New Oriental’s Live Sales Account Suspended Flags Potential Breakup with Douyin

BEIJING, August 1 (TiPost)— China’s education service giant New Oriental suddenly suspended its popular livestreaming sales at Douyin temporarily , underscoring the potential breakup with TikTok’s Chinese sister.

Credit：Visual China

New Oriental’s the live e-commerce business Oriental Selection, also known as Dongfang Zhenxuan, announced on July 26 that it would halt live sales on Douyin platform in the coming three days. The e-commerce unit said the decision was made in response to requirements of rules, without elaborating. Douyin didn’t respond to the suspension that day. Soon after the announcement, Oriental Selection’s application started offering a 15% discount for all products under its private label brand at 7:00 p.m. the same day. The surprising promotion once drove ranking of the app at Apple App Store’s shopping category to the top five. Oriental Selection later disclosed the day of its launch of promotion saw a daily sales of RMB17.5 million and sales of the next day sales topped RMB30 million. Its app hit record with sales of RMB47.5 million in first two days of Douyin account’s stopping livestreaming, exceeding transaction value of products under its private brand on Douyin in the past month.

Oriental Selection’s account was suspended due to violation of Douyin’s rule and the business is actively taking action for correction, Chinese digital news media outlet The Paper learned from people with knowledge of the matter on July 28. The sources said Douyin judged that an Oriental Selection host’s exposure of Quick Response (QR) code on the package of its private-branded product was an improper way to direct more traffic to the sales room, though the QR code could not be avoid being caught by the camera when the host introduced a list of ingredients.

New Oriental and Oriental Selection didn’t comment on the report. The accident came at a sensitive time that more signs showed New Oriental was gradually breaking away from Douyin.

Oriental Selection emerged as New Oriental’s new powerhouse in mid 2022, bringing more hope for the transition from its core business amid the tutoring crackdown in the home market. In about a  month stating from late May, 2022, viewers visited Oriental Selection’s sales room jumped from hundreds of thousands to more than 10 million, even peaked at over 40 million, and its daily gross merchandise value (GMV) leapt up to RMB20 million (US$2.98 million), from only tens of thousands yuan, according to short video and  livestreaming tracking platform Xindou.

Financial results released last week showed New Oriental was right on the track to turn around. The company’s revenue rose 64.2% year-over-year (YoY) to US$860.6 million in the fourth fiscal quarter ended May 31, 2023, beating the analysts’ expected US$817.9 million. The net income surged 115.5% YoY to US$29.9 million. Revenue in the whole 2023 fiscal year dropped 3.5% from the previous year to US$2.9978 billion, while annual net income stood at US$177.3 million, compared with the previous year’s net loss of US$1.1877 billion. New Oriental didn’t specify Oriental Selection’s performance at its report. According to latest available data, Oriental Selection recorded revenue of RMB2.08 billion in the six months as of November, 2022, jumping 265% YoY. Its net income of RMB585 million that period also seems much better than net loss of RMB544 million a year ago. Huatai Securities estimated e-commerce GMV of Oriental Selection to be more than RMB10 billion in the 2023 fiscal year, with net income to GMV ratio of 8.56%.

Oriental Selection has stepped up its expansion since it rolled out its independent app in last August, suggesting its increasing ambition when growth of livestreaming platforms passed their peak. In the start of July, an account of Oriental Selection targeting culture and tourism launched its first special livestraming at Douyin and its app, focusing on hotel reservation and local specialties such as agricultural products in north-central China’s province Gansu. Days after the travel-themed event, it hosted a livestream on its app for the first time. New Oriental’s founder and president Yu Minhong that month dismissed possible conflicts with Douyin. Yu said his company and the short-video platform help each other. “Creating our own platform is a normal action of our aggressive company. I hope you not over-interpret it,” Yu said.  

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