Since he was appointed Managing Director in 1987, Leong Mun Sum has been carrying on his father’s legacy. Leung Yun Chee founded the company in 1928, after being sent to Singapore from his native China to develop business for a silk company.
The inspiration for his business principles and philosophy, Mun Sum maintains a low profit margin and pursues high volume sales to cover production and operation costs as a strategy that his father implemented.
“The company should have a trustworthy reputation and stable development, and give back to society,” he says. “That was my father’s influence.”
It continues to be a family business. Founder Leung Yun Chee’s eldest son, Dr Leong Heng Keng, joined the business in 1947, with nothing more than a high school certificate.
He remained the company’s chairman until September 2018 when he passed away. All of the family’s brothers are still with the company, and now the third generation is coming to work there.
Mun Sum studied a master’s degree in pharmacy in the UK before rejoining the business in 1987. Along with four other brothers, they continue to run the company.
The company does not believe in excessive borrowing and has a very low tolerance for risk, shunning debt and opportunities for rapid returns.
The company manufactures and distributes medical products for external use, containing mostly natural ingredients in a unique formulation that provides relief of discomforts, such as headaches, stomach aches, muscle aches, dizziness and itchiness.
Its core product, the Axe Brand Universal Oil, was developed by Leung Yun Chee and a German physician Dr Schmeidler. “He told my father that this formula is good for a humid and hot country like Singapore, and it relieves all kinds of body aches,” Mun Sum says.
Since then, it has become a global brand, with a presence in more than 50 countries, including Vietnam, Australia, the US and Romania.
Hard work reaps rewards
The company hasn’t always had such success infiltrating the market, and its founder worked hard to pursue recognition.
During the 1930s, Leung Yun Chee faced stiff competition, and as an unknown brand, the public was sceptical about the capability of the oil.
Leung Yun Chee didn’t give up and worked hard to market the new product. Through a new logo and a team of illustrators and graphic designers, the company created a “now iconic, visual identity”.
According to The Business Times Singapore, Mr Leung would “dress in a Western suit” and employ a uniformed chauffeur to drive him around in a fancy limousine.
Thinking he was a prominent businessman, the shopkeepers would come out and talk to him. After distributing pamphlets around Singapore that explained the benefit of the medical oil, sales started to pick up.
As World War II broke out, Leung Yun Chee and the entrepreneur that he was seized the opportunity to expand the business. Trading ceased once Japan occupied Singapore, and the company’s foreign competition ceased with it. Axe Brand oil became the “go-to brand”, and this gave it a good position in the market.
After the war, the company expanded into markets beyond Asia. Its first foreign market was Saudi Arabia. The company owes this to pilgrims making their way to Hajj.
“Often, these arduous trips were made by sea, in cramped and uncomfortable conditions,” its website states. “Suffering from headaches, giddiness and insect bites, pilgrims came to rely on the naturally soothing properties of Axe Brand oil to treat their ailments. In their respective countries, sales began to increase.”
A product that works
The Middle East is the principal market for the brand, with Indonesia not far behind. “Our second biggest market is Indonesia,” Mun Sum says.
“We are doing well here. For the future, I see the most potential in China and India. China has around 1.4 billion people, and India has more than 1.3 billion. They know us already, we have a presence there, but we still have so much potential in both these markets because there are so many people there.”
The company is now more than 90 years old. Mun Sum is proud of managing Axe Brand oil for so many years and for seeing the company expand into global recognition and finding market acceptance in more than 50 countries.
He attributes this long-lasting success to Axe Brand oil being practical and affordable. “It works, it’s affordable, and it’s convenient to use,” he says.
“That’s why it has lasted so many years. For example, a newspaper will cost one dollar, and you can still get a bottle of Axe oil at the market for below one dollar.”
Axe Brand by LKF Medical is a recognised heritage brand in Singapore and one of Asia’s leading producers of medicated oils. It boasts five Good Manufacturing Practice (GMP) certified factories across Singapore, China, Malaysia, Indonesia and Vietnam featuring state-of-the-art technology. It still retains the spirit and passion of its founding father, Leung Yun Chee, who started the company in 1928. For more than 90 years, Axe Brand has built an extensive network of loyal customers, many of whom are ambassadors of the brand to their family and friends. It is a trusted brand in the industry and used by millions of people around the world.
Mun Sum is a firm believer in aiding society. Leung Kai Fook Medical Company (LKF Medical) sponsors many projects and organisations across Singapore.
The Kwong Wai Shiu Hospital in Singapore has been a recipient of LKF Medical’s donations of S$6 million (US$4.4 million) over the past three years.
It not only helps organisations in the medical field, but has also donated to others such as the National University of Singapore’s Department of Pharmacy, an ambulance for St John Singapore, the Singapore Chinese Orchestra, Singapore Cord Blood Bank, and more.
“These are some of the examples that show giving back to society is important to us and what my father always said,” Mun Sum says. “We also provide financial assistance for education, such as scholarships.”
Axe Brand oil is helping society in many ways, and Mun Sum says it has helped people deal with the pain that comes mainly from living in the computer age.
“So many people are using the computer all day – they look at the computer and at their phones – and feel eye strain and get shoulder aches and headaches,” Mun Sum explains.
“For hours, they look at one screen or another. Axe Brand oil has become useful to them to help relieve their aches and pains.”
Patience is a virtue
The role of innovation in LKF Medical’s business and operations has presented challenges for the company. For example, there have been obstacles to overcome in production.
“There was the use of automation in the manufacturing process as early as 1970, and for decades the company had to constantly upgrade its facility to be in tune with the advancement of technology, to improve productivity,” Mun Sum says.
“We’ve created workflow implementation systems to streamline the workflow among production, logistics and accounting.” Marketing has also been a challenge and an area of the company that requires it to adapt to change continually.
“We’re exploring innovative views of marketing, including the use of digital mediums and online communication to market and promote our product. We sponsor research projects in the university to develop new technology for product development.”
“We’re exploring innovative views of marketing, including the use of digital mediums and online communication to market and promote our product.”
LKF Medical featured in PwC’s family business survey of 2016 as an example of “patient capital in action”. “While other businesses typically look for a rapid return on investment, LKF Medical was prepared to distribute free samples of its product for 10 years to break into a new market, all without taking on debt”, the report says.
LKF Medical General Manager Chris Leong discusses in the report the advantage of slow growth, or as PwC calls it “patient capital”.
“Admittedly, the biggest impact that we’ve had is slower growth, but it has also created an advantage for us,” he says. “The company has been able to weather the ups and downs of many economic cycles.”
As an example of a patient approach, PwC describes the product marketing to pilgrims of the Hajj.
Axe Brand oil is considered an Asian herbal preparation. According to Market Reporter, alternative medicines include treatments other than allopathic, which is science-based, modern medicine. “Alternative medicine treatments include systems with healing ability such as acupuncture, naturopathy, herbal remedies and homeopathy. Herbal medicines include drugs that are derived from plants. Herbal medicines are either used for therapeutic purpose, or as supplements to improve wellbeing or health. Herbal products are available as teas, extracts, powders, capsules, tablets, and others. These products are natural, and considered to be safe.”
“The company spotted an opportunity to market its products to Asian Muslims travelling by passenger liner to undertake the Hajj to Saudi Arabia, many of whom suffered seasickness on the long voyage. Free samples were handed out for an entire decade, but this patient approach paid off, and Axe Brand is now a firm favourite among pilgrims. Similar long-term approaches have been undertaken to break into other new markets, such as China and Myanmar.”
It’s the only way the company has taken a slow-burn approach. As Mun Sum explained in the report, the company keeps prices low and relies on “economies of scale through sales in 50 countries to make a return”.
The PwC report also says its “strong family values dictate the company’s behaviour, with a major focus on giving back to society. The brothers are open to the idea of bringing in external talent to manage the firm, but stress that it is their long-term approach that has sustained the business for more than 90 years, and that whoever takes over the reins will need to continue this tradition.”
At home and abroad
The company wants Axe Brand oil to be a fully globalised product. Even the colours of the packaging signify this vision; the green and blue are symbols for the sky, water and land.
Mun Sum’s vision is that wherever these three elements exist, consumers will be able to find Axe Brand oil. The company has around 600 employees worldwide, with approximately 200 in Singapore and five manufacturing factories.
“We have factories in Singapore, China, Vietnam, Malaysia and Indonesia,” he says. “Five countries, because now our operation is automatic, not manual. Automatic machines do a lot of manufacturing, so people are not involved.
“In Singapore, labour is getting very costly. We realised this, and that’s why we have moved to manufacture in other countries where labour is cheaper. Our production can be automated, and it is done faster with fewer issues. Our machines are running about 100 bottles a minute.”
The Singapore government has “an aggressive export policy to help local industries”. The Trade Development Board (TDB) set up its policy in the 1960s to help companies further their trade fairs and exhibitions.
According to an interview with Pharma Boardroom, Mun Sum says that “Leung Kai Fook has participated in diverse TDB missions, which has given us a push to expand our presence in more than 50 countries. We have also followed the Singapore Chinese Chamber of Commerce and the Singapore Manufacturing Federation on a significant number of overseas missions to expand our Axe Brand products with favourable results.
“Therefore, we hope that the government continues to expand these initiatives and help Singaporean companies that have potential to export to forge new frontiers and reach new markets. If these companies succeed to export, they will certainly help to boost the economy of our country.”
Mun Sum says that the Singapore government could consider giving the pharmaceutical and medical companies an outstanding award in exports.
“90% of our product is exported. We earn a lot of revenue from other countries because we export so much.
“I hope one day, the government will provide a reward to our company for exporting because these awards encourage companies to continue to export.”
In his interview with Pharma Boardroom, he says another element that would benefit the company would be for the government to work with the Health Science Authority (HSA) and the National University of Singapore.
He believes they should be working to “assist SMEs in the pharma industry to upgrade their facilities to GMP standards since some companies cannot register or sell their products in other markets due to their lack of GMP certification.”
There are numerous hurdles to overcome in exporting product internationally. “Lastly, it is very challenging to license products overseas,” Mun Sum says.
“Before a product can be imported to developed countries such as the UK or the US, the exporting company must acquire a product licence from the local health authority, whose regulations are strict.”
Do what you love
Mun Sum’s drive comes mostly from honouring his father’s wishes and vision. “In the early days of learning about the business, government officers would often come to inspect the factory,” he recalls.
“My father was very nervous about the whole affair,” he says. “He had five sons. He wished one of them could become a pharmacist to upgrade and modernise the factory and expand the business. I am very proud that I have fulfilled his wishes. I received the necessary qualifications. I studied for a bachelor’s degree and a Master of Pharmacy at the University of London. I am a member of The Royal Pharmaceutical Society of Great Britain.”
“He had five sons. He wished one of them could become a pharmacist to upgrade and modernise the factory and expand the business. I am very proud that I have fulfilled his wishes.”
His father is still the most significant factor that motivates him. “Because of him I work hard on it,” he says. “I got the qualification, and that motivated me a lot, to run with it; to modernise the factory and expand the business.”
The team remains motivated because they know that they are working for a good company. Mun Sum says the company ensures the staff are working for a good firm with a good future.
“We act as a team to make the company grow, and that’s the way we keep our team motivated,” he explains. “Of course, how do they become motivated? I would say that we give good incentives. For example, we give quite a good bonus every year because the company is making money.”
Mun Sum’s underlying outlook is to “love what you do, do what you love”. “This is the piece of advice I offer to young people,” he explains. “I’m the Chairman of the School Advisory Committee, and they sometimes ask me to give a speech, so when I do, this is what I always say. If this is how you feel, I believe you will be successful.”
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