Summary of Key Points
In the 2026 fiscal year, Dongfang Zhenxuan reported a net profit of 544 million yuan, a staggering year-on-year increase of 8,684%. However, this figure is the result of both a low base and cost savings. Last year, the company incurred a one-time expense due to the spin-off of "Yuhui Tongxing," which reduced profits to just over ten million yuan. This year, 400 million yuan of the profit came from reduced salaries of key influencers after they left the company, rather than an improvement in operational capabilities. Dongfang Zhenxuan has shifted from an MCN (Multi-Channel Network) model that relied on top influencers to a brand retail model that focuses on its own products. While the company has survived, it still faces challenges such as peak抖音 traffic, unestablished new channels (app and offline), and high quality control pressures, indicating it is still a long way from achieving sustainable growth.
1. Is the 8,684% Growth Rate a "Mathematical Trick"?
The impressive growth figure is largely due to a very low base. In the 2025 fiscal year, Dongfang Zhenxuan's net profit was only 5.735 million yuan, not because of poor performance, but because of a one-time expense of 76.58 million yuan when "Yuhui Tongxing" was sold to Dong Yuhui. With the base significantly reduced, a profit of 544 million yuan this year appears to represent explosive growth. The actual normal profitability, when excluding one-time expenses, is 629 million yuan, a year-on-year increase of 262%, which is still not as dramatic as the 93-fold increase. It's also far from the company's peak performance in the 2024 fiscal year, when net profit was 1.72 billion yuan.
In simple terms, if you earned 1 yuan last year and 87 yuan this year, the growth rate is 8,600%, but 87 yuan is still much less than the 100 yuan you earned before.
2. 400 Million Yuan of Profit Came from Cost Savings, Not Earnings
Despite having 411 more employees this year (from 1,401 to 1,812), the company's salary expenses decreased by 400 million yuan (from 1.2 billion to 800 million yuan). Why? The reason is the elimination of the high salaries of key influencers. With the departure of Dong Yuhui and other influential figures, their substantial commissions disappeared from the company's finances, resulting in a 31% reduction in salary costs. These cost savings accounted for 60% of the company's operating profit of 663 million yuan this year.
Where did the saved money go? It was mainly invested in the supply chain: quality control personnel's salaries increased by 70%-80%, product managers' salaries doubled, and the supply chain team grew from 654 to 983 people. Previously, a few influencers earned high salaries; now, nearly a thousand supply chain employees work on product development with more moderate salaries. The reliance on top influencers was like paying a "tax" on the business model, and the amount of this tax was determined by the influencers themselves.
3. The Transition from "Influencers Driving Sales" to "Products Driving Sales"
After Dong Yuhui left, Dongfang Zhenxuan's GMV (Gross Merchandise Value) plummeted by 39% in the 2025 fiscal year, and traffic dropped significantly. Without these influencers, the company had to find new ways to generate sales. After Sun Jin took over, the company focused on its own products. In the 2026 fiscal year, the revenue from self-operated products exceeded 50% (5.4 billion yuan) for the first time, accounting for 85% of total revenue (4.8 billion yuan), with a year-on-year increase of 37.4%. The company has expanded the range of self-operated products from just over 300 to 1,009, including new categories like electronics and home goods.
This represents a shift from an MCN model that relied on influencers to attract traffic and charge commissions (a low-cost model with no significant competitive advantage) to a brand retail model where the company controls product development, inventory management, and profit margins (a higher-cost model with more stable revenue).
However, the transition is only halfway completed. While the proportion of self-operated products has increased, quality issues remain, such as a high number of quality control complaints and the rapid introduction of new products.
4. The Entire Industry is Abandoning Top Influencers
Dongfang Zhenxuan is not alone in this trend. Many top MCNs are moving away from relying on individual influencers:
- "Sanyang Ge" stopped broadcasting and launched an app called "Xiaoyang Zhenxuan," focusing on product matrices instead of individual IPs.
- Xin Xuan has shifted from a contract-based system with influencers to a partnership model.
- Jiaoge Youfriend has reduced Li Yonghao's broadcasting time to 20% and relies on 80 specialized live streaming channels.
- Me ONE has reduced Li Jiaqi's live broadcasts and diversified its influencer lineup to spread risks.
The reason for this shift is that top influencers pose significant risks: their health, reputation, and tax issues can significantly impact the company's performance. For example, incidents like Dong Yuhui's controversies and Xin Ba's withdrawal have caused stock price fluctuations. Additionally, the new "Live E-commerce Supervision and Management Measures" in 2026 make it harder for companies and MCNs to manage the risks associated with relying on influencers.
5. Dongfang Zhenxuan vs. Yuhui Tongxing: Which Path is More Stable?
Dong Yuhui's "Yuhui Tongxing" achieved a GMV of over 21 billion yuan in 2025, with average sales per session increasing from 10 million to 50 million yuan. However, this success comes with risks:
- The company's performance is highly dependent on Dong Yuhui; without him, sales fluctuate significantly.
- The company's financial data is not transparent, and as a private company, its profit situation is subject to greater risks (e.g., the Yousi Yipin quality control incident).
Dongfang Zhenxuan, on the other hand, has a more stable foundation with a larger team (1,812 employees and a 983-person supply chain) and a higher net profit margin (9.5%) compared to Yuhui Tongxing (estimated at 8%). However, its growth has slowed down.
It's too early to determine which approach is more sustainable. One model relies on individuals (influencers), which is lighter but riskier, while the other focuses on products, which is more stable.
Conclusion
Dongfang Zhenxuan's net profit of 544 million yuan shows that it has survived the challenges of the past year, but it still faces many difficulties:
- Growth in paid orders on抖音 has only increased by 6.3%, relying on higher-priced self-operated products rather than an increase in user volume or frequency of purchases.
- New channels (app and offline) are not yet generating significant revenue.
- High quality control pressure, with hundreds of new products introduced each month and numerous complaints.
- Investors are skeptical, with Goldman Sachs raising its target price but maintaining a "sell" rating due to concerns about the sustainability of the company's profits.
The 544 million yuan achievement demonstrates that MCNs can be profitable without relying on top influencers. However, cost savings are not a sustainable source of revenue. When the benefits of reduced salaries disappear and抖音 traffic peaks, what will drive Dongfang Zhenxuan's growth? The company has built a foundation for brand retail, but much remains to be done. Despite making progress, it is still a long way from achieving true sustainability.
In summary, while Dongfang Zhenxuan has survived, it faces many challenges that require continued effort to overcome.