Corporate vs. Influencer Culture in China: Who will come out ahead?
How the story of the most popular man in China that you probably have never heard of is changing the business landscape in China.
In China, emerging from the prolific online retail boom driven by live commerce, also known as social commerce or live streaming commerce, is Yuhui Dong (董宇辉). You may not have heard of him, but inside China, he holds 20 million followers on social media. However, Yuhui is not your typical influencer. The soft-spoken and seemingly average looking millennial was merely an English teacher just 7 years ago.
The company he started with, EDU (新东方教育, NYSE: EDU), encountered severe decline in revenue when the Chinese Communist Party cracked down on extracurricular tutoring in 2021. To reduce operating costs, the struggling EDU made the difficult decision to lay off 60,000 employees. Nevertheless, Yuhui did not leave. Instead, he chose to continue in the company and join East Buy (东方甄选, HK:1797), a live-commerce brand under the umbrella of EDU established at the end of 2021, to explore new business growth opportunities with some of his former colleagues.
What made Yuhui so unique and useful for East Buy during this time?
In the live streaming retail arena,Yuhui has stood out with his ability to provide an extremely engaging shopping experience for consumers. He is not only humorous, but also very skilled at incorporating knowledge from various fields, such as literature, physics, and cultural stories into the products he sells. With his extensive experience in teaching English, he can also frequently switch between Chinese and English during his streams, allowing viewers to learn English while shopping. Ultimately, Yuhui has turned selling into a kind of art form, evoking his consumers not only emotionally but also entertaining, relating, and educating his audience with a wealth of inspiring knowledge through his live show. He has developed such a strong level of trust with the audience, that many are ready to follow his suggestions no matter the price.
Here are some responses from the audiences after purchasing the products recommended by Yuhui:
I just want to buy corn, and Yuhui said that what you bought here is not just corn, but our nostalgic and irretrievable childhood. I really remembered the afternoons when I ran barefoot on the field and the noisy chirping of cicadas. The corn was sold for $1 each (a bit expensive for me) , but he said that good things should not be priced too low, as it would harm the farmers. Immediately, I felt that the corn was definitely worth that price.
I got carried away and impulsively bought a type of crucian carp. Yuhui mentioned that Eileen Chang, a Chinese-born American novelist, believed that there are three things to hate in life: the lack of fragrance in beautiful begonias, the bones in delicious crucian carp, and the incomplete masterpiece "Red Chamber" (红楼梦). (At the moment, I especially want to experience the delicious food that Eileen has eaten) So, without hesitation, I placed an order for a box of crucian carp.
Actually, if I hadn't watched the livestream (of Yuhui), I wouldn't have thought of buying these types of books for my child, as they can't even finish their in-class exercises, and their extracurricular classes are also full. The real world is too impatient, and no one has the patience to accompany their children's growth slowly. However, Yuhui said that buying a set of clothes for a child can only be worn for one or two years, but buying a set of books might benefit the child for ten years. (I made the decision to purchase books because I suddenly realized that purchasing books for children should not be solely motivated by short-term benefits.)
As mentioned in the beginning, EDU was really struggling in 2021 with regulatory issues as well as start-up pains that came along with the creation of the East Buy subsidiary from the parent group. The founder and president of EDU, Yu Minhong (俞敏洪), even anticipated an annual loss of $20 million for this subsidiary over the next five years
However, with his unique connection with audiences, Yuhui catapulted onto the live commerce scene overnight. In early June 2022, Yuhui's pivotal live-streaming video, where he seamlessly taught the audience English while selling peaches and steaks, went viral and unexpectedly altered the fate of East Buy as well as himself.
Below is the video clip that made Yuhui famous overnight:
According to the report by 36Kr on Jun 16th 2022:
Just a week ago, Dong Yuhui's video explaining steak in English went viral on the Internet.... His bilingual product promotion has left the users in the live broadcast room unsure whether they should take notes or click on the purchase links.
Since then, this live streaming business has become the cash cow of the entire EDU group. Within three weeks after Yuhui's video went viral, the brand's social media followers had grown by a multiple of 20, reaching 20 million. In the year following the viral success of Yuhui's video, East Buy has achieved $700 million in sales, representing a rapid year-on-year growth of 700%. Meanwhile, Yuhui's personal social media account has gained over 7 million followers as of August 2023, which is almost double the number in June.
Just as everything seemed to be heading in the right direction for both the company and Yuhui, a shocking bombshell surfaced on social media, bringing to light the terrible treatment Yuhui was facing.
Fast forward to July 2023, during a live broadcast, East Buy publicly started suppressing him and attempting to remove him from the screen. For me personally, what left the greatest impression was when Dongxu Sun (孙东旭), the CEO of East Buy and Yuhui's direct supervisor at the time, forced Yuhui to use his hand to smash an extremely hard coconut shell. Although Yuhui shrugged it off with a smile, this public physical abuse and humiliation towards him was a clear demonstration of the condescending attitude of the executive team.
Later on, the conflicts between Yuhui and the company escalated.
By early-December 2023, the company repeatedly stated that Yuhui's role had been exaggerated, and the true contributors were the company's copywriting team working behind the scenes. However, fans quickly recognized that this was the company's attempt to completely bring him down through moral defamation, as all evidence indicates that Yuhui's performances were in fact mostly improvised.
In response, Yuhui's fans started to support their idol while criticizing the company. Surprisingly, the company not only failed to apologize for their unethical behavior, but allowed the CEO to publicly scold fans who support Yuhui during a live show.
Yuhui's incident plus the CEO's blatant provocation of fans has sparked a thunderstorm crusade against the company, turning Yuhui into a sympathetic warrior of a humble cause. This ultimately resulted in the plummet of East Buy’s stock by 20% within five days. The company leadership seems to have forgotten one golden rule: the customer is king. At the top of their corporate throne, they obviously don’t see the reality: that most fans of Yuhui are professionals striving to find success in an unrelenting and oppressive workplace hierarchy. East Buy’s target audience not only sympathizes with Yuhui’s situation; This has become a representation of their own fight against injustice and abuse in the workplace.
Many netizens seem to support Yuhui, but there are still some taking the side of East Buy. This perspective argues that being such a large organization, it cannot rely on a single employee for its development. They essentially take the side of the status quo. However, the vast number of netizens have voiced themselves clearly – they do not like what the company is doing.
So why is East Buy doing what they are doing? Well, it actually makes sense if you look at it from a business management perspective.
Don't forget, both EDU and East Buy are listed companies. Management has a direct duty to perform to the best of their abilities for their shareholders. It cannot be denied that a large company relying on a single influencer can be dangerous.
Take the example of Kanye West and Adidias. Although the circumstances are completely different, this story clearly demonstrates how any single holder of power in a business can be a threat, particularly if driven by factors external to the company itself.
Kanye did not rely on Adidas, he had his own brand and own distribution, similar to how Yuhui has his own wide distribution network composed of millions of followers.
Any management of any company who is obligated by shareholders would be concerned about this situation and would be looking for a way out.
I can understand this, but where things have surely gone wrong is in execution:
Although the corporate strategy side is understandable, the behavior of management and East Buy’s PR machine can be seen as a complete disaster.
From the view of many, Yuhui is seen as the sole savior of East Buy from bankruptcy and the company as ungrateful, taking all that Yuhui has had to offer before unceremoniously tossing him to the streets.
Even now, incensed netizens are pointing out that the company still seems to have not learned any lesson.
At one point the company actually fired the CEO in an effort to show remorse, only to hire him back a short time later. They urged Yuhui to start a new channel from scratch, separate from the East Buy business completely. This has caused many to believe that any previous apologies or concessions were nothing more than a PR play. In this way, they have managed to lose the trust of the customer not once, but twice.
On the contrary, Yuhui's new success has not been negatively affected by the incident.
The new project that Yuhui he started from scratch outside of the company — “Time with Yuhui (与辉同行）” — was a resounding success on its own. Current numbers show that he has not been slowed down. His new project has been achieving 15 million followers in only a month, while his personal account has reached an impressive 24 million, respectively. East Buy, though currently still has over 30 million followers, according to some third-party data, its sales performance has been surpassed by Yuhui's new project.
This goes to show not only the resilience of Yuhui but also the power of the influencer generation, where followers rule the game. Needless to say, Yuhui's series of successes through adversity has proven to the world that the company relies on him more than the other way around.
It is anyone’s guess how this will turn out. Perhaps East Buy will continue on the path of scaling its business and weakening Yuhui's influence. It is also possible that the company could consider compromising with the fans and making Yuhui the true CEO in order to regain public trust. Of course, regardless of what the company does, we cannot rule out the possibility that Yuhui will eventually leave and start something new.
However, what is for sure is that the influencer business model is gaining traction. What is ironic is that no matter how hard anyone including companies try, influencers are not created through choice but more circumstances. There is no equation or formula to recreate the sensation that is Yuhui. In addition, no matter how hard the corporations try and no matter the resources expended, this is unable to sway public opinion substantially. Personally, I respect Yuhui’s wholesomeness, loyalty, and humbleness, and I’m not the only one. For many, his story is a sense of justice – a representation of a struggle that too many ordinary Chinese people have encountered in their daily lives.