China's Pearl River Piano - Tuning into the Global Market
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Case Code: BSTR451 Case Length: 15 Pages Period: 1956 - 2014 Pub Date: 2014 Teaching Note: Not Available |
Price: Rs.400 Organization: Guangzhou Pearl River Piano Group Ltd. (PRGP) Industry: Musical Instruments, Pianos Countries: China, US, Germany, Global Themes: Business Strategy, Brand Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In January 2013, China-based Guangzhou Pearl River Piano Group Ltd. (PRGP), the world's largest piano manufacturer, introduced the 'Kayserburg Artist' brand of pianos at the National Association of Music Merchants (NAMM) convention in Los Angeles, US. After the launch, the pianos were distributed across the US through PRGP's dealer network, the largest network for a piano company in the US. PRGP was the market leader in the American mass market for pianos. With the Kayserburg brand, PRGP intended to create a place for itself in the higher end of the market, thereby having a presence across the entire US piano market.
PRGP, a Chinese state-owned enterprise, was founded in 1956. In its early days, the company used a mix of German production methods and indigenously developed techniques to produce pianos using imported components. The Chinese Economic Reforms in the late 1970s gave a major boost to piano sales in China. This enabled PRGP to build up its production capability to cater to the growing demand for pianos in the domestic market.
Under the leadership of Tong Zhi Cheng (Tong), who became the CEO of PRGP in 1992, the company began focusing on international markets. In order to create an impact in the foreign markets, Tong undertook measures to enhance the quality of the pianos. Over the years, PRGP invested heavily in the implementation of automation technologies and new production methods. Tong also brought in several international piano consultants to advise PRGP on methods to improve its production processes.
In 1995, in a bid to gain management expertise in producing pianos of global quality, the company entered into a joint venture with Yamaha Corporation 6 (Yamaha). In 1999, PRGP set up a sales subsidiary in the US. In 2000, with the intention of adding brand value and creating a foothold in the European piano markets, it acquired Germany based 'Ritmuller Piano Company' (Ritmuller).
By 2000, PRGP was a market leader in the Chinese piano market with a market share of more than 60% and a 50% market share in the Chinese export market. Moreover, it held 5% of the market share in the US piano market. By 2002, PRGP became the leading manufacturer of pianos in the world, with an output of 71,000 units per annum. In 2002, global piano production was 700,000 units...
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