After Dong Yuhui left, Yu Minhong answered everything online.

Dong Yuhui has finally resigned, carrying the favor of his "mothers-in-law", leaving behind the "generous" Yu Minhong and unwilling investors.

East Buy has lost Dong Yuhui, its top IP and important asset, and the company's stock price has plummeted. On July 25, when the resignation letter was announced, East Buy's total market value was 12.8 billion HKD; by the 26th, it had shrunk to 9.8 billion HKD, a two-thirds drop from the 33 billion HKD before the "small essay" incident.

On the afternoon of July 26, Yu Minhong hosted a conference call to explain everything to investors.

As of the meeting, East Buy, which has been operating for two and a half years, had 29.85 million followers, while Yu Hui Tong Xing, which has been operating for half a year, had 21.72 million followers.

At the beginning of his speech, Yu Minhong tried to empathize with the investors who had suffered losses.

"My shares were not given by the company. Like everyone else, I bought a lot of shares in the market when it was called New Oriental Online. I want to prove to everyone that I will take the company's operation and development very seriously."

"Today, I asked my personal financial advisor: What is the status of the shares I bought in East Buy so far? He said, 'Just work hard, and it will take several more years of hard work to recover the losses.' To get my money back, I have to keep working hard."

In this transaction, investors focused on several data points, such as the 100% equity valuation of Yu Hui Tong Xing at 76.5855 million yuan, while Yu Hui Tong Xing retained 140 million yuan in net profit on its books. Moreover, this 140 million yuan was the net profit that should have belonged 100% to East Buy after distributing Dong's personal rewards.

In addition, Yu Minhong said, "I arranged for Yuhui to buy the company, and the company was given to Yuhui."

What kind of transaction is behind this? On the 26th, Yu Minhong explained: In the past six months since Dong Yuhui decided to become independent, he did not receive any additional equity rewards from the company. The difference of more than 70 million yuan was compensation for this.

On the 26th, Yu Minhong also tried to convince investors that East Buy's future would be better.

According to Chan Mama data, East Buy's peak daily sales before the "small essay" incident were 50-75 million yuan, but now they are only 5-7.5 million yuan. The Yu Hui Tong Xing live broadcast room's average sales in the past 30 days were 10-25 million yuan, already surpassing East Buy.

"Due to confidentiality and other reasons, I couldn't communicate with everyone in real time, which led to some shareholders' disappointment and anger. I will definitely redouble my efforts in the future, devote more energy to the operation and management of East Buy, to repay everyone and strive to give everyone an increasingly better East Buy."

In addition, Yu Minhong stated that it would be impossible for East Buy to have another anchor independently establish a platform in the future. "This kind of operation model would lead to certain private interests and unpredictable outcomes."

What happened in the past six months?

Yesterday, everyone saw the spin-off of Yu Hui Tong Xing. I deeply regret that it ended this way. But given the company's actual situation, this outcome was indeed unavoidable, and I even believe it is beneficial for the company's development.

East Buy started broadcasting on my "Old Yu's Casual Talk" on December 28, 2021. After the "double reduction" policy, the online education business was completely wiped out. After discussions, and my personal insistence, we decided to sell agricultural products while promoting culture and knowledge.

By June 2022, Yuhui revitalized East Buy. From mid-2022 to the end of 2023, despite many ups and downs, it was essentially on an upward trajectory.

Some incidents also occurred during this time, which led to the "small essay" incident at the end of 2023.

Before this, I was the company's chairman and basically did not participate in any daily management or operations. After the end of 2023, I realized the seriousness of the situation and personally took on the role of CEO.

At my age, taking on this role is a bit of a stretch, even though I am still a vibrant person.

As a company centered on live-streaming sales, I know Yuhui's value is crucial. After the board's authorization, we offered Yuhui a good compensation package to retain him.

Yuhui also trusted me, feeling it was safe to continue working under my leadership. To avoid conflicts and allow both sides to leverage their strengths, I suggested establishing Yu Hui Tong Xing, entirely led by Yuhui, with him registered as the sole executive general manager at the time of incorporation.

Why wasn't Dong Yuhui given equity at the time of registration?

As a listed company, once an individual holds shares in a subsidiary, they cannot receive shares in the parent company.

To ensure Yuhui could receive shares in the listed company, we anticipated that both platforms would grow simultaneously, increasing the value of the listed company's shares.

There are rumors that Yu Hui Tong Xing's registered capital was not fully paid. This is a misunderstanding. The registered capital was fully paid in the week of registration.

To allow Yuhui to focus on his work, I did not set performance requirements for him, only telling him to promote culture, interview authors, and explore cultural tourism. Selling goods was optional.

I naively thought that the two platforms could operate independently, supporting each other behind the scenes while appearing separate on the surface, creating a good model where everyone received satisfactory treatment and income. However, external interference and internal conflicts disrupted this plan.

How did external factors affect East Buy?

In the past six months, East Buy and Yu Hui Tong Xing encountered a powerful storm online... Many people fanned the flames, including various interest groups.

For example, those jealous of East Buy's success, competitors, and possibly capital-backed manipulators. These are just speculations; I have no concrete evidence. Fans of both platforms became polarized.

Initially, I tried to mediate, desperately trying to please both sides. I often appeared on both platforms, but instead of balancing the situation, I ended up burning myself.

In March, online attacks caused me significant losses, with endless rumors about my conspiracies, stinginess, and employee abuse. It seemed I had become the most evil capitalist and boss in history.

At my age, I don't care about external comments, but it did severely impact the company's operations. East Buy's anchor team of over 30 people, including management and myself, was deeply affected.

I couldn't implement any strategic plans because any action would trigger fierce online attacks. Even posting a travel video would attract swarms of critics. This led to increasing instability in the stock price despite rising GMV.

In late February and early March, Yuhui and I frequently discussed this. With Yu Hui Tong Xing's stable growth and strong daily sales, Yuhui raised the possibility of independence.

To secure the outside, we must first stabilize the inside. When internal conflicts become irreconcilable and external forces exacerbate them, I felt that without separation, mutual destruction might ensue.

Second, since Yuhui also desired a larger platform for development, I considered letting Yu Hui Tong Xing go independent.

Yuhui is, in a sense, the company's core asset, a rare talent. But given the circumstances, independence seemed inevitable.

After discussing with core managers and some board members, we decided to initiate Yu Hui Tong Xing's independence process at the end of the fiscal year (May 31).

How was the 76.585 million yuan valuation determined?

We fully communicated the specific situation with the valuation company and the listed company's lawyers to ensure procedural correctness. After the valuation company's report last week, we did not argue about the price.

We chose to proceed with the valuation in a friendly manner.

What is East Buy's future?

The various issues, internal conflicts, and external complexities between the two companies have been resolved once and for all, creating a cleaner environment.

For East Buy, we can now boldly implement reforms without worrying about imbalances or external pressures.

Since June, I have actively participated in East Buy's management, engaging with the team and external partners to plan future activities.

Did Dong Yuhui leave because his compensation was too low?

We cannot disclose specific data, but the principle is this: The board-approved compensation for Yuhui was reasonable, even generous.

Yu Hui Tong Xing's books retain 140 million yuan in net profit, which should have belonged 100% to East Buy after distributing Yuhui's rewards.

According to the agreement, Yuhui received 50%, leaving 140 million. His personal share will be reflected in the fiscal report.

In addition, Yuhui receives a decent monthly salary and company equity. Why reward him with the remaining 140 million, which should have belonged to East Buy?

This was proposed by me and approved by the board for two reasons:

First, Yuhui contributed significantly to East Buy's growth. Rewarding him upon independence expresses goodwill and sets a positive example.

Second, during initial negotiations, Yuhui was promised income and equity. However, since we discussed independence in February, the equity became meaningless. If the tenure was incomplete, the equity would be reclaimed.

Yuhui contributed without receiving equity for six months, so cash compensation was justified. I proposed this to the board's compensation committee.

Does the transaction sacrifice East Buy shareholders' interests?

We extended goodwill to ensure Yu Hui Tong Xing's future growth and to honor Yuhui's two-year contribution to East Buy.

This has no personal motive. A friendly separation enhances social reputation and leaves room for future collaboration, protecting the company's interests.

I decided to have New Oriental cover the 70 million yuan through a partnership with Yuhui. This complies with New Oriental's U.S. listing regulations and does not harm East Buy or Yuhui's interests.

Rest assured, this is the message I want to convey.

Will Yu Minhong personally be a shareholder in Yu Hui Tong Xing?

Yuhui and I have no barriers between us. Despite minor conflicts, we are close friends, even though I am older than his father.

I will never participate in Yu Hui Tong Xing's capital operations or development because I am East Buy's chairman and CEO.

Today, I wrote a letter to all anchors, encouraging them to maintain friendly cooperation.

The two companies will compete, but I hope it is friendly and mutually supportive.

How will East Buy cope without its top star?

East Buy's initial growth came from the influencer economy. After anchors boosted its popularity, product sales surged. At one point, its market value was very high. To this day, one leg of East Buy still relies on live-streaming and anchors to attract fans and drive revenue.

After this turbulence, the current anchors have matured. Recently, I arranged for them to participate in various events. I now personally mentor them, spending as much time as possible with them.

I know anchors and traffic are crucial for East Buy's future. I will push the company to discover more talented anchors and boost traffic.

Controlling negative publicity is now a priority.

While we cannot eliminate all negative incidents, these young anchors are still learning. We should be tolerant of their mistakes.

After two years of effort, East Buy's self-operated product system has matured. My household almost exclusively uses East Buy products, including the sparkling water I'm holding now.

I believe our products should benchmark against Sam's Club, and we are moving in that direction. This is the second point.

Third, stabilizing the foundation. Many have warned us that if Douyin shuts us down, we'll have nothing. I realized early that relying solely on Douyin, while beneficial, is unstable.

We now have our own app, though small, with over 200,000 members and millions of downloads.

I am also exploring an offline-online model leveraging New Oriental's 700-800 teaching centers, potentially opening physical stores nationwide.

In short, I will work diligently.

Will other anchors follow Dong Yuhui's example and go independent?

Yu Hui Tong Xing's establishment is a unique case. Yuhui's influence is extraordinary, and independence was a necessary choice at the time.

The final outcome was independence, which taught us a lesson.

Looking ahead, just as I never allowed star teachers at New Oriental to set up independent studios, we will offer anchors good compensation and development platforms. But we aim to build a united, high-performing team.

In the foreseeable future, East Buy will not allow another anchor to establish an independent platform. This model leads to private interests and unpredictable outcomes.

I can confidently say our future direction is "shared prosperity, shared hardship, collective development, and common wealth."

(The speech has been edited for readability.)