Thu, Jan 06, 2011
The Business Times
By Sheere Ng
VISITORS to the industrial office of Fei Fah Medical Manufacturing will be hit by the strong smell of menthol, as if someone who had bathed himself in medical oil was in the room. The scent comes from the Electric Medibalm, Fei Fah's first creation that brought the company international fame.
Established in the 50s, Fei Fah began as a medical hall in Chinatown, founded by Loh Yung Chai, a Chinese physician from Guangdong, China. Within a few years, the business was passed on to his son Lau Keong Ying.
In 1974, some friends from the pharmaceutical business shared with Mr Lau a secret formula for an analgesic balm, which was, and still is, popular for body aches and arthritis. Mr Lau then refined the remedy and manufactured, in a cottage factory behind the medical hall, what he later called the Electric Medibalm.
It was so popular that in 1979 the company began distributing it in Hong Kong. And for a long time, Electric Medibalm remained the only product Fei Fah made.
Despite its popularity, the company was in the red, especially after it moved out of its Chinatown premises which was slated for conservation, to a quieter location on Erskine Road. It was only in 1998 when Lawrence Lau, a member of the family's third generation, took over the reins of the business that Fei Fah's fortunes began to turn.
Its offices may be strong with the smell of analgesic balm, but the meeting room where the interview took place was packed with some 50 of the company's other products, such as its green tea plaster and goat's milk tablets. Over the last 12 years, Fei Fah finally expanded beyond Electric Medibalm to produce other health and beauty products.
Before the interview started, Mr Lau switched on the air-condition in the meeting room but left the door open so that his employees could interrupt the interview if they needed to speak to him. This priority he places on his work is probably why he has enjoyed such success.
Upon graduating with a marketing degree in the US, Mr Lau joined a jewellery company in Hong Kong as an export executive. The job required him to carry suitcases full of cash and jewellery around the world, and to stay a step ahead of crooks eyeing his load 'just like in the movies'.
He did such a good job that within a year, he was headhunted by a competitor to become its sales and operations manager. However, four years later, Mr Lau figured that no matter how capable he was, he would always be 'at the mercy of that company and the owner' as an employee.
So after assessing the market potential of healthcare products, and seeing the relative ease of 'building on something that is already there', Mr Lau decided to take over the family business.
His first goal was to boost the company's turnover. Immediately upon his return to Singapore, he got the Duty Free Shop (DFS) to include Electric Medibalm in its line of products. The only similar analgesic that the retailer was carrying then was Tiger Balm.
His strategy against his better-known competitor was to price its product higher to create interest among patrons. 'Of course, the product speaks for itself too,' he said.
To increase Fei Fah's production volume, Mr Lau borrowed $1.5 million from the bank to set up the needed machines and manufacturing plant. 'Honestly, the first two to three years, I felt a heavy load on my shoulders. First of all, it's a family business, so I cannot lose. Secondly, there is a risk of losing my parents' hard earned assets. Lastly, I don't want to be responsible for a failure,' he said.
His worries proved to be unfounded as the sales of Fei Fah's Electric Medibalm at DFS soon grew on a par with its competitor. The company's turnover also increased from more than $120,000 in 1999 to $600,000 in 2000.
Encouraged by this, Mr Lau made a bold move to manufacture more products the following year. 'Initially, I was looking at following the strategy of market leaders like Tiger Balm - focus on one or two products and expand worldwide,' he said. 'But Fei Fah has a shorter history and does not have the same scale of business to achieve the same results.'
Instead, he took a gamble to diversify the products. Despite expanding its product range at breakneck speed, the company adheres to one principle. 'We do not do a 'me too' product,' said Mr Lau. 'They must be distinct and have a strong selling point.'
The changes brought about by Mr Lau's drive and speed, however, got on his father's nerves at times. Once, the two men had heated exchanges after he terminated the contract of a supplier who had been overcharging them.
'My father, like the people of his generation, is wary of conflicts and prefer relationships to be kept cordial, even if it means being taken advantage of,' he said. It was only when the company was showing better results that the tension abated.
In 2009, Fei Fah's annual turnover was about $10 million, a sharp increase from $7 million in 2008. The company has also expanded to Hong Kong and Malaysia.
Within the next three years, Mr Lau hopes to register the company for public listing. As always, he is focused on the advantages that a publicly traded company has, even though most people would be wary of 'having people to look over their shoulders'. 'Let somebody audit you and question you. Only then you can be alert and be sharp in your decision making,' he said.
This article was first published in The Business Times.
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