165EY Family Business Yearbook 2016 |164 | EY Family Business Yearbook 2016

Award winners Asia-Pacific Singapore

Before they became the businesses we know

so well today, many famous companies had

to go through serious difficulties and major transformations. One business that had to go

through many struggles before achieving its

current global success is traditional Chinese

medicine group Eu Yan Sang. After a number

of difficult decades, which saw much of the Eu family businesses sold off, a revival began under

the stewardship of the fourth generation, led by

current CEO Richard Eu. His inspiration was to

take the company back to where it all started —

traditional Chinese medicine — and to consolidate

everything around this. His success in doing so

provides an inspirational tale of family business

renewal and success.

Europe

North America

Latin America

Asia-Pacific

Richard EuEu Yan Sang International Ltd. (EYSIL)

“Do whatever you can to build the name and keep it for your children and their children.”

Richard Eu,

Group CEO, EYSIL

167EY Family Business Yearbook 2016 |166 | EY Family Business Yearbook 2016

offering Chinese medicine and health products, Eu Yan Sang

shops have also evolved to offer postal and remittance services.

Eu Tong Sen’s business empire suffered under the Japanese

occupation of Singapore during the Second World War and,

afterward, under a rigid tax structure set up by the colonial

British authorities.

The family business soon encountered another big problem: too

many heirs. Eu Tong Sen had 24 children from 11 wives. But

the one bright spot was the Chinese medicine business, which

remained profitable through the 1960s, 1970s and 1980s.

Consolidation in the late 1980s

By the late 1980s, most of his companies had been sold, except for two: Eu Yan Sang Holdings in Singapore and Eu Yan Sang in

Hong Kong, both of which had grown from the medical shop Eu

Kong had started 100 years earlier. In 1989, at the age of 42, Richard became the first member of the fourth generation to join the business. And it was under his guidance that the revival

of Eu Yan Sang began. Before joining, Richard had worked in

banking and computers. And given how events unfolded over the

next 10 years, his investment banking experience in particular

was to prove important.

Over the next five years, Richard developed a new business strategy. During the next eight years, the various businesses

were consolidated under a common holding company, and a

single family-controlled entity was created. But achieving this

was not easy. “Some family members from the third generation

weren’t too keen on the process,” says Richard. “And it was

only after [completing] management buy-outs and buying

out competing groups [that] we eventually moved to a more

coherent share structure.”

In 1994, working with other members of the fourth generation,

Richard and his cousin Clifford Eu managed to put together

a leveraged buyout of the old Eu Yan Sang. Two years later,

issues around the Hong Kong business were resolved and unity

was achieved. “All the cousins had to work together to make

this happen,” Richard says. “And having just the one company

brought the whole family together under one unifying factor.”

Richard says that working with just the one company allowed

for the introduction of more professional governance. And

some members of the next generation, a few years ago, as they

joined the business. “The name of the company inspires trust,”

he said. “We want to maintain the name of Eu Yan Sang. Do

whatever you can to build the name and keep it for your children

and their children. We are dispensable as individuals, and we

cannot last long. But the name of the company can grow forever.”

Belief in the best practices of family businesses

The history of Eu Yan Sang starts with Richard’s great-

grandfather Eu Kong, who left China for Malaya in the 1870s. Determined to counter the problem of opium addiction, which

afflicted many of the tin miners at the time, Eu Kong set up a Chinese medical hall in a small town called Gopeng, in the north

of the country. It was named Yan Sang, which literally means

“caring for mankind.”

Through his traditional pharmacy, Eu Kong made a fortune

and eventually became a mine owner himself. His son and

heir Eu Tong Sen expanded the tin mining business in Malaya

and ventured into other sectors, including rubber plantations,

banking, remittance and property development. In keeping with

his father’s legacy to take care of workers and the communities

around the family business, Eu Tong Sen opened more shops

with the brand “Eu Yan Sang”, as his business network spanned

Malaya, Singapore, Hong Kong and southern China. Apart from

One of the best-known retail businesses in Singapore, Hong

Kong and Malaysia is a Chinese traditional medicine group called

Eu Yan Sang. With more than 300 shops and clinics covering

much of Asia and Australia, including 71 in Singapore alone, the

group has established itself as one of the fastest-growing retail

businesses in the region. It is also one of Asia’s most dynamic

family businesses.

Now managed by the fourth generation, Eu Yan Sang’s roots

go back to the 1870s. Current CEO Richard Eu is the great-grandson of the man who started the business.

The group’s core operations include retail outlets, clinics,

manufacturing facilities and a wholesale distribution network —

all focused on traditional Chinese medicine and natural health

and wellness products. Eu Yan Sang’s products include its

famous Bak Foong Pills for women’s health, Bo Ying Compound

for children’s health, dietary supplements, health foods and

beverages, packaged tonic soups and personal care products.

It all adds up to a big business. The Eu Yan Sang group had

revenues of US$257m in its 2015 financial year. And in the last 15 years, the group has achieved an annual growth rate of 11%.

Eu Yan Sang has always had a strong belief in the best practices

of family businesses. This was illustrated by what Richard told

Award winners Asia-Pacific Singapore

xx xx xx

An old store of the family business. Eu Yan Sang Retail Store in Raffles City, Singapore.

With more than 1,000 different types of Chinese herbs in a retail store, Eu Yan Sang is one of the best-stocked retailers of Traditional Chinese Medicine (TCM).

169EY Family Business Yearbook 2016 |168 | EY Family Business Yearbook 2016

he explains that it was as part of these efforts to improve

governance that, at the beginning of the new millennium, EYSIL

was listed on the Singapore Stock Exchange. “The appointment

of independent non-executive directors helped to maintain a

focus on business rather than family needs,” he says. “We had to

separate ownership issues and management to be effective.”

According to Richard, family disputes relating to the business

are now rare. But he adds that, due to being a publicly listed

company, efforts always have to be made to ensure that this

remains the case.

Currently, there are two members of the fifth generation working at the business, including Richard’s eldest son Richie.

They and future members of the family will no doubt take their

cue from Richard’s inspirational revival of the group and its

extraordinary Chinese medicine heritage.

Award winners Asia-Pacific Singapore

Richard Eu

Group CEO

Company name: Eu Yan Sang International

Ltd. (EYSIL)

Generation(s): Fourth and fifth

Founded: 1879 in Gopeng, Malaysia

Industry: Health care

Employees (2015): 1,600 (group, full time)

Revenue (2015): Approx. US$257m

Eu Yan Sang operates more than 30 TCM clinics in Singapore, Hong Kong and Malaysia.

Eu Yan Sang is committed to providing products of the highest

possible quality.

One of Eu Yan Sang’s state-of-the-art production plants.

The Eu family.

“The appointment of independent non-executive

directors helped to maintain a focus on business

rather than family needs.”Richard Eu