Last week, we looked at the fascinating family saga of Eu Yan Sang, one of the largest traditional Chinese medicine (TCM) businesses in the world.
The founder, Eu Kong, started the business in 1879 in Malaya, and his son, Eu Tong Sen, expanded the enterprise into diverse interests.
However, bitter family conflicts in the third generation made the conglomerate a mere shadow of its former self by the 1980s, until Richard Eu (fourth generation) decided to turn things around.
With shrewdness and daring, he persuaded the board (which included non-family professionals) to make him general manager in 1989.
But Richard was not as successful with the clan as he was with the board.
His family branch was the largest shareholder, but the extended family, which included 10 uncles and aunts, and 72 cousins, did not support him.
Instead, they sold their shares to the construction company Lum Chang, which acquired Eu Yan Sang Holdings the year after Richard joined the company.
Despite losing control, Richard dutifully steered the company to steady growth, with the launch of a breakthrough product, American Ginseng Tea in 1991.
For millennia, ginseng has been a health tonic, but its meticulous and laborious preparation has limited its potential in the world market. Partnering with top-notch universities and research centers to create American Ginseng Tea, Eu Yan Sang has come up with a convenient way for consumers to partake of ginseng, without diluting the health benefits.
In 1992, the company was listed on the Hong Kong Stock Exchange.
At the helm
Richard set his sights on foreign shores, but to realize his vision, he needed to gain control.
In 1993, with the help of cousins Clifford and Robert Eu, he led a buyout and created Eu Yan Sang International Holdings.
In 1996, the holding company finally got back the subsidiary in Hong Kong, uniting all core businesses (including those in Singapore and Malaysia) under common management and stockholders.
Expansion went full-blast in Hong Kong, with its facility receiving ISO certification.
In the coming years, the company achieved one milestone after another.
In China, Bak Foong Pills for women’s well-being and Bo Ying Compound for children’s health penetrated the mainland, making their way to hospitals and health centers.
In the United States, the company bought the alternative health company Elixir Store.
In Australia, Eu Yan Sang established the “YourHealth” line of Integrative Medicine Clinics, patterned after the clinics in Malaysia and Singapore.
In less than 10 years, the company would also become majority stockholder of Australian health giant Healthzone.
Backed by science
As I discussed last week, what initially attracted me to Eu Yan Sang was its quality TCM products, which though originating from folk medicine, now have the backing of solid science.
At the turn of the millennium, Eu Yan Sang partnered with the Chinese University of Hong Kong to study the ingredients of their popular Bak Foong Pills, and their joint research resulted in the more convenient, high-quality Menoease Pills, which are touted to help alleviate menstrual and menopausal problems.
When SARS hit Hong Kong, the partnership saved lives: anti-viral Kang Du Bu Fei Pills were speedily manufactured and distributed to minimize the spread of disease.
In Singapore, the company partnered with Nanyang Polytechnic to build the first TCM research laboratory in the nation, resulting in Zerotox, a patented method of extracting impurities from herbs.
The Prime Minister’s Office of Singapore awarded the company a grant to make its herbal products world-class.
The company soon developed online automation for quality control.
Global brand names quickly took note: Nestle, for one, worked with Eu Yan Sang to make “Yang Sheng Le” easy-to-prepare herbal soups that appeal to the busy modern consumer.
In 2012, more than a century after founder Eu Kong left China in search of his fortune, the company opened the first retail-museum store in his birthplace in Foshan, Guangzhou.
Eu Yan Sang today has more than 300 stores and clinics across four continents, with $230 million in sales.
The Eu family has more than 60 percent ownership of the company, though without a single majority shareholder, and as of 2013, Forbes estimated the family’s net worth at $160 million.
Richard acknowledges that professionals are necessary in a huge enterprise, but he told Asia Society that non-family managers tend to think short-term rather than long-term.
For him, family is still paramount.
Next week: A reader says no one is qualified to take over their family business
Queena N. Lee-Chua is on the Board of Directors of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail msanagustin@ateneo.edu.) E-mail the author at blessbook.chua@gmail.com.