,000 followers on Douyin platform from December 9 to 13, and its Hong Kong-listed shares plunged more than 19% in the same period.

New Oriental’s management soon took actions to reassure Dong’s fans. East Buy announced on December 16 the removal of Sun Dongxu from the positions of Executive Director and CEO, citing Sun’s mishandling of the inciden hurt the firm’s brand and reputation. A day later, East Buy promoted Dong Yuhui to senior partner and another day later, New Oriental chairman Yu Minhong, who takes over CEO of East Buy, disclosed the board of directors decided to name Dong Yuhui as chairman assistant and vice president of its subsidiary, New Oriental Tourism.