HAI-O ENTERPRISE MAKES IT THREE-IN-A-ROW IN FORBES AWARDS

BY YONG SOO HEONG

KUALA LUMPUR, Nov 9 (Bernama) - When Tan Kai Hee rises to receive an award
on behalf of Hai-O Enterprise Bhd from Forbes magazine in Singapore on
Wednesday, the sprightly 72-year-old group managing director might actually do
so with an extra spring in his step.

It is simply because of the elation that this is the third consecutive year
that Hai-O Enterprise is cited for being among the best public-listed companies
in the Asia-Pacific for profitability and growth of under US$1 billion.

The bubbly and enterprising founder of Hai-O Enterprise has been grinning
from ear-to-ear in the last few weeks ever since he was informed that his
company would be making a three-in-a-row strike, a special reason to be proud of
since it was picked from among some 25,000 companies in the region.

"It's all due to hard work from everybody associated with the company," he
said in an interview in his Klang office near here.

Tan admits that after his company had won the award for the second
consecutive time last year, he was determined to get his company to be in the
running again for the award this year.

He is simply thrilled that Hai-O Enterprise rose to the occasion and won the
award this year.

For the year ended April 30, 2007, Hai-O Enterprise made a group pre-tax
profit of RM3.607 million and this increased to RM67.716 million in 2008 and
RM75.887 million in 2009.

To show his appreciation for this year's robust results despite the global
downturn, Tan gave about 500 employees in the company, irrespective of their
rank, a financial reward of RM1,000 each.

He also threw a sumptuous dinner for them and let everyone off for a long
weekend.

When pressed for his recipe of success, Tan put it all down to collective
responsibility and decision-making and said "unity is strength when we all put
our heads together."

Perhaps Tan's once socialist leanings may be the clue why he promotes
collective responsibility and collective leadership as a business philosophy in
the company.

Ever the humble entrepreneur, Tan, often known for his broad smile and calm
demeanour, said Hai-O Enterprise started when "he and few comrades" were
unemployed and decided to do something useful to fend for their families.

" We didn't have jobs then and we decided to start a business. In that way,
we can find money to feed ourselves and our families," he recalled the hard
times they endured about 35 years ago.

" So we started a sundry shop, selling medicinal products from China. We
knew that there was good demand for such products as they were good and
relatively cheap. We also knew quite a number of people who wanted them. Most of
our friends were poor, so we got products that were affordable for them.

" Fortunately or unfortunately, we became bigger. We then decided that if we
became bigger, we would be able to help more people. And so here we are after
more than 30 years. At first we bought from other importers (in the country),
later we became direct importers as well when our reputation became known to
leading pharmaceutical and medicinal product companies in China.

Perhaps Tan's once socialist leanings may be the clue why he promotes
collective responsibility and collective leadership as a business philosophy in
the company.

For the record, Hai-O Enterprise has also been exemplary in rewarding
shareholders and the stock is highly regarded by stock market analysts if recent
reports from OSK Research, RHB Research and Affin Securities are anything to go
by.

What stands out has been its commitment to a 50 per cent dividend payout
from its net profits. For instance, when Hai-O made a net profit of RM21.384
million in 2007, it paid out RM10.937 million in dividends to shareholders.

Similarly in 2008, shareholders received RM23.683 million of the net profit
of RM48.535 million.

On this act of generosity, Tan explained: "Our philosophy is very simple. We
must also give back to society what we have taken or benefited from. Today we
(founders of the company) are no longer poor but we are simply rich on paper
value. We value our shareholders and that is why we give them good returns."

Tan is also especially proud of what he has done for the Malay and
Bumiputera community and what they had done in return for the company. He is
also touched by their respectful reverence of him by calling "ayahanda" or
"father", adding that "that is their polite way of calling this old man."

Out of 100,000 multi-level marketing (MLM) distributors with Hai-O Marketing
Sdn Bhd, the company spearheading the MLM initiative, about 90 per cent are
Bumiputeras (sons of the soil or native people).

"I like their spirit of gratitude for what they had achieved after becoming
successful distributors in Hai-O Marketing. But I must say that their marvellous
performance had also turned around Hai-O Marketing that was once on the brink of
collapse," he said.

Tan disclosed that the driving force of Hai-O Enterprise, the listed entity,
has been Hai-O Marketing as the latter accounted for 80 per cent of the group's
revenue.

Bumiputeras in Hai-O Marketing, he said, had shown that they were capable of
doing business in their own special way as MLM distributors because some 50 to
60 Bumiputera millionaires had been created in the process.

"And they are real millionaires with real money in their pockets, this group
often known as "usahawan jutawan sejati" or true-blue millionaire
entrepreneurs. Many of them even earn more than me and I am proud of them. Their
success makes me very happy. This is due to their sheer hardwork, nothing else.

"I also like their approach to the MLM business as Bumiputeras usually
involve their family members as opposed to non-Malays who rather go it alone.
Now that is the difference. Perhaps that comes from their "gotong-royong"
(volunteerism) spirit and wanting to stand on their own feet.

"They have started what I might call "one family, one company" approach and
they are doing very well. From just RM28 as a starting point, the sky is the
limit. They don't need to rent premises to do their business and there is also
the flexibility of time," said Tan, who has been described by Musa Hitam,
Chairman of Malaysia-China Business Council, as being a role model among
Malaysian Chinese merchants for his effort to produce many Bumiputera
entrepreneurs.

"Among the many friends I know, I believe Tan Kai Hee is one of those who
have the capability of breaking moulds. In the MLM business, many people are
trying to imitate what the others are doing, but he has outperformed many in his
field, creating unique know-how and methods and others are having a hard time
competing with him," said the former Deputy Prime Minister.

Tan said of the 100,000 MLM distributors in Hai-O Marketing, about 50,000
were active while 10,000 fell under the "very active" category with monthly
incomes running into five figures. The majority of the active Hai-O Marketing
MLM distributors have monthly incomes of several thousands each.

However, Tan did say that of the 4,000 to 5,000 who joined as MLM
distributors each year, only a handful made it to the very top as a result of
hard work.

"There is no short-cut. Success is sweeter when you know you had achieved
through the fruits of your own labour," he said.

To repay his debt of gratitude, Tan is considering the listing of Hai-O
Marketing on Bursa Malaysia to set the MLM distributors, especially Bumiputeras,
to be more involved in business.

In addition, Tan has also embarked on an expansion to Indonesia since August
this year, targeting to get some 5,000 to 10,000 MLM distributors within a year.

He likened the move into Indonesia as a natural progression as the cultures
of both countries were almost similar and many Malaysians also have relatives in
Indonesia.

"That's a big bonus for our MLM distributors as well as they can reach out
to a bigger market via their relatives," he said.

For the long term, Tan knows that he cannot rely on trial and error,
goodwill or luck to sustain his string of successful high scores.

In the pipeline is a training college to "make sure that we have
professionals coming in to tell us what is the best way forward," he said.

In other words, ensuring that the Hai-O Group becomes an even more potent
force in the pharmaceutical and healthcare industry. (US$1=RM3.38)
-- BERNAMA