CHINA is now the world’s biggest maker of pianos and guitars and is moving into other parts of the musical instrument industry. And the biggest producer is Pearl River Piano. It estimates that it will make half a million guitars and 80,000 pianos this year.

“With our good quality and low prices, our products will be successful,” Tong Zhicheng, general manager of Pearl River, told BusinessWeek magazine.
Tong has been with Pearl River for 44 years.

But, China now has around 1,000 instrument manufacturers, according to the China Musical Instrument Association. They made 3 million guitars and 343,500 pianos last year.

Only a few Chinese companies make the best instruments. Most of the output is low-quality and will stay in the domestic market. Still, exports are growing.

Meanwhile, China’s increased instrument production is pushing prices down. In the US, you can now find a good piano for less than US$2,000.

“Because of China, our average retail price in 2003 was 10 per cent lower than in 2002,” Richard Ash, chief executive of Sam Ash Music, a retailer with 41 outlets in 13 US states, told BusinessWeek.

Today, more than a third of the products Ash sells come from China.

In the past five months, Steinway Musical Instruments has closed two US factories that make saxophones and clarinets and is buying more low-cost instruments from China.

The company insists its products still won’t be made in China. But it’s clear that demand for more expensive instruments has dropped.

This is not about the US exporting jobs. Production of lower-level instruments left the US long ago. It went to Japan, then to Korea, then Indonesia. It’s those countries that will lose jobs in the shift to China.

Japan’s Yamaha is the world’s biggest instrument maker. It has a joint venture with Pearl River and is opening its own plant in Guangzhou, this fall. Korea’s Samick Musical Instruments plans to double annual capacity in Tianjin, to 60,000 pianos, by 2008. Its production in Korea fell to 40,000 pianos in 2003 from 200,000 a decade ago.

The market still has a lot of room.

Fewer than 1 per cent of Chinese households today own pianos, compared with around 20 per cent in developed countries. So, there’s plenty of room there.

Many high-end musical instruments are still US brands. These include the US$50,000 Steinway & Sons pianos and US$2,000 Gibson Les Paul guitars. Those are the brands consumers typically seek as incomes grow.