The regeneration of Dr. Chen
Despite an office the size of a small company in a 350,000 square foot building on nine acres with a Chinese antiquities museum and a botanical garden, there is nothing in Dr. Tei-Fu Chen’s manner to suggest he is a billionaire.
His office’s piped in music is The Kingston Trio, Peter Paul and Mary and other American folk groups popular when he was a teen in Taiwan.
Chen had returned two days earlier from a two week business trip to Singapore, Indonesia, the Philippines and Japan. But there was no hint of hurry or fatigue as he seated himself, unescorted by handlers common to men of his position.
He wore a dark blue, three piece suit with a plum-colored tie and matching breast pocket handkerchief and spoke softly and slowly while leaning backwards and forward with his hands pressed together.
Chen and his wife Oi-Lin are founders of the privately held Sunrider International, a multi level marketing company with tens of thousands of independent dealers, approximately 1,000 retail stores and over 400 products.
Sunrider’s manufacturing plant in nearby Harbor City is 860,000 square feet, or roughly the size of the Los Angeles Coliseum. The company owns similar plants in Taiwan and Singapore and a larger, one million square foot plant on 30 acres in Kunshan, China.
The Chens also own a luxury hotel in Taipei and two in Beijing, including the five-star Sunworld Dynasty Hotel across from Tiananmen Square. They acquired the hotels in 2006, in part, to host Sunrider dealer conventions.
Chen is viewed as Sunrider’s visionary and Oi-Lin its organizational master. The Chen’s five children are also involved in the company. Two are lawyers, one is a medical doctor, one is a doctoral candidate in organic chemistry, and one has a masters in information systems.
Though Sunrider lacks the name recognition of rival Herbalife and other multilevel marketing companies such as Amway and Avon, it has begun to rival them in sales, which Forbes Asia put at $775 million last year. The company does not disclose its sales figures.
Chen attributes his company’s low profile to his personal style. “I focus on the product. I never advertise myself. It’s an area I need to improve on,” he said.
He took a step in this direction two weeks ago with the announcement of a $2.5 million donation to Torrance Memorial Medical Center for its new surgical department. His previous, charitable contributions were largely on the international level, to UNICEF and natural disaster relief efforts in China, Japan and Haiti. In 2009, Forbes Asia recognized him as one of Asia’s leading philanthropist. In 2010 it named him one of Taiwan’s 50 wealthiest natives and one of the “25 Most Notable Chinese-Americans.”
To the extent the Chen name is known locally, it is likely because of publicity surrounding his 1998 conviction on tax evasion and the controversy over the size of his Palos Verdes Estate home.
In 1989, he acquired the 6,000-square-foot, former home of fitness magnate Gloria Marshall. The Chens then submitted plans to replace it with a 30,000-square-foot home “with 16 toilets (20 if you count the pool house and servants’ quarters),” the Los Angeles Times reported at the time.
“I am a dreamer. This is our dream home,” Chen explained to the Times.
Over objections from neighbors and reservations from the planning commission, the city approved the home. Today, despite subsequent additions, and the largest water fountain in Palos Verdes, passersby are unlikely to notice the home because its triangular-shaped lot is artfully hidden by landscaping.
From 20-pound weakling
Chen’s response to being asked how he and his wife built so large a cross cultural and cross disciplinary business, then almost lost it, and then rebuilt it would seem evasive were he not so self effacing.
“I never thought I was smart. I was never good in school and had to hang on to graduate. One day I asked my wife, ‘Do I look like someone who could get someone to overpay for something? She said, ‘Definitely not.’
“I decided to begin my own business because I was not very good in science. Everyone was surprised by my success, even my wife,” he said.
He credits Sunrider’s meteoric growth to the quality of its herbal products.
“People enjoy our products, They pretty much sell themselves,” he said.
As evidence, he mentioned, with no suggestion of rancor, that there are 15,000 internet sites selling counterfeit Sunrider products.
Sunrider products are based on what the company literature calls The Philosophy of Regeneration.
“I had the idea of trying to combine traditional Chinese herbalism with modern science,” he said. “If you look at Chinese history, going back 5,000 years, we did not distinguish between hunger and disease. We believe disease is a result of poor nutrition. Hunger is the body telling you, you need food. Colds are the body telling you to boost your immunity system.
“Chinese herbalism may not be recognized as science by Western standards. But we are the most populous people on Earth.”
By contrast, he noted, “Western science has simpler answers. Take an aspirin and you’ll feel better. But it only erases the symptom. It doesn’t address the root problem.”
“Put it this way. Even today, 70 percent of medicines are derived from herbs. Aspirin is from willow bark. Digitalis, a toxin used to stimulate the heart, is from fox grove.”
“So, at an early age I had the idea to focus on nutrition. But I had to figure out a way to do it.”
Chen was sickly from the time of his birth in 1948 in Chiayi, in Southern Taiwan.
“After the war, everyone was poor and there wasn’t much food. I was sick all the time.”
His nickname was “Chopsticks.” He remembers using a flashlight to attract grasshoppers to eat.
“My grandfather was a farmer and learned about herbs from his father. He would grind up Chinese yams with other herbs and mucilage and boil them down into a drink for me,” Chen said
Chen’s grandfather died when Chen was a teen, but by then Chen was studying traditional Chinese medicine on his own.
“I didn’t want to be Superman. I just wanted to be normal. I couldn’t play ball games or even run because I was so weak,” he said.
Efforts to heal himself led him to study pharmacy at Kaohsiung Medical College and then to Brigham Young University in Utah, accompanied by his new bride Oi-Lin.
He chose Brigham Young because when he was 16, he converted to Mormonism.
That decision was also related to his poor health.
“I was interested in religion since I was young. I studied Buddhism and Taoism. And then one day a Mormon friend answered the question that was always on my mind. Because I was in not-so-good health and people thought that I would die young, I wondered what our purpose was, where we came from and where we go when we die.
“In the Bible, Jesus says to Peter, ‘Upon this rock, I will build my Church.’ He doesn’t say, ‘Upon a rock.’”
The inference Chen drew is that the Church is universal and eternal.
“People often focus on the death of Jesus Christ. But I’m more focused on the resurrection. I don’t want to follow a dead God. A God who is alive is more interesting.”
At Brigham Young, Chen took up judo. To relieve soreness after workouts he concocted an herbal ointment, which became popular with fellow students.
Following Brigham Young, Chen became the research and development director of a multi level marketing nutritional company.
By then, he had begun formulating his own line of herbal remedies. His company agreed to sell them, but not to promote them. The company did not believe U.S. consumers would buy Chinese herbal remedies.
As a result, in 1982, Chen and a fellow employee left their skeptical employer to form Sunrider, along with Oi-Lin, who had earned her MD. They settled on a multi level marketing structure to sell their products, he said, because there were so many other successful multi level marketing companies in Utah.
Sales neared $330,000 the first year, based largely on sales of the sore muscle ointment they called Sunbreeze. It remains one of Sunrider’s most popular products.
Chen distinguishes his nutritional supplements from others by saying, “We are selling concentrated food, not vitamins.”
“Western science wants to find the one magic ingredient, but I think we need to look at food as a whole.”
“Vitamins are not a food. They are actually chemicals. Vitamin C is ascorbic acid. If God wanted us to have just Vitamin C he would have given us ascorbic acid and not oranges.”
The concentration is necessary, he said, because natural foods may not contain sufficient amounts of the nutrients the body is lacking.
“Doctors say a glass of wine a day is good because wine contains the antioxidant resveratrol. But a person would need to drink 400 bottles of wine a day to receive a beneficial amount.
“That’s where modern science plays an important role. It helps determine the levels at which herbs are helpful and harmful.
“People think ginkgo biloba improves memory. They don’t understand that it is actually a blood vessel dilator. If the vessels are dilated for too long fluid will leak out and cause edema in the eyes, where there are a lot of blood vessels.
“Ginseng contains glycolic, a blood thinner. So it calms you down. But ginseng oil excites you, a quite different effect.”
Chen says his products balance Western science and traditional Chinese herbalism.
“The Chinese believe in yin (to nourish) and yang (to cleanse). To balance yin and yang the five systems of the body must also be in balance: fire, earth, metal, water and wood. In western medicine these correspond to the endocrine, digestive, respiratory, circulatory and immune systems.”
“Too much emphasis on the traditional side may not be desirable, but too much emphasis on modern science may cause us to lose site of nourishing the whole body,’ he said.
Chen contends that multi vitamins and protein powders that narrowly target one area of health can be harmful because they may cause the body to become unbalanced.
He cites the example of Chinese emperors who ate ginseng for strength and stamina and then bled to death in battle because of ginseng’s blood thinning qualities.
Sunrider’s literature describes a complex and costly manufacturing process by which herbs are concentrated into pill and liquid forms.
The herbs are cleaned, ground and then subjected to a proprietary extraction and condensation process in factories that can fill 100 potion bottles a minute.
Chen said designing and operating its factories distinguishes Sunrider from its competitors by enabling it to control quality.
In 1987, Sunrider relocated its headquarters from Orem, Utah to Torrance. In just 5 years, annual sales had reached $24 million and the company had 125 employees and 40,000 distributors. Six years later Sunrider opened its current, 350,00 square foot headquarters near Old Town Torrance. In 1992 it opened a manufacturing facility in City of Industry and in 2008 opened its current research and manufacturing facility in Los Angeles.
Then, in 1995, the company was dealt a near fatal, self-inflicted blow.
The Chens were named in a 20-count, Federal Grand Jury indictment alleging tax evasion and art smuggling The case stemmed from an investigation that began three years earlier and would culminate in 1998 with the Chens paying $93 million in back taxes. In addition, Tei-Fu Chen would serve an 11 month sentence at Boron Federal Prison, a minimum security camp near Palm Springs. Oi-Lin Chen was sentenced to six months of home detention.
“That’s a very interesting question,” Chen said when asked about the tax fraud allegations.
“The government thought what we were buying was too expensive, so they thought we were making [more] profit, which we never did.”
“The prosecutor was frustrated. He complained, ‘I’ve been in this for seven years.’ We were also frustrated, but he wouldn’t let it go. So, I reached out to him. I asked him, what can we do? I figured the chances in court for rich people in this area weren’t good, especially with my own family, my sister, being a witness for the government.
“They gave her a misdemeanor. It’s hard for people to understand the conflict within a family. So we reached a settlement with the government.
“I enjoyed prison. It was a good time to rethink everything, to quiet down, to figure out what we wanted to do in the next years.
“I read a lot of history and religion books. I also tried to repent for what I had done wrong, for why I did not keep family peace. It gave me time to cool down.’
“We were blessed that the company survived,” he said.
Chen said prison was when he determined to replace their City of Industry manufacturing facility with the new, larger facility in Harbor City, closer to their Torrance headquarters. Another decision reached in prison was to abandon their multi level marketing system in China in favor of retail stores.
In 1996, he said China sales approached $1 billion annually. But the Chinese government had begun imposing restrictions on multi level marketing because of industry-wide abuses.
“Multi level marketing became a dirty business, so we decided to stop it totally,” he said.
Sunrider helped its best distributors open approximately 1,000 retail stores. Sales plummeted 60 percent, Chen said, but have since rebounded.
“There are always ups and downs. I think of trials as God-given gifts. When we face trials, that is when we must move on. Don’t judge a person by his success. Judge him when he falls down. That is the true test of character.
“I always move forward. I named my company Sunrider because if we face the sun, the shadows will always be behind us.”