The stock price plummeted by 23%, as East Buy and Yu Hui Part Ways split up.

Source | Dong Ge's E-commerce Insights

Author | Jin Shan

Eight months after the "small essay" controversy, Dong Yuhui and East Buy have officially parted ways. The outcome seems unsurprising to many.

¥218 Million for a Graceful "Breakup"

On the evening of July 25, East Buy announced the news of Yu Hui Tong Xing's independence.

"The Company announces that, after friendly discussions between the Group and Mr. Dong Yuhui, Mr. Dong has decided to resign as an employee of the Company and as a senior management member of a consolidated entity of the Company. The resignation is due to Mr. Dong's career aspirations, commitment to other endeavors, and personal schedule, and will take effect on July 25, 2024."

Yu Minhong also awarded all profits from Yu Hui Tong Xing to Yuhui. "I arranged for Yuhui to buy the company, and the company is a gift to Yuhui. In addition, East Buy has not taken a single penny from Yu Hui Tong Xing's total revenue and profits since its establishment, leaving everything to Yuhui and Yu Hui Tong Xing to support their continued development."

According to Yu Minhong, Dong Yuhui received a gift package worth over ¥200 million. The announcement revealed that East Buy sold 100% of Yu Hui Tong Xing's equity to Dong Yuhui for ¥76.5855 million. From December 22, 2023, to June 30, 2024, Yu Hui Tong Xing generated a net profit of ¥140 million.

In his public WeChat account "Lao Yu Xian Hua," Yu Minhong also thanked Dong Yuhui: "As everyone knows, Dong Yuhui has made significant contributions to East Buy's development. Without Dong Yuhui's explosive impact, East Buy would not have grown so rapidly."

Dong Yuhui also expressed gratitude to his former company on his personal Douyin account: "Throughout this process, Teacher Yu has respected the feelings and wishes of Yu Hui Tong Xing to the greatest extent, for which we are deeply grateful." He added, "To avoid misunderstandings, I want to clarify here that after the establishment of Yu Hui Tong Xing, both I personally and the entire team have received significant improvements in compensation. Teacher Yu has also given us bonuses that exceeded expectations on multiple occasions."

Yu Minhong further stated that he would continue to support Yu Hui Tong Xing, including connecting government resources and business opportunities as before.

This seems to be Yu Minhong's compromise to public opinion. He said, "The complexity lies in the fact that, as an internet-based company, public opinion often influences our development."

Yu Minhong no longer wants to face public attacks: "I’ve reduced my appearances in front of Yu Hui Tong Xing’s camera because whenever I show up, I’m met with intense criticism. I also dare not appear in front of East Buy’s camera, as the same thing happens. I’m caught in a dilemma. As the founder of East Buy, supporting the company’s growth has become an extremely difficult task."

Dong Yuhui has gained independence and control over his account.

However, behind the seemingly graceful breakup, both Yu Hui Tong Xing and East Buy face significant challenges ahead.

Lose-Lose or Win-Win?

The breakup was an inevitable decision, but the two independent livestreaming rooms now find themselves in competition, and their paths forward are far from smooth.

For Yu Hui Tong Xing, Dong Yuhui is transitioning to a behind-the-scenes role, but the company has yet to cultivate a second "Dong Yuhui" to take the spotlight.

Dong Yuhui himself has struggled with the transition from teacher to livestreamer—at heart, he remains a scholar. The pressures of being a host have also left him visibly fatigued.

Dong has openly admitted his reluctance to sell products, saying he doesn’t enjoy the job. In a June interview, he revealed that his parents have been harassed due to his livestreaming career: "Suppliers often contact me, and when they can’t reach me, they go to my rural hometown to find my parents. My parents often keep their doors locked. I feel guilty about this. I often think about quitting this job."

Dong also confessed in the interview, "It’s hard to say I enjoy my current life. Except for a few days in Hainan where I could breathe freely, I rarely smile in my daily work."

Independence has brought Dong Yuhui even more pressure.

Li Chengdong, founder of Dolphin Research, noted that Dong faces pressure from three fronts: (1) investors in the listed company who bought East Buy stock based on their faith in Dong and have seen shares plummet over the past year; (2) internal team members, as the pillar of the company with the highest salary, he must deliver results and can’t simply refuse to sell products; and (3) public opinion, with every word and action under intense scrutiny.

Many top livestreamers on major platforms step back from the spotlight after earning enough, transitioning to behind-the-scenes roles while letting secondary IPs take over.

But for now, Dong Yuhui can’t act as freely as he’d like, as Yu Hui Tong Xing must now be self-sustaining and support an entire team.

Industry insiders also point out, "The peak period for a livestreaming star is about three years of big gains." It’s a shame that a livestreaming room at its peak has repeatedly been embroiled in management controversies.

For East Buy’s livestreaming room, the challenge is different: how to transition from a livestreaming e-commerce company to a brand or e-commerce platform.

Compared to an MCN agency, brand and product companies command much higher valuations in the capital market.

After completely parting ways with Dong Yuhui, East Buy’s path to developing agricultural products and becoming a Costco-like premium e-commerce platform won’t be easy.

When initially launching the East Buy app, Yu Minhong envisioned the future: "Without an app, we have no home. Without a home, we’ll always be wanderers. Unless we become a product company whose sales rely on channels rather than self-promotion, the app is indispensable."

Without Dong Yuhui, East Buy faces overall performance pressure.

According to BOCOM International’s estimates, after the split with Yu Hui Tong Xing, East Buy’s short-term financial performance will be impacted. In fiscal year 2025, East Buy’s GMV may drop by 34%, revenue by 9%, and profits by 20%.

The Ultimate Victims—Small Shareholders

Whether Yu Minhong and Dong Yuhui’s future paths will be fortunate or disastrous remains to be seen. But the victims have already emerged.

The day after the news broke, East Buy’s stock closed at HK$9.5, down 23% in a single day, wiping out nearly a quarter of its market value.

Many small shareholders questioned the deal, publicly stating that while a similarly sized "Friends Trading" is valued at ¥2 billion, Yu Hui Tong Xing was sold for only ¥76 million, potentially undervaluing company assets.

This reaffirms a market truth: avoid investing in companies overly reliant on a single IP or business line.

East Buy and Yu Hui Tong Xing will continue to face pressure.

References:

1. Yicai, "Dong Yuhui is free, Yu Minhong saves face, small shareholders are screwed."

2. Huxiu, "Yu Minhong sends off the god, the dead end becomes a way out."

3. Zimubiao, "Dong Yuhui buys his freedom, Yu Minhong sends off the god."