DXN Early News - How it all began...

The early news...

The article is written by 'The Edge' (It is a weekly hot selling newspaper in Malaysia) after having an interview session with DXN CEO Dr.Lim Siow Jin.
Corporate News: DXN prospers on mushrooms By Isa Ismail

The Early News of DXN...

When Dr Lim Siow Jin introduced his locally produced Ganoderma extracts and health care products to pharmacies and herb shops in his home state of Kedah, he found that there were few takers.

Ganoderma is a species of mushroom that is more popularly known among the Chinese community as Lingzhi and is believed to have properties that can cure a host of illnesses from coronary diseases to ulcers and depression.
Lim has found a way to mass-produce the mushroom and its end-products locally with local content.

"But consumers just couldn't believe that Ganoderma could be produced in a place like Kedah," exclaims Lim. "When you talk about Ganoderma, people think that it comes from nowhere else but Japan, China and Taiwan."
Numerous rejections from sceptical consumers inevitably led Lim to come up with the idea of multi-level marketing (MLM). This set the direction for Lim and the establishment of his company DXN Holdings Bhd, as it got off the ground in the early 1990s.

Red Mushroom

The Early News of DXN...

"Compared with reading the labels on our products, MLM is more convincing because through word of mouth we can better explain how good our products are," Lim says in an interview with The Edge. "Ganoderma produced in Malaysia is as good as that produced in East Asia."

Evidently, DXN's products have found acceptance in the local market, enabling the company to be listed soon on the Kuala Lumpur Stock Exchange.
But still there were challenges.

How was DXN going to compete with the brand image of Ganoderma products from Japan and China? Lim says the answer came in the form of recognition for cleanliness and safety.

"One of the ways was to set up a good manufacturing practice (GMP)-certified factory," Lim explains. "This is a factory with a modern set-up that meets the standards set by authorities like the Drug Control Authority of Malaysia."

The Early News of DXN...

After DXN had established its processing facilities, the next step was the marketing strategy. Lim started small, recruiting members from Kedah and elsewhere in the country. But by 1995, he says, business boomed. DXN came up with many different products containing Ganoderma besides offering it in tablet form. Among these products are DXN's 3-in-1 Lingzhi coffee, toothpaste and cosmetics.

"We may not be the only Ganoderma mushroom producer in the country but we are certainly the largest in terms of capacity," Lim claims. "We are a complete company in the sense that we do the cultivation, processing and marketing of Ganoderma. We not only sell our products locally but also sell to the whole world. We already have branches in 11 countries."

Lim began to dabble in cultivating Ganoderma as a hobby in the early 1980s. His father was a herbalist and the two of them had a keen interest in this mushroom. They, too, thought that Ganoderma, like Ginseng, could only be found in China and Japan.

"But in the 1980s, we found Ganoderma in our own jungles," recalls Lim. "It was great news to us as Ganoderma is a better herb than Ginseng. So in 1984, we went into the jungle to get the mushroom. We used tissue culture to acclimatise the mushroom for commercial cultivation. We did a lot of toxicity tests to ascertain that what we had found was really Ganoderma."

The Early News of DXN...

By the late 1980s, Lim was already producing Ganoderma on a small scale. His Ganoderma extracts were introduced to friends and family members who found that the mushhroom was very effective.

"[But] it was not easy to cultivate Ganoderma," explains Lim. "First you need to get the seeds, or more accurately called 'spawn', and then we had to work out what materials to use to grow the mushroom.

"Books will tell you that you need cotton wood sawdust, wheat bran. But in Kedah, we only have rubber wood and rice and so we used rubber wood sawdust and rice bran. The only foreign materials that we needed were barley and corn. We only required a small amount but they are easily available in the market."
As almost all of DXN's raw materials were sourced locally, Lim's products were selling at a third of the price of imported Ganoderma. And this helped DXN gain a foothold in the market.

DXN registered net profits in the region of RM15 million for the financial years ending February 2002 and 2003. Turnover during these periods hovered around RM120 million.

The Early News of DXN...

Sales in Malaysia only contributed about 20 per cent of the company's total turnover. Its largest foreign market is the Philippines, which contributes about 43 per cent. DXN's most popular product is the 3-in-1 Lingzhi coffee, accounting for 74 per cent of the company's total sales.

"Our coffee was the first product that actually ran out of stock," says Lim. "Our members in the Philippines had sold all their Lingzhi coffee and we had to rush our production to meet the demand."

Today, the company has up to two million members under its MLM scheme.
Its products have won over not only the Chinese community and foreigners but also non-Chinese Malaysians.

"A good-quality product will eventually bring in the customers," Lim says.

The early news of DXN was written in August 4, 2003.


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