Pearl River Piano Company Essay

Pearl River Piano Group (PRPG) was established in 1956 by bringing together six small piano shops in Guangzhou. The group of 100 employees produced only 13 pianos that year. After many attempts, Guangzhou technicians were finally satisfied with the tone color and quality of its first manufactured piano, and in a short time it was sold in Hong Kong. It would be twenty years before the factory was able to prove its potential. As a State -owned enterprise PRPG is accountable to the Guangzhou municipal government. Investments from both Yamaha and Steinway & Sons have played a key role in the expansion of their production. In addition, PRPG has bought the German piano brand Ritmuller and will be expanding in the European market. Guangzhou, located at the north of the Pearl River delta, is an important trading center as well as a busy port and the capital city of the province of Guandong . The city has an area of over 16,000 square kilometers and a population of 6.7 million. Guangzhou is a lso one of the most important centers of foreign commerce in South China. There are a lot of interesting legends concerning its past. One of the beautiful stories which gives the city its name Goat Town says that five gods riding on five goats brought the first grain to the city. In 1959 PRPG consisted of a shed on the side of the street to repair pianos. Later a shelter was built to process the wood. At that time the pianos were carried in a cart with men walking barefoot to the port. During the tumultuous of Mao Zedong’s Cultural Revolution in the 1960’s and 1970’s, few Chinese dared to buy a piano, which symbolized the West’s decadent and bourgeois society. Learning the piano was frowned upon at that time. The factory didn’t stop making pianos. However, they were lucky if they sold more than one hundred pianos a year. In the meantime China’s one-child policy has created a culture where parents invest heavily in their children’s education. Parents like to spend money to improve their children’s educ ation and culture and this has paid off for PRPG. Nearly 80%of their pianos are sold in China. Pianos have caught on in China. PRPG’s domestic shipments climbed even throughout Asia’s financial crisis. During the1960’s companies such as Yamaha took advantage of low labor costs to enter the global and domestic market. They were quietly followed my South Korea. For years the musical instrument business was dominated by U.S. and European companies. But this has been changing now for decades. In 1992 Tong Zhi Cheng took control of the company. He had worked for only one company during his adult life, the state-owned PRPG. When Tong took over pianos were fairly common in households in Europe and the U.S. for nearly two centuries, but in China they have been a luxury. In 1995 PRPG and Yamaha Pianos of Japan forged a $10 million joint venture. They set up a company called Yamaha-Pearl River. This company was set up to make certain â€Å"Eterna† models that are exported to Europe and the USA. Unlike China’s typically backward state-owned companies, PRPG is savvy about brands and looks for new products to sell. Tong bought a mature German brand Ritmà ¼ller in 1999. In addition he has struck a deal with Steinway & Sons to produce their Essex line of pianos. Today, PRPG consists of a factory spanning 2 million square feet–the world’s biggest piano plant–cranks out 250 pianos every day. White-smocked workers steer computer-driven kilns that bake oak planks en masse. Individual piano keys are hand-checked for precision and balance. Five pairs of ears listen to each piano’s tuning, speeding another instrument out the door–and into America’s living rooms. Just two years after Pearl River set up a U.S. sales arm, its high- quality, low-priced pianos have snared 10% of the market, and the company vows to capture a 25% share by 2005. It already has won the hearts and minds of some U.S. consumers.