The creation of Lee Kum Kee Company's world-beating oyster sauce began with an accident, but the fourth generation of the family running the firm know they cannot rely on their great-grandfather's luck to keep the 119-year-old firm going.
As a result, the firm's chairman Eddy Lee Wai-man has in recent years been spearheading management reforms to make the company more like a publicly traded firm, including hiring its first outside chief executive and chief operating officer.
"This is to ensure good succession planning and the future of Lee Kum Kee," Mr Lee explains.
Lee Kum Kee is named after its founder, Mr Lee's great-grandfather, Lee Kum Sheung, who - like Alexander Fleming with penicillin 40 year later - discovered oyster sauce by mistake in 1888.
Owning a tea house in Nan Shui, in the southern part of Guangdong, Lee served some simple dishes with oysters from the region. According to family lore, one night he failed to completely extinguished the fire under the wok which, as luck would have it, contained remnants of an oyster dish he had prepared earlier.
"The oyster and broth turned into a thick sauce that was delicious cooked with other foods", Mr Lee says. "My great-grandfather decided to discontinue the tea house and started to sell the oyster sauce."
The company moved to Macau in 1902 and expanded to Hong Kong in 1932. It passed through generations and now Eddy's father, Lee Man Tat, is chairman of Lee Kum Kee Group - which also sells Chinese herbs and traditional health products.
Eddy Lee, eldest of the fourth generation, oversees the sauce-making division.
Its five factories - in Tai Po, Xinhui and Huangpu in Guangdong, Kuala Lumpur and Los Angeles - produce 221 sauces, ranging from the oyster (still the most popular) to XO (the most expensive) and exotic Asian, which are sold to restaurants and retailers in 80 countries. In 2005, its Xinhui unit became the first enterprise in the city to pay 100 million yuan in tax.
So why change a winning formula?
For the Lees, a big question loomed: would the 14 members of the fifth generation be willing to work for a sauce company, even one that had become an international brand? Four years ago, seven members of the family - Eddy and his parents, three brothers and a sister - formed an oversight council and decided to implement a number of corporate reforms.
These include establishing audit and remuneration committees and appointing two independent non-executive directors: the chairman of the Securities and Futures Commission, Eddy Fong Ching, and the executive-director of the Trade Development Council, Michael Sze Cho-cheung.
The family also instituted a policy that the chairman must be a Lee but that it could hire from outside the chief executive and chief operating officers - two posts then filled by Eddy's brothers, David and Charlie. In August last year, with the help of a global headhunting firm, they recruited Stephen Lui Song-tien, a 30-year veteran in international consumer health care, to become chief executive, and George Tsang as chief operating officer.
Mr Lui set out to introduce a more professional style of management. One of the first things he did was lay down procedures and guidelines for each department, and a review system to check that everyone was doing their jobs.
"Before, many people would guess and speculate on whether the boss liked what they were doing. Now, they no longer need to waste the time guessing whether the boss is happy," Mr Lui says. "A family run business runs on trust. Now, I tell the staff, 'I trust you, but I also need to verify'."
These systems will become especially important for the company to reach its target of doubling sales in the next few years, since this will require hiring hundreds more people to upgrade marketing, production and packaging design.
The family is still intimately involved in company operations. Its council of seven meets regularly to discuss "how to enhance the Lee Kum Kee brand, develop other Chinese herbal businesses, charity work and investment", Mr Lee says. Charlie is chairman of China operations, and David is chairman of the European and American arms. David has also become the family management guru, attending courses and then introducing the concepts to the council members and Lee Kum Sheung's great-great-grandchildren, aged two to 25.
Mr Lee hopes the reforms will help the firm stay in the family for many generations to come.
"We were approached by many investment bankers to consider listing but we want to remain a family business. The reasons to go public are to raise money and to enhance our reputation and we do not have the need for either.
"We are also concerned that being a publicly listed company may make it easier for it to become a target of acquisitions. Our family considers Lee Kum Kee an important family asset and we do not want it to be taken over."
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