Eu Yan Sang CEO Richard Eu is working on the perfect prescription of traditional and modern practices
A giant deer antler mounted on the wall of Eu Yan Sang’s ambient showroom towers over a plethora of herbs and ingredients organised into cubicles – American ginseng, angelica root, cassia bark, Chinese caterpillar fungus and much more. One might be fooled into thinking that they had stumbled into a history museum – which in fact isn’t too far from reality when it comes to documenting the lineage of Eu Yan Sang, a household name in traditional Chinese medicine (TCM).
One thing lacking is the pungent, musky scent typical of Chinese herbal shops. This is a testimony to the unwavering desire of Richard Eu – Eu Yan Sang’s fourth-generation CEO – to modernise the 134-year-old brand. One dramatic result of the scion’s drive to introduce new technology has been to condense once foul-smelling, sticky, cloudy Chinese medicinal drinks into a new form.
“We want to try and preserve the integrity of the natural form,” Eu says. “If it is a 20- or 30-herb formulation, we want to try and keep that. In the past, it was a big pill or a bowl of bittersweet [drink]. A modern dosage form will convert that into capsules.”
Eu’s great-grandfather, Eu Kong, a Chinese immigrant in Malaysia, opened the first shop in 1879. His vision was to use traditional Chinese herbal remedies to help opium-dependent tin miners alleviate pain. His son, Eu Tong Sen, expanded the business by opening shops in Malaysia, Hong Kong and Singapore. His influence in politics and business earned him an Order of the British Empire (OBE). Today there are more than 300 shops across Asia and Australia.
Heritage and honour are highly esteemed by the family, but maintaining such a legacy is a challenge for Eu. “Having a history is both an asset and a burden,” he says. “If you stay traditional all the time, you’re going to get stuck. So you really need to think about modernisation. However, you cannot be so extreme that it doesn’t relate to your past. So it’s really trying to tread that balance. It’s a challenge.”
Eu has an enormous family tree; his grandfather had 11 wives and over 70 descendents. “I have had to fight my way through. There’s no controlling interest. There was no process by which the next generation could get involved in the businesses. As a result, most were sold. We had many other businesses: tin mines, banks, finance, insurance, all gone. This [Eu Yan Sang] is the smallest,” he says.
Eu has a law degree but has never practised. He began his career at British merchant bank Slater Walker. “We did a lot of corporate exercises. That was good learning for me. A lot of M&A [mergers and acquisitions].” The experience proved extremely helpful further on in his career. He later worked for the corporate department at TVB in Hong Kong in the mid-1970s and then as a stockbroker in Singapore.
By the early 1980s, however, he felt he had had enough of the financial sector and moved on to different areas. “I wanted to try and learn how to manage a business rather than just sell shares.” His next couple of jobs – running a computer business and managing luxury brands such as Cartier – helped polish his management skills. By 1989, when his uncle retired, the time was right to help the business.
“My great-great-grandfather wrote a poem: ‘If you follow the righteous path, then you’ll be successful,’” Eu says. The profound family values that intertwined the generations prompted him to quit banking and drew him back to the family.
“I think something has gone wrong in the corporate world when we have the kind of disparity where, sorry to say, investment bankers can make tens of millions of dollars when other people are struggling to survive. I felt it wasn’t just about money. Of course I like money and I like to spend it too. But I think there’s got to be a balance.”
Two months after Eu joined the family business, his entrepreneurial calibre was put to test. “I was a general manager on the board of directors at the time that other uncles engineered [a] sell-out. This is a well-documented story – we were sold out to a third party.” Eu Yan Sang passed into the hands of an outsider, Lum Chang, a Singaporean property and construction group.
“It was traumatic. It’s one of the things you always remember,” Eu recalls. In hindsight, though, he thinks it was a blessing in disguise. “But that was the best thing that could have happened. The first act of selling us out consolidated the business in one pair of hands. So I just had to deal with one person.” Previously, the shares had been scattered across different countries among the various family members’ businesses.
It turned out that Lum Chang was not keen to grow the TCM side of the business. “They said: ‘Look, we are not really interested in this business. When we’re ready to sell, we’ll give you first right of refusal.’”
By 1993, Eu had organised a buyout from Lum Chang, and by 1996 all the Eu Yan Sang businesses in Hong Kong, Malaysia and Singapore became one entity. The company’s expansion has since been on full blast.
Eu says it is a historic fact that there are currently three Eus – him and his cousins Robert and Clifford – running the company. “But over time, there may not be that many family members who’re executive directors. And it could well be a professional manager who runs the business or is the CEO,” he says.
However, he says it is crucial to have family members running the business when it has the majority of the shares. “Because we’re a family company, we can therefore align our values with the company’s core values. So it’s not just about making money – especially not just for yourself. This is what we teach our children from day one. So my issue with professional managers is, ‘Can you follow this?’”
Eu’s eldest son, 29-year-old Richie, joined the company’s Australia business a few months ago. Eu himself is adamant that to manage is to be humble. “[Richie] has to do very basic stuff because if he can do it, he’ll earn the respect from all his co-workers. People will watch how he reacts and how he behaves,” Eu says.
Drawing on his own experience, he understands the frustration of the scions. “In a family business, the guy who is in power will find it very hard to let go. And so it’s very frustrating for those who are waiting.”
He says that the keys to a successful family business are being able to let go and transparency. “You have to communicate to the next generation what the roadmap is, because the worse thing for them is not knowing,” Eu explains.
He adds that for a business to be successful, it must be dynamic. “You hope that by the time the next generation takes over, the business will not be the same any more,” he says. “It will change and it’s going to be more complicated. You must think about 10 or 20 years’ time, rather than today. What’s happening today is going to change.”
Eu is brutally honest about what he thinks and refuses to be bound by conformity. “Every era is very different,” he says. “You’re influenced by whatever is happening around that time. Yes, I guess I’m quite rebellious. I try not to conform to the norm. You have to keep questioning. It doesn’t mean that just because things have been done the same way, that you have to do them the same way. Keep finding new ways to do things.”
VISION, VALUES AND VERSATILITY
Family values “If you build your family through a righteous path, you will be rewarded with success.”
Integrity first “The alignment of the brand values is important. Those values must stand the test of time.”
Grand vision “We want to be a global consumer health-care player, leveraging our TCM know-how.”
Go West “TCM packaging has to be modern and relevant for a Western audience.”
Mature minds “In a family business, the one in power finds it very hard to let go. The next generation has to understand they will probably have to go and do their own thing first.”