Familiar with the family business since a child, Richard Eu joined the Singapore-listed Eu Yan Sang Holdings in 1989. Soon after, he engineered a buyout so his family could regain control of the business, which had been bought by a third party. KINIBIZ has his story.
Not many people know that traditional Chinese medicine (TCM) brand Eu Yan Sang was founded more than a century ago in Gopeng, Perak. According to the company website of the now international brand, a young man named Eu Kong left China in 1873 to seek greener pastures in Malaya.
Eu Kong settled in Gopeng, Perak, which was a mining town. He observed that the that the tin mine workers depended on opium to alleviate the pain and suffering from hard work and poor living conditions, so he introduced traditional Chinese herbal remedies to them. This eventually led to the opening of the first Yan Sang shop in 1879.
The shop Eu Kong founded, was made up of the words “Yan” and “Sang”. where “Yan” means benevolent, kind or humane in the Cantonese dialect, while the latter represents birth, life or livelihood. “Yan Sang” translates to “caring for mankind”.
As the story goes, Eu Kong’s only son, Eu Tong Sen grew up dedicating himself to the family business. He established himself in Malaya and Singapore, and became a leading figure in the tin mining and rubber plantation businesses. Eventually, Eu Tong Sen expanded Eu Yan Sang’s business to Hong Kong and China.
Today, the name Eu Yan Sang is associated with the only business the family has left, which is the TCM business. KINIBIZ recently spoke to Eu Kong’s great grandson Richard Eu, who is currently the group chief executive officer of Eu Yan Sang.
How did he get interested in the family business?
“I grew up knowing about the family business. The family actually had other businesses but this is the only one that’s left, and I’ve been familiar with it since I was a child. What happened was in the 1970s, it was listed in Singapore under the name of Eu Yan Sang Holdings Ltd and my father was the chairman. I was working outside, but he made me the alternate director. I was an observer at the board meetings and so on. I was involved in the later part of the ’70s,” Eu told KINIBIZ over the phone from Singapore.
“That’s how I got to know a bit more about the business. In the late ’70s I was an alternate director to my father. Towards the end of the 1980s, my uncle who was the executive director had just retired, he had just turned 70 years old and he was retiring and there was no successor. I put myself up to be the successor and that is basically what happened. The board agreed that I would come in as the general manager and I joined the company at the end of 1989,” he added.
Not long after Eu joined the company, the company was acquired by Lum Chang. Two years later in 1992, Eu Yan Sang (Hong Kong) was listed on the Hong Kong Stock Exchange. Eu and his cousins decided to regain control of the family business. During the following year, they got together, organised a buyout of Eu Yan Sang from Lum Chang, and formed Eu Yan Sang International Holdings.
Eu Yan Sang International Holdings then became the parent company of the businesses in Hong Kong, Singapore and Malaysia and became a public listed company in Singapore in 2000.
According to Eu, the toughest part wasn’t that the business had been sold after he joined the company in 1989.
“That part was OK. Because although it was quite traumatic to hear that your company is being sold, the fact that the people who owned the business were very good to us and they kept me on. I think the difficult part is really trying to figure out the right direction of the business,” he said, adding that once the company staff saw what he and his cousins were trying to do, they went along with it.
We asked Eu his opinions on the TCM business and what he has found most surprising about it.
“Well, it’s not exactly surprising, but I think it’s a very complicated business. Although the business model is one of retail, selling products through our own stalls, our products are more complicated than selling shoes or fashion – they different parts. So I would say this is a challenge – the more scale that we have, in a way it made it more complicated because we have to move up and down the value chain.”
He explained further: “When you are a pure retailer, you have a shop, get products from different suppliers, put them on the shelves and sell them. That is relatively simple. Apart from what we do in our stores, we went into the clinic business as well. So that adds more complexity to the business.”
“I think the one challenge that we face in all markets, whether Chinese or non-Chinese, is the regulatory environment. Every country is different. It can be quite complicated.”
He added that the challenge for non-Chinese retails is how to educate consumers. “Because Chinese medicine is not pure science – there’s some philosophy behind it as well – it’s hard to explain in modern scientific terms, because they have their own framework. So trying to explain that to someone who doesn’t know is actually quite complicated.”
How has it been addressing the issue of education?
“A few years ago we started a chain of health clinics with Australia. We believe that the future of healthcare is a convergence of both medical practices – natural medicine and Western medicine. We don’t say that there’s one single solution for everything, and that the best way to approach is really to take the best of what there is – ancient practices as well as modern science. This is the vision behind the company. But to try to explain this is difficult. The regulatory environment doesn’t really help either,” Eu explained.
Which is their toughest market so far? “I think China is pretty tough. Australia… there is a market there. It’s a high-cost market. Business is there, but it’s hard to make money because of the cost structure,” he said, adding that they are currently in China, Hong Kong, Macau, Malaysia, Singapore, and Australia, and also export to many other countries.
In the markets they’re in how do they counter such challenges? What is Eu Yan Sang’s strategy going forward, is it going for market diversification, or looking at more markets?
“Yeah, it’s a combination of everything. For example, we have just announced a joint venture with a Chinese business. We’re bringing in a very strong Chinese partner, to convince our operation in China to help us, because they have local knowledge and access to the local talent.
When you go into the market, especially like China, it’s not easy to find the best local talent. So when we partner with somebody who’s really strong in the market, we have access to the talent. It’s not just the money; it’s also the talent, the people,” he said.