After more than 100 years in business, Eu Yan Sang continues to grow under the leadership of fourth-generation family leader, Richard Eu.
What started as a provision shop in northern Malaysia, offering Chinese herbs as an alternative to opium for workers in his great grandfather’s tin mine, has today grown into a respected international brand in Traditional Chinese Medicine (TCM).
Since it was publically listed in 2000, Eu Yan Sang has delivered double digit growth. In its core markets of Singapore, Malaysia and Hong Kong – the business enjoys the largest market share in its sector.
Like many companies, growth is coming from China and today the business is evolving from a Chinese medicine business to a broader enterprise focused on total wellbeing.
Recently I had the pleasure of speaking with Richard for our Driving Growth series. (Watch the interview here Part One | Part Two). He shared more about Eu Yan Sang’s evolution and his strategies for leading growth. In this blog, I’ll summarise some key learning points on growing a family business from our conversation.
Good governance in a family business starts by putting the company and the family first – each in its own time.
When making business decisions, the company business has to come first and decisions should be based on what’s best for the company. But as major shareholders of the business, family members must align themselves before going to the board which prevents family disagreements that can take them off course.
At Eu Yan Sang, family members on the board represent different parts of the family and through an annual retreat, they arrive at an agreement that is taken to the board. This sort of process is particularly important after a few generations of family ownership when ownership is dispersed over a large number of family members.
While many companies struggle to implement an effective succession plan using a 2-3 year time horizon, Richard is concerned with where they will be going in 20 years, and what leadership skills will be needed then.
Determining how the family is going to be involved in the business and ensuring the business continues to be aligned with the family values is a top priority for him.
By taking a long-term perspective on the business, he avoids decisions that might meet short-term needs but damage the long-term.
Eu Yan Sang has long taken the position that they are not just a TCM company. Their vision going forward is to leverage knowledge of TCM into the wider space of natural wellness. As a result of this vision, they recently bought an Australian chain of health food stalls.
This acquisition provides an opportunity to bring their TCM knowledge into a more western market as a test case for moving into other western countries. By buying into a readymade market, they were able to speed up the learning process.
This long-term perspective helps to avoid the boom-splat cycles of growth that beleaguer many non-family owned corporations.
Understanding and adapting to local tastes and preferences is key to the success of Eu Yan Sang.
While it is very granular in its understanding of local market needs, it also aims to create a differentiated buying experience for its customers. Assistants in their shops are trained to look after the needs of customers by sharing their deep product knowledge but also encouraged to not be too “pushy”.
By being very clear on what is core, the company can promote constancy where it’s needed – and difference where this is more appropriate.
In spite of his background as an investment banker, Richard has been slow to drive acquisitive growth and he is quick to highlight the challenges of making them work.
In our conversation, he spoke of the difficulty in managing cultural differences in a merger or acquisition – differences that become even larger when done across borders.
Only recently did they acquire a company – in this instance, a retail chain in Australia called, Healthy Life which they own 100 per cent. For Eu Yan Sang, this also represents an opportunity to learn how to sell its products to non-Chinese consumers.
Clearly, another long-term strategy that is building key capabilities needed for future growth.
Too often, leaders taking their business outside their home market can be seen as arrogant. They assume they know all about a market in three months and are quick to let others know this.
To me, Richard embodies the balance of confidence and humility of a growth leader. On one hand, he is a confident leader of long-term growth. When family members sold the business to a public investor, he took back control. He drove Eu Yan Sang into new markets with new channels and new products. He bought into businesses as both a minority and majority shareholder.
But when he speaks, he’s a humble man. He speaks of the need to come in with humility to understand local conditions. He speaks of having patience and not expecting overnight success. As Richard says, “you must start from a position of humility, but at the same time you must be very confident in your own abilities”.
I believe this is good advice for all growth leaders.
At the end of the interview I asked Richard for his advice to leaders who want to grow a family business. I leave you with his words:
“Every generation, you’ve got to think what you want to do with the family business. Is your business the right business for the future? Is it more important to preserve the family or more important to preserve the business? That’s a discussion that you’ve got to have within the family and there’s many different parts to this. The family must have ongoing conversations about its future. This isn’t just about the patriarch or the founder – it’s got to include everybody.”