Steinway tunes in to Asia-Pacific market
Shanghai facility allows piano-maker to benefit from growing affluence of local people and their appreciation of music Why did you choose Shanghai as the location for your headquarters in the Asia-Pacific region? Is there any policy of the Shanghai FTZ t
For anyone learning to play the piano or who simply admires the brand name, it would be a dream come true to own a Steinway & Sons piano. The company’s global CEO Ron Losby can still recall when he got his first Steinway at the age of 25 after years of saving.
In light of the increased affluence of Chinese people and their appreciation of music, Steinway opened its Asia-Pacific headquarters in Shanghai at the end of March, after opening the Steinway Hall in Beijing in June last year. The opening ceremony of the Shanghai facility also marked the beginning of the celebration of Steinway’s 165th anniversary, showing the company’s confidence in the Chinese market.
The new facility is located in East Shanghai’s Waigaoqiao, which is in the China (Shanghai) Pilot Free Trade Zone. Covering 6,300 square meters, it is the third largest outside Steinway’s two factories in Germany and the United States.
As Losby discovered, Chinese consumers have not only shown an appreciation for the classic Steinway pianos, but also interest in the company’s latest product Spirio — which combines modern technology with the piano and sells for nearly 1 million yuan ($157,000). With the first Spirio introduced to the Chinese market in 2016, China has now become the company’s second-largest market globally, overtaking Europe and second only to the US.
With a music degree from the renowned San Francisco Conservatory of Music and the Juilliard School in New York, Losby never thought of taking a management position at Steinway. But over time, he found that musicians are great hires for corporations, as they have good attention spans and understand cooperation.
In an exclusive interview with China Daily, Losby talked about his understanding of the Chinese market and the industry, as well as his love of pianos and music.
There was no other choice, frankly. Being contiguous to such a large market as Shanghai is important for us because many artists and customers come through here. Given the location itself, it is the only one that we should have chosen.
China is our No 1 growth market. It has grown in double digits over the past eight years. Waigaoqiao — particularly where we are sitting now, in the free trade zone — makes a lot of sense from a financial standpoint, not to mention the space available in the industrial park to build the facilities we need.
Definitely, yes. This is the distribution center for all of the Asia-Pacific region. So all the pianos coming from Germany or the US come here tax free and they can go out without duties except for the duties from the receiving country. So it makes it efficient and easy. Otherwise we really could not afford to run such a large operation.
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 secondtier
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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.
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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 piano? still practice the
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.
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