I HAVE lost count of family-controlled businesses that did not survive a generational transition. Only those classified as high-profile cases have gotten the spotlight like the highly publicized corporate feud in South Korea involving the two sons wrestling control of the country’s fifth largest “chaebol” Lotte Group (annual revenues US$90 billion) and the dispute over the assets of Stanley Ho, Asia’s gambling billionaire. The last decade of Ho’s life was mired by very public squabbles among family members eager to gain a share of his vast wealth. And according to Bloomberg, most of his wealth, estimated at $14.9 billion in 2019, was split between two of his children and his second wife, Angela. Ho, considered the godfather of gambling, sired 17 children by four women.
Next generation transition is critical
While other conflicted families have managed to keep themselves under the radar, they are not spared from vicious infighting. Many continue to grapple with bruising succession issues and most of these acrimonious business owning families will never get the chance to transition. A leadership transition process therefore is one of the biggest challenges facing family firms, as most fail to remain a family business past the second generation.
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 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 fourth generation successor and great grandson of the founder of the Eu Yan Sang (EYS) group. Under his previous role as group chief executive officer, he grew the company into one of Asia’s largest traditional Chinese medicine organizations. He is the current chairman of the group.
As a leading TCM health and wellness company, EYS has an extensive distribution network comprising close to 200 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.
Family business started in 1879
In 1873, EYS founder Eu Kong left his hometown of Foshan in Guangdong, Southern China to seek his fortune in Malaya (present- day Malaysia). 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 realizing 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 the 1920s.
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 (fourth) culminating in the return of control of EYS 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 of hurt feelings, despair and triumph.
Don’t miss my last year-end Association of Southeast Asian Nation webinar event entitled, “Managing a 141-year-old business.” Slots are limited and registration will close on event day. Please contact Jayson of W+B Advisory 0917-324-7216/ firstname.lastname@example.org.