Once the ailing part of a family business, Singapore-listed Eu Yan Sang International, one of Southeast Asia's largest traditional Chinese medicine distributors, is in the pink of health.
To prove that it remains relevant, the 135-year-old household brand in Singapore has a new goal: to become a billion-dollar company in 10 years.
"The sector we are in is huge, so even if we carve out a small share in this multi-billion [dollar] sector, that would [be enough] to keep us going for a long time," Group CEO Richard Eu told CNBC's "Managing Asia."
To do so, Eu aims to venture into the untapped Western market, which he believes could be the next elixir for its century-old business. It made its first move by acquiring Australia's Healthy Life Group in 2012.
"If things work in Australia, [the next target would be…] California and also part of Europe. Our approach is to look at traditional Chinese medicine as part of the natural wellness sector which includes Western naturopathy like vitamins," the 66-year-old said. "But we're still learning so I can't tell you for sure it's going to work until perhaps 5 years later."
Remedy to hurdles
Eu Yan Sang – which means "Caring for Mankind" in Chinese – is not new to challenges. Founded by Richard's great-grandfather Eu Kong in 1873, the family lost control of the business to Singapore-based property firm Lum Chang Holdings in the 1980s.
With the aim of maintaining the family's reputation, the younger Eu joined hands with two cousins to buy back the family's stake in 1989 and eventually led the firm to where it is today – revenue of nearly $288 million (366.3 million Singapore dollars) and over 280 stores across Singapore, Malaysia and Hong Kong.
Hong Kong is Eu Yan Sang's fastest growing market, but is slowing amid rising rental costs.
"Hong Kong is very volatile. We've been able to expand during the economic downturn when retail stores were more available. Now that times are good, rentals have shot up. In one case it rose from 400,000 to 2.5 million (Hong Kong dollars)! We can't afford that kind of… rental increase!" said Eu, who graduated with a law degree from London University and is a former merchant banker.
From the Special Administrative Zone, the Singapore-listed company has set its sights on the broader Chinese region, which Eu admits is a tough market to crack. For one, the mainland has complicated regulations in the healthcare and medicine sector.
"We've tried opening stores, also tried selling our products via wholesale. Our latest move is to open a restaurant in Shanghai and sell herbal food. We felt this modern approach could help us expand in China faster because if you sell a bowl of soup with herbs, there are far less regulations as opposed to putting them into a pill. That's the way regulations are," he said.
And this varied approach towards expansion is what Eu Yan Sang is banking on to realize its ambition to set up thousands of physical stores in the world's second-largest economy.
"China is the largest traditional Chinese market in the world but we need to get our business model right [because] we are up against very large players in China and that is their home ground. But on the other hand, I know we have a good reputation in Southern China so I think we can build on that," Eu added.
— Reported by Christine Tan | Written by See Kit Tang