Chinese medicine-manufacturer Eu Yan Sang (Hong Kong) (EYS) threatened yesterday to sue its critics for defamation after coming under fire from minority shareholders and an ex-director. The threat came with the company's bid to clarify a range of issues including on-going trademark litigation, the quality of its products, the loss of a board director and the company's future business and management. The announcement came five days after Charles Eu Keng-pang claimed he had quit the board because of his worries about the company's trademark, product standards and quality of the management. EYS insisted that he did not resign, but was removed by the board at 4pm on May 27 for behaviour 'inconsistent with his fiduciary duties as a director of the company'. The company said his resignation letter arrived at 6pm that day. Mr Eu was relieved of his executive duties on March 25 and was made non-executive director. The company said it had a good chance of winning its trademark lawsuit against a company controlled by children of one of its directors. It said that even if it lost, it 'would not be precluded from using any of its trade marks'. That was because trademark legislation provided certain statutory defences in favour of users who could show prior rights to the mark, the company said. EYS said it had a good chance of fending off any future law suit for allegedly infringing the other company's trademark. The sales which might be affected by the two trademarks under question represented 29 per cent of the company's turnover as at December 31,1995. Again, the company rejected allegations of quality control problems of its products, in particular the ingredient called moschus. EYS said the analysis report alleged by its minority shareholder, Modern Bridge, was prepared in China and the standard did not apply to Hong Kong. 'In Hong Kong there is currently no legislation governing the manufacture or quality control of Chinese medicines,' the company said. The company dismissed Modern Bridge's status as a 'substantial' shareholder, saying that its holding was less than 10 per cent. It said the attack launched by Mr Wu, Modern Bridge and its chairman, Lister Chang, was unwarranted. EYS said it might begin proceedings against 'these apparently defamatory comments and in connection with alleged breaches of confidentiality'. Dismissing doubt cast by Charles Eu over the company's management, EYS said its profit margin and sales had improved considerably this year after an internal re-organisation and a series of sales promotions. EYS's board considered the present senior management team, brought together in the past two years, was making a good contribution to the company. It was seeking staff to formulate its strategy for China.