BY PROF. ENRIQUE SORIANO
THE LEADERSHIP transition process is one of the biggest challenges facing family firms, as most fail to remain a family business past the second generation.
Family enterprises are different from nonfamily businesses in that the former have not only business issues to deal with, but also the obligation to take care of family relationships, which in most cases can be personal issues and unrelated with the business. How family members navigate these overlapping roles will define the success or failure of the organization.
What is a patriarch’s biggest challenge in a transition where he is about to relinquish or share power to the next generation?
What are the most important lessons that business leaders learned from their founders or parents that they would like to pass on to future generations?
How does a key business leader inspire a generation with its own career aspirations and dreams to want to join and lead the family business?
I will be asking these tough questions (and more) to Mr. Richard Eu in a webinar event organized by ICON Events Asia slated on Dec. 9 at 10 a.m. to 12 noon. Richard is a 4th generation successor and great grandson of the founder. Under his previous role as group CEO, he grew the company into one of Asia’s largest traditional Chinese medicine organizations.
As a leading TCM health and wellness company, Eu Yan Sang has an extensive distribution network comprising close to 200 Eu Yan Sang retail outlets in China, Hong Kong, Macau, Malaysia and Singapore. It also operates close to 30 TCM Clinics in Singapore, Malaysia and Hong Kong, and a food and beverage outlet in Malaysia. The avid philanthropist and music lover is now transitioning the business to the next generation.
A family business that started in 1879
In 1873, EYS founder Eu Kong left his hometown of Foshan in Guangdong, Southern China to seek his fortune in Malaya. Determined to free tin mine coolies from the clutches of opium’s suffering by dispensing quality Chinese medicine and herbs, Eu Kong set up their first shop in 1879 in Gopeng, Perak. This shop was named “Yan Sang”, which literally means “caring for mankind” in Chinese.
Eu Kong’s only son, Eu Tong Sen grew up dedicating himself to the family business and to realising his father’s goal. With determination and astute foresight, Eu Tong Sen established himself in Malaya and Singapore, and became a leading figure in tin mining and rubber plantation businesses by 1920s.
Wherever he starts his tin mines, Eu Tong Sen would set up a medical shop to take care of his workers’ health and wellbeing. As he expanded the medical shop beyond Gopeng, he decided to brand the medical business more firmly with the attachment of the family name, and his medical shops were named as Eu Yan Sang since then.
From a small, homegrown business to a public company with global ambitions, the EYS values to “care for mankind” remain constant and unchanging. They are as relevant today as they were in the past.
However, despite having survived two world wars, EYS had its own fair share of tumultuous family conflict and tragedy. One tragic event that almost imperiled the business was the murder of second generation successor Eu Tong Sen’s wife by his brothers, the sellout to an outside investor, dealing with 72 cousins with diverse interests and the repurchase by Richard’s generation (4th), returning control of the business back to the family.
This storied rivalry involving money and power represents the complicated nature of family businesses and the even more complex and often unwieldy interplay of preserving family values, managing sibling rivalries, personality differences, and reviving a century-old business using modern management techniques.
A generational transition is the most difficult and complicated phase in the life of the family business, everyone in the family will struggle with change and the need to reconcile the old and the new. It is a test of character and resolve for the family to move forward. Many will fail and the few family firms that will survive will relive to share their stories.
Join me in my last end-year ASEAN webinar event entitled, “Managing a 141-Year-Old Business.”
Slots are limited and registration will close soon.
Please contact Jayson of W+B Advisory 09173247216/ inquiries@wbadvisoryasia.com/PN
