Korean Firm On Track to Lead World Instrument Market

Inside the Samick Musical Instrument piano component plants in Cheongcheon-dong in Incheon, there are signs that read, “The Best Quality Piano” everywhere.

The plants were operating on October 26.

Chairman Karl Schulze (57) of Bechstein, which Samick acquired back in 2002, visited the plants that day to observe the company’s production technology. He came away impressed, saying, “I saw a big improvement.”

Recently, the Lim Dong-min and Dong-hyuk brothers won a prize from the world-renowned Frederick Chopin International Piano Competition. Against this backdrop, the domestic musical instrument industry, which was once on the verge of decline, is taking the leap into the world market. Samick, the No.1 Korean company in that industry, is the engine driving that growth.

Quality is competitiveness-

Samick exported 85.6 billion won worth of musical instruments last year. The company expects profits in the 10 billion won range this year.

In particular, Samick pianos hold a 22 percent share of the U.S. piano market, the world’s largest, second to Yamaha (25 percent).

High quality and precise assembly technology are what give the company its competitive edge.

World-class pianists, including Fazil Say and Stanislav Bunin, play on Samick pianos, which feature exact 13mm distances between the hammers and the copper wires inside.

Kim Bu-hwan (44), a Samick assembly manager, said, “If the standards of components and assembly are not fine enough, the tone of the piano will not be even. Therefore, all of our employees are working with an artisan spirit.”

Crisis is opportunity-

Founded in 1958, Samick went bankrupt in 1996 due to excessive expansion and came under legal management. However, the company ended its period of legal management in 2002, thanks to good management and ceaseless efforts to pioneer overseas markets.

In 1996, right after it went bankrupt, the company established a plant in Indonesia for cheap labor. By so doing, it secured a competitive edge in price in competition with China early on. Production at its Indonesia plant, which stood at 10,000 units at that time, has now grown to 24,000 units.

The company has also cut down on production costs by reducing the number of employees from 2,500 at the time of bankruptcy to 197 today. It sold most of its 45,000-pyeong plant sites and now has only 9,000-pyeong sites.

Retaining just a few production facilities for high-grade musical instruments in Korea, it handed over all of the production of its mid-class musical instruments to its Indonesia and China plants.

As part of a thorough localization strategy, the company hired mostly local people at its overseas plants, including its U.S. branch, starting from the late 1990s.

Creating demand for musical instruments with cultural activities-

According to the Korea Musical Instrument Industry Association (KMIIA), annual domestic piano production nosedived from 250,000 units in the early 1990s to 20,000 units last year. That is partly because of the overseas relocation of production facilities, but is mostly because of the foreign exchange crisis. Demands for piano education are also shrinking due to low birth rates.

However, Samick is confident that sluggish domestic demand for musical instruments can pick up again. It bases this confidence on a population with more leisure time thanks to the five-day work week, and a larger elderly population in Korea’s aging society that is emerging as a new consumer of musical instruments.

Lee Hyung-guk (50), president of Samick, said, “In Japan, the elderly soundproof their homes to play musical instruments. This tendency will appear in Korea soon.”

Samick is also engaged in supporting nationwide tour concerts by pianists, including Professor Kang Choong-mo of the Korean National University of Arts, who was the first Korean to be named one of the judges in the Frederick Chopin International Piano Competition.

Next year, the company is planning to open a music school to teach customers how to play the musical instruments they have bought, and is aggressively pursuing the U.S. market by building a plant in Tennessee.

Sun-Mi Kim kimsunmi@donga.com