The 'dilemma' of East Buy, trapped by Yu Minhong?

For a live-streaming company, the most critical factor is its top influencers.

Clearly, East Buy, which transitioned from an education group to a live-streaming company, failed to grasp this logic. Since its rise to popularity, it has been plagued by frequent issues and negative controversies.

If East Buy continues down this path, its accumulated strengths will eventually be depleted. By then, it may have to seek a new direction and embark on a third entrepreneurial venture.

In reality, the frequent "amateur" mistakes made by East Buy, from Yu Minhong to its influencers, stem partly from their previous backgrounds and partly from the cognitive direction of its management and influencers.

Of course, the above perspective can be glimpsed from New Oriental Online's transformation process.

Previously, the challenges faced by the education and training industry affected every company in the sector. TAL Education Group, which once outperformed New Oriental, declined under these circumstances. Unlike Zhang Bangxin's focus, Yu Minhong achieved an early transformation. Beyond being the head of New Oriental, he is also a relatively successful investor.

With rich investment experience and a keen sense for entrepreneurial trends, Yu Minhong initially chose "agricultural assistance" live-streaming as his direction. It must be said that Yu Minhong bet correctly.

Had Yu Minhong stuck to his original live-streaming approach, it might never have gained traction. It was only when Dong Yuhui's live-streams broke through that New Oriental Online's transformation became so smooth.

This demonstrates Yu Minhong's exceptional ability to identify and capitalize on trends.

After the successful transformation, New Oriental Online rebranded as East Buy. While building up its influencer team, Yu Minhong also strengthened the company's logistics and self-operated systems.

Consequently, the stock price reflected these improvements in the capital market ahead of the company's performance.

In less than a year, East Buy's stock price surged over 26 times, and former CEO Sun Dongxu cashed out at a high point.

However, to outsiders' surprise, East Buy, which had thrived during its 艰苦奋斗阶段， encountered a series of conflicts after completing its live-streaming system. Sun Dongxu's "lecture incident" brought internal tensions into the open, revealing major management flaws at East Buy.

To mitigate the fallout, Yu Minhong swiftly removed Sun Dongxu and, under external pressure, established a new live-streaming company for Dong Yuhui.

Yet, the underlying management issues at East Buy remained unresolved. As a publicly listed company, it couldn’t rely solely on one individual or let a single major client dominate, as this would pose significant risks. Logically, risk diversification is standard practice, but East Buy’s unique position as a live-streaming e-commerce company complicates matters.

As Luo Yonghao pointed out, in most live-streaming companies, top influencers take the lion’s share, and the company typically revolves around them. East Buy’s approach, however, defies this norm.

Moreover, East Buy’s "balancing act" failed to achieve its intended purpose.

The facts show that Yu Minhong underestimated Dong Yuhui’s value. After the launch of "With Yuhui," its 粉丝增长 quickly became a phenomenon, and its sales soon surpassed East Buy’s. Meanwhile, East Buy’s situation worsened. Amid the earlier "123, link up!" sales pitches, Yu Minhong’s comments quickly pushed East Buy into the spotlight for the wrong reasons.

Forced into damage control, Yu Minhong issued an apology.

Subsequently, influencer Dun Dun publicly expressed disappointment with the company during a live stream, and "East Buy influencers vent frustrations on air" trended on Weibo. Another influencer, Ming Ming, stirred further trouble by remarking, "It can truly be described as a shattered landscape."

Behind all this lies a lack of management and inadequate managerial awareness. Their missteps will inevitably reflect in performance, and the continuously declining stock price seems to confirm this.

Recently, Goldman Sachs released a research report, assigning East Buy a "neutral" rating and lowering its target price from HK$18.4 to HK$15.9.