Recently, the best way to multitask on the Chinese Internet has been to hone your English skills while shopping for items promoted on Douyin.
It may seem like an unlikely combo, but consumers nationwide have been swayed lately by the unlikely return of New Oriental, once a leading online education platform. The so-called “double reduction” policies, which came into effect last year, aim to reduce the extracurricular burdens on young Chinese people by limiting access to additional online tutoring. New Oriental’s core business model imploded.
Now the company is turning to the booming live e-commerce sector in a bid to save its business. Dong Yuhui – formerly a featured English teacher on New Oriental’s tutoring platform – caught netizens’ attention with his new blend of salesmanship, pedagogical wit and humor, helping his business struggling to generate income in an entirely new way.
Koolearn Technology Holding, the New Oriental subsidiary that carried out this transformation live, saw its shares soar in June, from HK$3.69 ($0.47) each on June 1 to HK$18.84 ($2.40) at the June 30 close.
The company seems confident in its ability to get back on its feet thanks to this new commercial path. In addition to his popular Douyin account Oriental Select (东方甄选), which mainly specializes in agricultural products, he recently launched a new account called Oriental Select Personal Care Makeup. The move suggests that Koolearn is doubling down on its newfound success in live e-commerce and will try to diversify its field operations in the future.
New Oriental’s abrupt comeback demonstrates the adaptability needed for some companies to stay afloat in a rapidly changing Chinese tech landscape, following a wave of new regulations that began last summer.
One of the main trends in recent years has been the growing popularity of live streaming as a method of driving online sales. Alibaba Pioneer‘s Taobao Live in 2016, a pair of video streaming platforms – Douyin (TikTok for mainland China) and Kuaishou – recently threatened to supplant the dominance of established e-commerce giants.
A 2021 study by McKinsey suggests that by 2026, live streaming could account for up to 10-20% of the entire e-commerce market in China. Considering that the country’s total e-commerce sales last year were $2.49 trillion, the sector is certainly one to watch.
As live streaming continues to grow, consumer demand is changing. “People are eager to spend on things they’ve never tried or experienced before,” said Sharry Wu, head of Greater China consulting business transformation at EY. “New brands now contribute 40% of e-commerce sales growth according to recent research, and interest in local fashion brands has overtaken international brands.”
The desire to try something new may help explain some of New Oriental’s recent success, with its unique blend of English tutoring and business promotions. “The main challenge will be how businesses can better adapt to the new normal of omnichannel consumption,” says Wu.
SEE ALSO: New Oriental Education operates a live bilingual e-commerce
For traditional e-commerce giants like Alibabafrom Taobao and JD.com, interest in livestream sales was driven primarily by a new classification of internet celebrities: livestream host. Two of Taobao Live’s biggest stars — Austin Li, dubbed the “Lipstick King,” and Viya — have recently encountered hurdles in their operations, creating a market opening.
Another key method has been the creation of various shopping festivals, led by the Singles’ Day period held annually around November 11, launched by Alibaba in 2009. The second most important event in China’s e-commerce calendar is the “6.18” shopping festival in June. During this year’s recently completed activities, JD.com recorded a total trading volume of 379.3 billion yuan. While this is a new high in terms of scale, this figure also represents the slowest annual growth on record for the company during the period.
With some of the biggest celebrities in the youth sector absent and the growth of established platforms slowing, ByteDance’s Douyin and Kuaishou could see an opportunity to capitalize.
“Although we see a clear downward trend in growth rates for major shopping festivals, each e-commerce platform is presenting its biggest promotion program ever to attract consumers back online this summer,” says Sharry Wu.
There are also signs that the Chinese authorities are seeking to strengthen the regulatory framework for this emerging sector. Released on June 22, the new rules standardize the practices of live streaming hosts, ensuring they are qualified to sell certain products. They also attempt to encourage more positivity and upright morals, cracking down on perceived fan worship and core consumerist values.