Made in China

Bechstein is a name that resonates. Nearly 160 years ago, the instrument builder Friedrich Wilhelm Carl Bechstein founded a pianoforte factory in Berlin. The list of people who preferred to play on Bechstein instruments includes not only famous artists like Franz Liszt, Richard Wagner and Claude Debussy, but also royalty from across the European continent.

At least a bit of this glamorous tradition still exists. The piano maker still speaks of its products as "the most noble jewels of the German 'sound culture'" and the "non plus ultra for the most spoiled ears and discerning fingers."

Karl Schulze, who has been the company's managing director for nearly 30 years, is convinced that even an amateur can distinguish a Bechstein's unique sound.

"The listener can decide whether the sound gives him something for his inner being, whether it speaks to him or whether it's just a noise where he says, well, I suppose that could be a musical instrument," said Schulze. With an instrument from Bechstein, the listener is always certain it's the former, he added.

High prices for elite instruments

Bechstein's two workshops - one in Germany, the other in the Czech Republic - produce more than 4,500 pianos each year, including 30 to 50 grand pianos. Their prices range from 30,000 euros ($38,000) to 300,000 euros for a grand piano made according to the buyer's specifications. Currently, a 1.5-million-euro instrument is being built in the Bechstein workshop in Seifhennersdorf on the German-Czech border and will be delivered to its buyer next year.

Bechstein's more affordable sub-brand, W. Hoffmann, makes pianos in the Czech Republic which start at 5,000 euros.

Of course, not every one who is in the market for a piano is prepared to pay even 5,000 euros, admits Schulze. To cater to these customers as well, Bechstein has partnered with the Chinese piano builder Hailun.

The pianos, which are made in China, "are conceptualized and developed by us," emphasized Schulze. "We can offer instruments for less than 5,000 euros and will certainly find customers - not only in China but around the world - who want to buy their first piano and find a Bechstein product that meets their criteria."

Secrets stay under wraps

A Bechstein made in China? Not exactly. The instruments built in the city of Ningbo are to be sold under the Hailun brand but receive the Bechstein Quality System seal. In addition, pianos branded "Zimmermann" will also be produced in China - a name under which Bechstein had until recently made reasonably priced instruments in Germany.

Currently, German specialists are conducting quality checks at the Hailun factory. Schulze expects around 5,000 Chinese-made instruments to be sold in the next two to three years.

Is Bechstein not worried about leaking the company secrets that have historically made their instruments so unique? Not everything can be prevented, responded Schulze. But Bechstein would incorporate certain protected components that are made in Germany or elsewhere in Europe.

"It's important to write up a contract that is meticulous about the cooperation," said Schulze.

"That means that we won't just dump our entire wealth of experience onto the table and hand it over, but will retain it for ourselves and use it to expand other opportunities."

Chinese piano market booming

The other side of the coin is the opportunity for higher sales of German-made pianos in China. Right now, Bechstein only exports 500 or 600 instruments a year to China, a number that is kept small due to import duties of 45 percent. But the European sound is very attractive to the Chinese market and learning to play the piano belongs to basic education there.

Burkhard Stein, the director of Grotrian-Steinweg piano company and the leader of the German Association of Piano Makers has been witness to the sustained growth of the Chinese market and the rise in demand for pianos made in Germany.

"As the standard of living in China has risen over the last twenty years, the younger generation is learning to play the piano and violin. 'Made in Germany' is a well-known mark of quality and a piano-making tradition among the around 30 million people who play the piano in China," Stein said.

Sales to China are up 20 percent on last year, he added.

Despite the increase in demand for pianos produced in Germany and Europe, Japanese industry heavyweight Yamaha Music has also made headway in the Chinese market as the children of the country's burgeoning middle class learn to play musical instruments.

"Sales of pianos have continued to be robust in China, increasing 20 percent year on year. We now have over 430 local dealers, expanding mainly in the middle-to-high-end market," said Yusaku Shibuya, a spokesperson for Yamaha.

Turning a profit

More than 100 piano makers are active in China, while in Germany there are only about 10. China has the largest number of manufacturers in the world, but also the largest market. Worldwide, some 450,000 new pianos and grand pianos are built each year, and two thirds of them are sold in China.

Bechstein employs 340 people in Germany and the Czech Republic and recorded revenues of 34.6 million euros in 2011, with a profit of 2.2 million euros. The expansion in Asia is expected to boost the company's profit margin. Eighty million Chinese are interested in learning to play the piano, according to Schulze, who referred to studies that have been carried out.

"Asia is clearly the largest market for pianos these days and Europe plays a secondary role," said Schulze.

Looking ahead to retirement, Schulze won't see the plans in China come to fruition as Bechstein's CEO. But it's already been arranged that Berlin entrepreneur Stefan Freymuth and the investment group Arnold Kuthe will take over when Schulze's contract ends in 2014. All the same, Schulze is confident he'll stay on as a consultant long after that.