Yeo Hiap Seng Malaysia Bhd. - Company Profile, Information, Business Description, History, Background Information on Yeo Hiap Seng Malaysia Bhd.



7 Jalan Tandang
Petaling Jaya
46050
Malaysia

Company Perspectives:

Our Vision: To be the No. 1 Asian Food and Beverage Company in Malays ia. Current Achievements: No. 1 in Soy Milk Category; No. 1 in Tea Dr ink Category; No. 1 in Canned Meat Range. Targets: No. 1 in Instant N oodle Category; No. 1 in Canned Food Category.

History of Yeo Hiap Seng Malaysia Bhd.

Yeo Hiap Seng Malaysia Bhd. is one of the leading food and beverages groups in the Malaysian and Singapore markets. The Petaling Jaya-base d company produces a range of foods and carbonated and noncarbonated beverages under the brands Yeo's, Fizzi, Goodtaste, SoyRich, and Cint an. Core product areas include soy milk, tea, and instant noodles; th e company holds the number one spot in its market for the first two, and has targeted the third category for future leadership as well. In addition, Yeo's product range includes canned goods, such as curries , coconut, and the like; sugarcane-based drinks and chrysanthemum tea ; and other regional favorites. The company's logistics and distribut ion network gives it national reach. After a disastrous attempt to en ter the U.S. market in the early 1990s (through the acquisition of Ch inese food brand Chun King), Yeo has remained closer to home, focusin g primarily on Malaysia and, through subsidiary YHS Beverage, Singapo re. Nonetheless, the company also operates production and distributio n joint ventures in China and Thailand. Yeo Malaysia has been listed on the Kuala Lumpur Stock Exchange since 1975; the company is control led at nearly 61 percent by Singapore's Yeo Hiap Seng, which has conv erted itself, in large part, into a real estate and property developm ent holding company. In 2004, Yeo Hiap Seng Malaysia posted sales of more than MYR 375 million.

Early 20th-Century Soy Sauce Maker

Like many businesses in Malaysia and Singapore, Yeo Hiap Seng's origi ns lay in the vast ethnic Chinese community that helped transform muc h of the Southeast Asian region in the first half of the 20th century . The Chinese proved to be energetic entrepreneurs, often backed by s trong support networks in their business endeavors. Over the course o f the 20th century, the ethnic Chinese community, particularly in Sin gapore and Malaysia, developed into the region's strongest economic p layers. Although the Chinese avoided political involvement, and thus remained at the mercy of governmental will, they clearly controlled t he regional economy.

Among the Chinese who arrived in Singapore in the years leading up to World War I was Yeo Keng Lian. Yeo had founded a soy sauce factory i n Amoy, near Zhangzhou, in China's Fujian province, in 1900. Yet the Yeo family's greatest success came only after they immigrated to Sing apore in 1935. By 1937, the family had incorporated its new business. The name chosen for the company, set up as a family-controlled partn ership with a starting capital of just SGD 51,000, set the tone for t he group. The Yeo family called their company Yeo Hiap Seng Sauce Fac tory (Yeo Hiap Seng literally translated as "Yeo United to Succeed.")

Success was indeed swift, as the city-state's large ethnic Chinese co mmunity embraced the Yeo family's soy sauce. By the early 1940s, the company's sauce also had begun developing a market in nearby Malaysia as well. Yeo Hiap Seng formally extended its sales reach to Malaysia in 1942. The manufacturing base of the company's operations remained limited to Singapore, however, into the 1950s.

The years following World War II saw a dramatic transformation of the region, as Singapore and Malaysia emerged from British colonial domi nation to set up their own independent governments. The Chinese commu nity played an important role in creating a base of relative financia l stability on which to build the new countries. As important partner s for the country's emerging political elite, the Chinese community m aintained their own economic prosperity.

For Yeo, the postwar period became a time of strong growth and expans ion into new areas. By the late 1940s, the company had begun to prepa re a diversification of its production, launching development of its first new product, a canned chicken curry, in 1950. In support of thi s effort, the company built a new and larger production facility in 1 951. The following year, the company became the first in the region t o market a canned chicken curry product.

That successful launch was soon followed by the company's expansion i nto the production and bottling of beverages, as well as the launch o f a wider range of canned foods. Yeo also continued to produce its so y sauce. In the early 1950s, the company sought to leverage its exper tise in soy products by experimenting with methods for bottling soy m ilk. Until then, consumers had to make their own soy drinks, boiling the soy over a fire for long periods. By 1955, however, Yeo had succe eded in developing a method for producing and bottling the soy milk. The launch of that product sparked a revolution of sorts in the regio n's beverage market. At the same time, the company recognized the pot ential for bottling another favorite regional beverage, chrysanthemum tea.

Yeo converted from its partnership status to that of a limited liabil ity company in 1955. Two years later, with the declaration of Malaysi a's independence, the company formalized its operation in that countr y as well, establishing a sales subsidiary there, Yeo Hiap Seng (Sara wak) Sdn. Bhd. Yet, with the new Malaysian government promoting the c ountry's economic independence as well, Yeo quickly added a productio n component in that country. The new Yeo subsidiary, Yeo Hiap Seng Ca nning Factory (Malaya) Sdn. Bhd., opened in Petaling Jaya in 1959.

Canning and Bottling Innovator in the 1960s

Through the 1960s, Yeo continued expanding its range of products. By the early 1970s, the company had branched out into instant noodles, c hili, and tomato and oyster sauces, among others. Yeo was also the fi rst in Singapore and Malaysia to begin packaging a newly developed lo ng-life UHT soy milk in disposable paper-based containers, starting i n 1967. The popularity of the new packaging type led the company to l aunch a similar packaging for its chrysanthemum tea. In 1974, Yeo ado pted the latest generation of paper-based packaging, the Tetrabrik. I n support of its packaging conversion, the company acquired its own t etrabrik packaging machine in 1974. In the meantime, the company had begun to establish its brand name elsewhere in the world, launching e xports of its canned curry in 1967.



Yeo went public on the Singapore Stock Exchange in 1969, at which tim e Alan Yeo, grandson of the company's founder, took over as CEO. The company by then also had gained the bottling franchise for Pepsi Cola in Singapore and Malaysia, boosting the company among the region's t op beverage groups. Meanwhile, the determination for developing self- sufficiency by the Malaysian government led to the enactment of a new series of legislation governing the import sector. As a result, Yeo Malaysia built a new factory in Johor Baru in 1971, becoming a major Malaysian beverage and food producer in its own right. This led the c ompany to go public in 1975, as Yeo Hiap Seng (Malaysia) Bhd. Yeo Hia p Seng maintained a controlling stake in its Malaysian counterpart, h owever, and the companies continued to evolve in parallel for some ti me. Gradually, however, the focus of the group's food and beverage ma nufacturing operations shifted to Malaysia, as the Yeo Hiap Seng grou p itself grew to include a range of diversified interests, especially real estate.

During the 1970s, Yeo launched a variety of new tetrapak beverages. I n 1976, the company became the first to introduce herbal teas in tetr apaks. Yeo also unveiled its successful line of bottled sugarcane dri nks in 1978. Into the 1980s, Yeo sought to expand its beverage offeri ng. The company entered the carbonated beverage category in 1984 with the production of a range of "Fizzi" brand tropical fruit-flavored s oft drinks. In that year, as well, Yeo became the first in Malaysia t o offer a smaller format 100 percent juice for the childrens' market. The "Junior Juice" brand featured 125 ml tetrabriks.

By the end of the 1980s, Alan Yeo had developed the Yeo name into a m ajor player in the food and beverage markets in Malaysia and Singapor e. By 1987, Alan Yeo himself had earned recognition as Singapore's "B usinessman of the Year."

Yet Yeo already faced dissension among the ranks of Yeo family member s, many of whom remained active in the company's management. Tensions began to gather when Alan Yeo led the company on an attempt to enter the U.S. market in the late 1980s. Yeo accomplished this by buying t he Chun King brand of Chinese food from Nabisco for $52 million.

The purchase proved to be a big mistake, and Alan Yeo's downfall. Nab isco had had the marketing clout to ensure Chun King a prominent plac e on supermarket shelves and in the minds of U.S. consumers. Yeo, how ever, lacked both experience in the U.S. market and sufficient funds to properly market the Chun King brand. Of importance, the success of the Chun King brand had come during a period when there were relativ ely few Chinese restaurants outside of the country's urban centers. B y the early 1990s, however, Chinese restaurants had found their way t hroughout every segment of the American landscape. In this way, the C hun King brand lost its novelty, and sales began to slip.

The problems at Chun King quickly caught up with Yeo itself, and the company slipped into the red in the early 1990s. The Yeo family, whos e shareholding interests in the company were bound together in a join tly owned private holding company, split into factions. One faction, led by Alan Yeo's nephew Charles, began calling for the ouster of Ala n Yeo as head of the family. In response Alan Yeo won the right to br eak up the family holding company, which enabled him to sack Charles and other members of the dissenting group.

Yet Alan Yeo's victory was only temporary. The breakup of the holding company also enabled family members to sell off their stakes in the company. By 1995, the prominent Singaporean real estate family led by Ng Teng Fong had amassed 24.9 percent of Yeo, just below the thresho ld that would have triggered an automatic takeover offer. Yet during that year, Yeo, which owned some highly valuable properties, had foun d another suitor, Malaysian banker and industrialist Quek Leng Chan, head of the Dao Heng Bank in Hong Kong and the Hong Leong Group, amon g others. Quek was also cousin to the Singapore-based Kwek family, wh ich controlled real estate and hotel group CDL. By the middle of 1995 , Quek had quietly built up a stake of more than one-third of Yeo's s hares, triggering a takeover battle with the Ng group.

Malaysia Base in the New Century

The Ng family ultimately emerged as victorious, with the Yeo family b ecoming the ultimate loser, removed from the company founded by their grandfather nearly a century before. Under Chairman Robert Ng, Yeo i ncreasingly split its Singapore and Malaysian operations, with the Si ngapore wing focusing on real estate development, and the Malaysian w ing becoming the base for the company's continuing food and beverage operations. This transition was confirmed in 2001 when Yeo Hiap Seng in Singapore received permission to transfer control of its beverage business, YHS Beverage (International) Pte. to Yeo Malaysia in 2001. At the same time, the Ng family brought in France's Danone as a new m ajor shareholder in Yeo Malaysia to assist in developing its food and beverage wing.

The arrival of Danone also played a part in Yeo's increasing interest in once again expanding beyond the Malaysian and Singapore markets. This process had begun in the early 1990s. Yet the company's new effo rt turned away from the U.S. market (the Chun King brand was sold) an d focused instead on expanding Yeo's reach in Southeast Asia through the Yeo and other brands.

Joint ventures played a prominent part in the company's international expansion. In 1993, for example, the company formed a joint venture with World Grain Co. in Thailand to launch WY Co. Ltd., which launche d a variety of teas, fruit juices, and other noncarbonated soft drink s under the Eliza brand. By then, the company had been manufacturing soy milk under license in mainland China. In 1994, the company launch ed the Rengo International holding company joint venture in Hong Kong , which then launched the manufacturing and sales of instant noodles on the mainland. The launch of Xiamen Rengo marked a return of the co mpany to its roots, of sorts, as the company set up a production plan t in the Fujian province. By the end of the decade, Yeo operated six food and beverage production facilities in China.

Yeo turned to the Persian Gulf region in the early 2000s, setting up a subsidiary in Bahrain. The new unit provided sales and marketing su pport for Yeo's effort to extend its brand reach into the West Asian region. At the same time the company continued to look for opportunit ies to expand its product range at home as well. This led to a market ing and distribution agreement with Hain Celestial Group, a U.S.-base d maker of organic and natural foods, as well as personal care produc ts. Yeo appeared to have set its sights on remaining a major Asian fo ods and beverage group for its second century in business.

Principal Subsidiaries: Bestcan Food Technological Industry Sd n. Bhd.; Esin Canning Industry Sdn. Bhd.; Leong Sin Nam Farms Bhd.; R engo International Investment Ltd. (Hong Kong; 54.83%); Sarawak C oconut Enterprise Sdn. Bhd.; Senawang Edible Oil (Sendirian) Bhd.; WY Co. Ltd. (Thailand; 50%); Xiamen Rengo Food. Co. Ltd. (China; 54 .83%); Yeo Hiap Seng (Middle East) Co. Ltd. (Bahrain); Yeo Hiap S eng (Perak) Sdn. Bhd.; Yeo Hiap Seng Trading Sdn. Bhd.; YHS Beverage (International) Pte. Ltd. (Singapore).

Principal Competitors: Nestlé S.A.; Procter & Gambl e Co.; Unilever PLC; Japan Tobacco Inc.; Coca-Cola Co.; Philip Morris USA; Taian Taishan Brewery; Groupe Danone; Lamson Sugar Co.; Xiamen Cannery.

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