Yu Minhong, founder and chairman of New Oriental Education & Technology Group Inc. (Photo by Visual ... [+] China Group via Getty Images/Visual China Group via Getty Images)
Michael Minhong Yu, the founder of China’s tutoring service provider New Oriental Education, has entered the world’s billionaire ranks once again after the country’s year-long crackdown on private education has decimated the once burgeoning sector, and wiped out tens of billions of dollars from the net worth of its education tycoons.
The 60-year-old’s new found success, however, doesn’t have much to do with its education business. In a bid to generate income after regulators ordered last year all tutoring firms teaching school subjects to become non-profits, Yu pivoted to livestream e-commerce.
The entrepreneur, together with some of his former English teachers, now sells via live-streamed shows a wide range of goods such as food and other daily essentials. As the number of viewers suddenly jumped and sales subsequently increased, New Oriental’s shares listed in Hong Kong have surged more than 80% from a low in May. Yu, who owns 11.6% of the company, is now worth $1.1 billion, according to the Real-Time Billionaires List. His wealth also includes stock dividends and previous proceeds from disposal of New Oriental shares.
To viewers, the company’s shows have one unique selling point. After an initial lackluster start, hosts of the livestreams now combine English teaching with selling goods. Starting from last week, the former English teachers often pull out a white board to teach viewers vocabulary related to the merchandise they are promoting. For example, in one of the shows, the host wrote phrases such as “easy to cook” and “dietary supplement” on the board while touting the health benefits of a new type of pumpkin.
“The teachers are doing great at selling goods!” one user wrote on China’s Twitter-equivalent Sina Weibo. “They are so eloquent and I even took notes of the new English words while watching.”
A former New Oriental teacher tries to teach English while livestreaming
But Kenny Ng, a Hong Kong-based securities strategist of Everbright Securities International, sounded a note of caution. In China’s ultra-competitive e-commerce field, it remains to be seen whether New Oriental can sustain current growth momentum. According to Hangzhou-based data provider Huitun, which tracks livestream e-commerce, the company sold almost 68.8 million yuan($10.3 million) worth of goods on June 16th , an almost 20-fold surge from June 9th’s $600,000, the day when it first experimented with English teaching while selling.
“It is too early to say that New Oriental has become successful at transitioning its business,” said Ng, “It takes time to prove that the surge in viewers will help the company improve its fundamentals.”
New Oriental declined to comment on whether it will make livestreaming a long-term strategy. It is, in fact, mired in the red. The company, dual listed in New York and Hong Kong, reported a net loss of $122.4 million for its third fiscal quarter ending in February, reversing from a profit of $151.3 million the same period a year ago. Its revenues almost halved as the company could no longer offer tutoring sessions at will. Earlier this year, New Oriental announced that it would lay off 60,000 employees, and its shares still trade in Hong Kong at a fraction of a high of HK$151.5 apiece achieved early last year.