Be Friends charts new path without famous founder

The livestreaming e-commerce company’s revenue rose 8.7% in the first half of 2025, as it uses a matrix-based operation model and AI to rebuild after losing its popular lead host

Key Takeaways:

• Be Friends reported 8.7% revenue growth in the first half of the year, but its profit dropped a significant 32.7%
• The livestreaming e-commerce company’s gross margin tumbled from 53.8% to 43.7%, mainly due to higher traffic acquisition costs and heavier technology investment

By Lee Shih Ta

China’s internet is offering up a new “Tale of Two Livestream E-Commerce Companies,” showcasing the rapid rise of the popular format and how celebrity hosts can be both an asset but also a huge potential liability if they depart. But the paths forward for Be Friends Holding Ltd. (1450.HK) and East Buy Holding Ltd. (1797.HK) are shaping up quite differently, following the high-profile departure of star host Luo Yonghao for the former, and a colorful breakup with charismatic online salesman Dong Yuhui for the latter.

Both cases highlight key fundamentals about the livestreaming e-commerce business, namely the importance of personal charisma to generate big sales, but also the need to avoid too much reliance on individual personalities to ensure a company’s longer-term viability.

Of the pair of companies, Be Friends started its de-personalization process first. Now, the company’s latest financials show it is at a critical juncture as it slowly rebuilds its business. Its revenue rose 8.7% year-on-year to 676 million yuan ($94.8 million) in the first half of 2025, with new media services as its main breadwinner, supplying more than 90% of the total.

But its profit moved in the opposite direction, falling 32.7% year-on-year to 56.35 million yuan, with profit from new media services down 37% to 55.36 million yuan. Its gross margin also fell sharply during the period from 53.8% in the first half of 2024 to 43.7% in the latest period. The company blamed higher user acquisition costs and stepped-up R&D investment in areas including its “Friends Cloud” system for the profit erosion, even as its revenue rose.

Let’s make friends

Be Friends’ story started with Luo Yonghao, a trailblazing serial entrepreneur who shot to fame in the pre-internet era with his popular English language instruction materials. In the internet age he leveraged his name to launch the Smartisan smartphone brand, which ultimately folded under a flood of competition. From there he ventured into the livestreaming e-commerce sector in 2019, claiming that he had “debts to pay.” “Let’s just make friends, no money involved,” became his signature tagline kicking off all his livestreaming sessions, drilling his “Be Friends” brand into viewers’ minds.

While he may have been sincere about wanting to make friends, the “no money involved” was hardly what he had in mind, as the enterprise thrived financially. But then he announced in June 2022 that he would be leaving the company’s management team.

The company made its own new friend just two months later, when it signed an agreement with Century Sage Scientific, which took over the operation of Luo’s account on the livestreaming platform Douyin, China’s version of TikTok. The next year, Hong Kong-listed Century Sage acquired 100% of Be Friends and changed its own name to Be Friends Holding Ltd., effectively completing a backdoor listing for the livestreaming e-commerce operation.

But the problem remained of how to maintain its growth after losing its star anchor. The answer so far is threefold: adopting a matrix-based operation, using a multi-platform strategy and through the adoption of new technologies.

The matrix-based operation lies at the center of its new model. Vice president Cui Dongsheng pointed out last year that the company had cured itself of the “single leading anchor” reliance by putting in place a “vertical matrix-based operation model” consisting of a range of product segments like cosmetics, drinks, sports and home appliances. Revenue from Luo’s two primary accounts now accounts for less than 3% of the total, the company says, signaling it has transformed from “Luo Yonghao’s livestreaming room” to the “Be Friends Matrix.”

The second prong in its transformation is the company’s multi-platform strategy. Besides Douyin, Be Friends has set up on other livestreaming platforms, including Alibaba’s Taobao and JD.com, and Baidu’s Youxuan, as part of its diversification efforts.

Virtual AI anchor

Lastly, Be Friends is trying to move past Luo Yonghao by harnessing the power of AI and other new technologies. The company continues to invest in its “Friends Cloud” system with an aim of creating a digital platform that combines goods selection, distribution and other operations, ultimately boosting its own efficiency. During this year’s June 18 online shopping festival in China, the company launched a digital avatar version of “Luo Yonghao’s livestreaming,” whose first session lasted 6.5 hours, got over 13 million views and generated 55 million yuan in GMV. Still, the continued need for Luo’s digital avatar highlights the reality that even with AI’s help the company is still somewhat reliant on its former celebrity host.

At the same time, Be Friends is also trying to develop and sell its own goods and take a more hands-on approach to supply chain management, hoping such steps can stabilize its tumbling gross margin.

Investors didn’t seem too impressed with the results from Be Friends in its new form, with the stock falling about 4% the day after the midyear report’s release, leaving it down over 10% year-to-date. The shares currently trade at a very so-so price-to-sales (P/S) ratio of just 1.02 times. That’s well below the 6 times for East Buy, which is also trying to figure out its own way forward after its blowup last year with Dong Yuhui.

East Buy isn’t doing much better, recently reporting a net profit from continuing operations of only 6.19 million yuan for its latest fiscal year through May. The company is in the process of “de-Dong”-ing itself and shifting towards selling private label goods in a membership format, positioning itself as an online version of Walmart’s popular Sam’s Club.

Be Friends started its de-personalization process earlier and its matrix-based operation model and multi-platform strategy are already taking shape. But while its revenue has stabilized, higher traffic acquisition costs have eaten into its profitability and it has yet to find a relatively greenfield area like East Buy. The two companies are on different courses as they find their way forward. But their similar difficulties testify to what’s shaping up as a new basic fundamental principle for the livestreaming e-commerce business, namely avoiding overreliance on individual hosts.

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