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How S'pore's oldest firms stay relevant
SINGAPORE may have just turned 52, but many homegrown businesses have been around for far longer. Greatearth, Boustead, Drew & Napier, Braddell Brothers, Haw Par, Eu Yan Sang and Yeo Hiap Seng - to name a few - have existed for more than a century.
A chief concern for old companies is succession planning. Whether it is a family business trying to balance lineage with meritocracy or a company working to retain its talent pool, succession considerations is something no company can ignore. This might mean welcoming outsiders into management of family firms or promoting talented personnel to senior management roles.
For instance, Drew & Napier's Davinder Singh last week moved up from CEO to become executive chairman, making way for Cavinder Bull to assume the CEO's position. The firm also appointed Jimmy Yim as its deputy chairman and Sushil Nair as its deputy CEO. At Yeo Hiap Seng, CEO Melvin Teo is neither a member of the founding Yeo family nor part of owner Far East Organization's Ng family. Eu Yan Sang CEO Richard Eu's successor, Aaron Boey, is also not a member of the founding Eu family.
These firms, as well as others The Business Times spoke to - such as Boustead, Greatearth, Haw Par and Braddell Brothers - have said merit is a key consideration for succession. It is an especially poignant issue for family-run businesses which often have to consciously decide the degree to which the firm would continue to remain within the family's ownership and management.
Singapore Management University's Business Families Institute academic director, Annie Koh, said family-run businesses tend to have an advantage over others as the owners of these firms tend to be driven by "long-term horizons" and "a sense of purpose" behind their businesses, rather than just being motivated by maximising shareholder value.
A prominent example would be Eu Yan Sang, whose CEO Richard Eu - who will step down on Oct 1 to be its non-executive chairman - is the fourth generation of the founding Eu family.
Even though Eu Yan Sang will no longer be headed by a member of the Eu family, Mr Eu said it was important for the family to remain as the firm's owners. This is so that they can provide the "corporate memory" and retain the DNA of the company. However, he acknowledged the company needed to transcend family boundaries for it to keep going, and whoever was running the company needed to be capable, whether or not they carried the Eu family name. "You want to make sure that they can do the job, and it's not just because of their surname."
He cited the Toyota family in Japan and the Ford family in the United States as models on which to base the future ownership and management structure of Eu Yan Sang, where outsiders would manage the company while the family would continue to own a substantial stake in it.
Although CYC Company Pte Ltd - famous for being the tailor of choice for Singapore's first prime minister, Lee Kuan Yew - is younger than Eu Yan Sang, it has also been run by family since it was founded in 1935. Its owner, managing director Fong Loo Fern, said that she intends to let her niece take over the business in the future.
And for Leung Kai Fook Medical, its managing director, Leong Mun Sum, is the son of the company's founder, Leung Yun Chee. Both these family-run businesses, like Eu Yan Sang, have non-family members working together with family members in running the business.
The line between a family firm and a non-family firm may sometimes be blurry. Although Boustead Singapore was not founded as a family firm, CEO Wong Fong Fui has two children who occupy management positions. Both the children rose through the ranks based on merit, the firm said. Wong Yu Loon is the executive director and deputy group CEO, while Wong Yu Wei is the deputy chairman and senior deputy managing director of Boustead Projects.
Prof Koh said: "Family firms recognise that they don't have a monopoly of talent if they just source their human capital from the family. So having loyal professionals aligned to the values and vision of the family are critical to the sustainability of the family enterprises. That is why getting the human resources right is so critical."
Apart from succession planning, these firms have also had to weather events such as financial crises, technological disruption and globalisation. Many old companies have reinvented themselves to stay relevant. The legal sector, for one, has seen its share of difficulties, including competition from foreign firms and the threat of automation.
Braddell Brothers managing partner Edmund Kronenburg said that it was becoming necessary for law firms to specialise in a few select areas, rather than provide very many different types of legal services. Mr Kronenburg said that his firm underwent a re-boot and re-branding exercise in 2009, and is now focusing on corporate and commercial litigation and arbitration, medical negligence, and corporate insolvency.
Drew & Napier's Mr Singh said that the firm focuses on dispute resolution and international arbitration, competition and regulatory practice, restructuring, and data protection as its four areas of growth going forward. As for firms such as Yeo Hiap Seng and Eu Yan Sang, their CEOs said that the key lay in adapting to current trends.
The deputy director of Nanyang Technological University's Institute for Asian Consumer Insight, Lewis Lim, said that for firms to survive, they often have to modernise their products while keeping their authenticity.
Whether it is Yeo's providing "healthier choice" options for its sweetened drinks, or Eu Yan Sang making easy-to-swallow pills or ready-made bottled drinks instead of just selling raw herbs, adapting their product is one way these firms have remained relevant over the years.
Firms such as Leung Kai Fook Medical or Haw Par have not changed their flagship products - Axe oil and Tiger balm, respectively - in the same way, but have managed to turn themselves into global brands. Haw Par has also since diversified into healthcare and leisure, and invests in securities and properties.
When asked how local businesses, including family-owned firms, weather crises and remain sustainable, Prof Koh said that these firms display resilience, work to remain relevant and crucially "needs to be rejuvenated at every generation as if it was the first, creating value with the entrepreneurial zest just like the founding generation".