Steinway tunes in to Asia-Pacific market

What has been the propelling power for your growth in China?

We have a great market here for two reasons. First, Chinese people revere music education like nowhere else in the world. Statistics show that between 30 million to 40 million Chinese children are taking piano lessons. This enormous number is the biggest in history.

Second, Chinese people also like luxury goods. That combination is extraordinary for us. It covers the spectrum of what we are trying to do.

When you have a city of 5 million people, there are going to be affluent and musical people who want pianos. We have not fully addressed the opportunity. That's why China is our growth opportunity for the future.

Who are the major consumers in China?

Wealthy Chinese families. We get most of our business in Shanghai, Beijing and Guangzhou.

But that's changing. We didn't have dealers in cities such as Shenyang, Shenzhen and Dalian. Within the past few years, we have established representation in 22 cities in China. By having representation and training the representatives, which takes time, we are seeing nice growth in second-tier cities.

What are the major distribution channels for you in China?

Almost all through dealers. We have one retail store in Beijing－Steinway Hall on Jinbao Street. The Waigaoqiao facility also has a distribution system as we do operate it as a retail location, but not in a major shopping district. All the rest of our distribution is through independent businesses that represent Steinway.

How has Spirio been received by Chinese consumers so far?

Spirio is the finest quality re-performance piano that is seamlessly integrated into this old world product. With a touch on an iPad, anyone can enjoy the beauty of a Steinway piano in their home even if they don't play.

Chinese consumers are receptive to this product, especially when couples have a child and the parents don't play the piano.

In the first year when we introduced Spirio, we did so in first-tier cities. Last year, we introduced it to second-tier cities. Some of those second-tier cities sold more at events than the first-tier cities, much to our surprise.

Are there any differences between Chinese consumers and Western ones in terms of their choices of pianos?

A large percentage of Chinese consumers want something unique. That is not overtly apparent in the US and definitely not in Europe. Europe is much more conservative and understated.

Chinese consumers absolutely expect perfection, though. They are much more discriminating than Americans.

Will we see Steinway pianos produced in China in the near future?

I don't think that will happen in the near future, frankly. Some great piano companies have moved from high-cost areas to low-cost areas, thinking that they will make more money. But instead it was the beginning of a downward spiral because the quality was not the same. And virtually every one of those companies no longer exists today.

Quality is all Steinway has. The difficult construction of our pianos is down to the craftsman. In Germany we have roughly 300 people in the factory. And it takes us a year to physically build a piano.

How do you train your workers?

In Germany we have the apprentice program. Depending on their aptitude, desire and skills, the apprentices learn different applications, whether it's putting case parts together, tuning, voicing, action regulation or finishing.

In the United States, we don't have an apprentice program. We bring new people in and we have to train them at our own cost for many years.

It's not scientific in the sense that people sit down in a class and learn to do something. It is a constantly increasing level of skill in both of our factories. For example, if one is trying to be a tone master, it literally takes decades.

Some Chinese domestic brands aspire to become top performance level piano brands. What is your understanding of their efforts?

The piano industry is relatively new in China compared to Europe and America. Acquisition of the skill set is so important. Many of these piano companies have adopted high technology to build pianos. That's very different from what we do because it makes every piano coming out exactly the same, whereas every Steinway is unique because it's handcrafted and that's what artists prefer.

We have a close relationship with China's largest manufacturer Pearl River. They have this incredibly rapid system of building pianos and all the pianos are of a certain quality.

But that's not what we go after. We go after individuality. It will be difficult for another company to displace Steinway.

Combined with the rise of the Chinese middle class, What business opportunity do you see from them?

We are seeing an emerging middle class in China and a good portion of them are buying our Boston and Essex pianos－which are more affordable. At some point over the next decade or two, they are going to have the ability to purchase a Steinway piano.

Do you still practice the piano?

Yes, every day, if I am at home, for half an hour to one hour. Playing the piano is a release from daily life. It's almost like pressing the reset button.