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A family business built to last
TRADITIONAL Chinese medicine (TCM) is a profession marked by centuries of history and culture, involving knowledge that has been passed down by generations of practitioners. The story of TCM company Eu Yan Sang has a similar narrative - having begun nearly 200 years ago in a poem that was written by a family ancestor. The poem instructs the family to behave in a righteous and steadfast manner to be successful.
To ensure that successive generations of Eus are reminded of these values, each word in the poem is used in the names of the family's male descendants, says Eu Yan Sang International chief executive Richard Eu. The company was recently honoured with the EY-Barclays Family Business Award of Excellence.
In many ways, the company's founder Eu Kong took this set of values and established the DNA for the company when he set up the family's first shop in Gopeng, Perak back in 1879.
His goal was to free tin mine coolies from their opium addiction by dispensing good quality Chinese medicine and herbs. The name of the shop was Yan Sang, which means caring for mankind in Chinese.
His son, Eu Tong Sen, who would go on to become one of the most famous and successful businessmen in the region with interests in tin and rubber, continued in the same vein. Wherever he set up tin mines, he would also establish medicine shops to care for the workers.
"Our success is influenced by this family mantra and we went on to be one of the household brand names across Asia, known for our reputation as a trusted and respected brand in the Chinese medicine industry," Mr Richard Eu tells BT in an interview.
"We are known to deliver quality and safe products with excellent customer service and teamwork."
Today, from that one shop in Gopeng, the company has grown to become one of the most established Chinese medicine companies in Asia, with 282 retail outlets in China, Hong Kong, Macau, Malaysia, Singapore and Australia. It also runs clinics and sells its products in supermarkets, pharmacies and hospitals.
The firm, which is listed on the Singapore stock market with a market capitalisation of around S$180 million, also operates its own manufacturing plants in Hong Kong and Malaysia to ensure quality control. After 136 years since the first shop was opened, the Eu family continues to play a big part in the company's fortunes.
Apart from Mr Eu, his two cousins also hold key management positions in the company. Robert Eu is the chairman, executive director and group managing director for China, while Clifford Eu is the executive director, group managing director for international markets. Despite the rich family history in the business, Mr Richard Eu notes that it was not a foregone conclusion that he would continue in his father's footsteps and take over the company.
In fact, he worked in various other industries, such as the banking and venture capital, before entering the family business in his 40s.
He joined the company in 1989 as group managing director of Eu Yan Sang Holdings, which was responsible for the Singapore and Malaysia operations. Four years later, Mr Eu organised a management buyout and merged the regional operations with the Eu Yan Sang business in Hong Kong to form the group in 1996. Similarly, he does not expect his children to necessarily take over from him.
"I give my children the flexibility to pursue their dreams. One of my sons has shown interest to be part of the business and he has started to learn the ropes in various divisions of the company as a strategic development manager," he says.
Mr Eu does acknowledge, however, that there are unique challenges operating in a family-run business. For one thing, there is the challenge of ensuring a fair balance between personal and professional relations. The other is getting family members to agree on major decisions.
"We work on getting consensus on major decisions, both within the family members as well as the management group. Of course, there will always be differing opinions, but we try to accommodate everyone's point of view. Tension at the workplace is not uncommon," he says.
Mr Eu stresses that even though it is a family-run business, it is still first and foremost a business, which means that it has to be run professionally. "It must be remembered that the interests of the business takes precedence over the family's interest as there are outside shareholders and other stakeholders to consider," he says.
Apart from the three Eu family members on the board, there are also three other independent directors. Its senior management team is also made up of professionals in the industry, recognised for their expertise.
Ensuring that the business is professionally run is also a key reason that the management has invested much time and effort to groom talent for the company. In 2006, it started an in-house education programme to train their staff on the company's products as well as to raise the levels of customer service.
Last year, the company also established a professional academy that provides professional development courses and programmes to people in the industry for both its own staff and non-employees in Singapore and South-east Asia. At the same time, Eu Yan Sang provides opportunities for its employees to move across geographic locations to acquire new skills and work experience.
Mr Eu believes that professional and family values will drive the company for the next 135 years. He wants Eu Yan Sang to open up new markets and reach new segments of customers - especially younger and more tech-savvy consumers - by using new distribution methods including e-commerce.
And while TCM is still not seen as mainstream medical treatment, Mr Eu hopes that this will change with time.
"TCM is currently considered complementary medicine in most countries. Becoming mainstream requires both the market to create the demand and for regulators to keep up with the market."
There are signs that this attitude is slowly changing, particularly among the younger and more health-conscious segments of the population, and Eu Yan Sang is poised to capitalise on this changing dynamic.
Above all, however, Mr Eu's greatest hope is that family values continue to drive Eu Yan Sang forward
He says: "We want to be around for the next 135 years to help to improve the health of the communities, and we will stay true to our vision and values to ensure this longevity."