East Buy controversy reflects rapid evolution of China’s consumer ecology
Published: Dec 19, 2023 10:54 PM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

East Buy, a subsidiary of Chinese private tutoring giant New Oriental, has been a focus of public opinion in recent days. Internal conflicts within a company have rarely attracted such strong social attention, but this time it is an exception, reflecting the rapid evolution of China's consumer ecology and the complex impacts it has had on the economy and society.

Chinese enterprises are striving to adapt to the changes in the consumption ecology and convert them into higher revenue and stock prices. During this process, challenges will persist.

New Oriental has been regarded as a successful case of a company that transitioned from a traditional enterprise to one with a business unit that becomes a live-streaming e-commerce giant. But during the past few days, a dispute surrounding the company and its star live-streamer Dong Yuhui has escalated. 

It originated in claims by East Buy staff on social media stating that the scripts used for live broadcasts are collaboratively created by teams, instead of solely by Dong. These comments have sparked discontent among Dong's fans, some of whom have criticized East Buy for downplaying Dong's contribution to live-stream production.

China's e-commerce sector is booming, and both the consumption ecology and the business logic behind it are gradually changing. How East Buy treats Dong, and how it views Dong's value and contribution, to some extent, reflects a process of how traditional enterprises are adapting to the business logic of live-streaming e-commerce. A transformation is necessary, but it will be full of twists and turns.

East Buy's shares closed 22 percent higher at HK$32 ($4.10) a share in Hong Kong on Monday, after the platform announced over the weekend that Dong would return to its live broadcast salesroom on Monday with the title of senior partner. On Tuesday, the shares remained relatively stable. According to media reports, Dong was also appointed as the cultural assistant to the chairman of New Oriental Education and Technology Group and vice president of New Oriental Tourism Group. It seems the capital market has rewarded New Oriental's decisions.

Dong, a former English tutor, has emerged as a powerful live-streaming e-commerce influencer. Dong becoming a partner has let the public see his business value, and, more importantly, the rise of China's live-streaming e-commerce sector. 

According to GlobalData, China is set to retain its dominant position in the global e-commerce landscape. Bolstered by remarkable 9.9 percent growth, the Chinese e-commerce market is anticipated to surge to 15.2 trillion yuan ($2.13 trillion) in 2023, driven by the ongoing shift of consumer preferences from bricks-and-mortar stores to convenient online shopping, GlobalData said in August.

What lies behind the rise of China's e-commerce sector is the strong consumption power of the young generation. This power is astonishing, as can be seen from the stock price movements of East Buy in the past few days and trading volumes in its live broadcast salesroom.

Several Western media outlets in recent weeks have published articles saying "China's consumer sector fell into deflation" or "consumption remains weak," which constitutes a new round of bad-mouthing China's economy with a sinister intention. This reflects their ignorance of a big country that has a population of 1.4 billion and the world's second-largest economy. 

China's economy is an uneven and complex landscape. At the least, the pessimists overlook the astonishing consumption power of the young generation in China.

East Buy represents a crucial step in New Oriental's transformation into the live-streaming e-commerce business. The success of East Buy and its star live-streamer Dong offer a window to observe that traditional Chinese enterprises are striving to win the consumption market created by China's young generation, and convert it into income and stock price growth, by adapting to the business logic of live-streaming e-commerce. 

It may take time, but Chinese companies are adjusting. In this process, China's consumption power will be further explored and promote sustainable economic growth.

The author is a reporter with the Global Times.