Old Company Case

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  • Topic: Soy sauce, Lee Kum Kee, XO sauce
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工業貿易署 Trade and Industry Department
SME Case Series

CHI KIN (BENNETT) YIM

Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee1 Introduction
We are a very old company, but we recognise that our customers are changing, so we continually develop new products to reflect this. David Lee, managing director, Lee Kum Kee Company2

The problem with a lot of family-controlled local brands that have a long history behind them is that it’s very easy to become old and run out of steam. - Antony Chow, vice-president for Greater China, RSCG (an advertising agency)3

The sauce company Lee Kum Kee, one of the best known Hong Kong brands, certainly did not have the problem mentioned above, although it did have a long history that began in 1888, and was run by the same family through four generations. The company was founded by Lee Kam Sheung as a small oyster-sauce manufacturer in Guangdong Province, China. It relocated to Macau in the early 1900s, moved once more to Hong Kong after World War II, and was based there in the decades afterwards. Lee Kum Kee was already expanding beyond the Guangdong-Macau-Hong Kong distribution network in the 1920s to North America, when it was also making shrimp paste. In the 1970s and 1980s, after the torch passed to thirdgeneration leader Lee Man Tat, there was a diversification of geographical markets as well as products at a very quick pace. Lee Man Tat’s sons, who were educated in the West, inherited the leadership from their father in the 1990s, and the pace of modernisation and diversification continued while the Company’s marketing strategy remained as vigorous and 1 2 3

This Case is based entirely on public sources, including the Lee Kum Kee Website, URL: home.lkk.com. Nisha Gopalan, “LKK reveals recipe for success”, South China Morning Post, 1 October, 1996. Joanna Slater, “Spreading the Sauce”, Far Eastern Economic Review, 20 May, 1996.

Vincent Mak prepared this Case under the supervision of Dr. Chi Kin (Bennett) Yim for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes. This Case is part of the Trade & Industry Department SME case series funded by the Hong Kong Special Administrative Region Trade and Industry Department SME Development Fund. Any opinions, conclusions or recommendations expressed in this material/event (by members of the project team) do not reflect the views of the Government of the Hong Kong Special Administrative Region, Trade and Industry Department or the vetting committee for the SME Development Fund. © 2003 by The Centre for Asian Business Cases, The University of Hong Kong. No part of this publication may be reproduced or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise (including the Internet) - without the permission of The University of Hong Kong. Ref. 03/187C

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03/187C

Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee

adaptable as ever. The Company moreover overcame a consumer-confidence crisis — called 3-MPCD crisis — in the late 1990s and early 2000s and continued to thrive. By early 2003, Lee Kum Kee had already developed more than 200 sauces. Its distribution network covered 60 countries in five continents, and its products were available in more than 80 countries. What lessons about strategic brand management can we learn from the way Lee Kum Kee developed, maintained and expanded the reach of its products over a whole century? What lessons about crisis management does the Company’s handling of the 3-MPCD crisis offer?

Early History4
Lee Kam Sheung was born in 1868 in Qibao, a village in Xinhui, Guangdong Province, China. Threat from local gangsters forced him to leave his farming life and move to a small island called Nam Shui in the same province, where oysters were abundant. Lee opened a small restaurant there, often using oysters as stock for soups. One day, while cooking...
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