Music is the universal language…that's pretty much a given. No matter where you go, people are listening to something on some type of player or are playing music on a variety of instruments. One sound that is universal within the music world is The Beatles. You don't have to speak English to know who the Fab Four were and what their music was all about…even in China! The Music & Sound Retailer attended the most recent Music China, held October 11 to 14 at the Shanghai New International Expo Centre, organized by Messe Frankfurt (HK) Ltd., China Musical Instruments Association and INTEX Shanghai Co. Ltd. And "The Beatles" were there, too! Their music was playing at one booth, "bad hair day and all" (see photo on page 60), with their sound, among others, available in multiple areas around the show venue.
For this first-time visitor to Music China (as well as China itself), the experience was a positive one. It certainly can be a challenge, traveling halfway around the world to attend a trade event in a country where many people don't speak English (and this writer can barely order Egg Foo Young in an American Chinese restaurant!). Nonetheless, the exhibitors with which I met were primarily English speaking, so communication was not a problem. (A note to our host, Messe Frankfurt (HK) Ltd.: We appreciated your assistance, especially the efforts of Samantha Pang and Angel Ho, for making it so much easier to get around and do our job!)
This was the 10th anniversary of Music China, and it set a new exhibitor and attendance record, attracting 1,419 exhibitors and 52,186 visitors over the four-day event. Exhibitors, either in international pavilions or individual booths, covering 78,500 square meters, represented the U.S., Belgium, the Czech Republic, France, Germany, Italy, the Netherlands, Scandinavia, Spain, Taiwan and the United Kingdom, among others.
The first show in 2002 drew 1,500 international visitors (eight percent) from 32 countries out of the 18,000 attendees, who saw 274 exhibitors covering 15,000 square meters. Last year's outing offered 1,274 exhibitors (an increase of nine-and-a-half percent over the previous year), with just over 48,047 representing 96 countries and regions.
A variety of programming accompanying the exhibits included a block from NAMM, encompassing the NAMM CMIA Industry Forum, NAMM University courses and Global Forum on Chinese Traditional Music, attended by distributors, dealers, retailers and professors. Organized by NAMM and the China Musical Instrument Association (CMIA), the industry forum covered topics relating to music industry trends and consumer needs, with panelists from the CMIA, the Chinese Society of Music Education and People's Music Publishing House, Parsons Music, Peavey Europe, Thomann Music, TianMu Music and Willis Music Company Ltd.
According to Betty Heywood, Director of International Affairs for NAMM, "Attendees were keenly interested in NAMM Chairman Kevin Cranley's presentation on 'Global Trends in MI,' as well as in Simon Wei's talk about apps-driven music instruction. All in all, I believe the CMIA and NAMM presented a well-balanced, informative and relevant forum to the more than 200 attendees, and we look forward to designing the program for 2012 with the CMIA."
NAMM University courses offered "how to" sessions that featured industry speakers from AXL, Best Friend Music, Hebei Qinchuan Musical Instruments, KHS, Roland, Shanghai No.1 National Musical Instruments and Willis Music Company Ltd.
Cranley, President of Willis Music Company, discussed "How to grow your people and your business by delegation." He offered, "The aim of NAMM University courses organized at Music China is to spread the benefit of music to the world music market. By interacting with different people, we learn how to do better business in different cultures, which ultimately helps the music market to grow."
There were many other presentations, including live music throughout the venue; some were presented in English with Chinese translation, whereas others were in Chinese with English translation.
The Retailer spoke with several exhibitors, representing well-established brands in the U.S., asking for their comments about opportunities in reaching the China market.
• David Kayye, Trade Show Manager, Taylor Guitars, when asked about how Music China differs from NAMM and Messe Frankfurt, told us, "It's still such a new market. Attendees here want to gather information. They ask a lot of questions about the history of our product. Messe Frankfurt is more of a trade show."
He added, "A lot of trade goes on [at Music China], but I find a lot more consumers here, gathering information. The first two days are trade only, but it's like every show: The public gets in, no matter what. And we like that. Some companies just want to deal with the trade, but, at Taylor Guitars, we want to embrace the public, engage people and talk about our products. We have a great story to tell."
As to who comes to his booth, he said, "We see a lot of our friends in the industry, but mostly [people from] China."
We asked how the China retail music store is different from what we see in the U.S. "Stores in China look exactly like stores in the U.S.," he replied. "They have beautiful wood floors; it's much more sophisticated than most people think it is. One challenge we have here is that we want people to play our guitars, not just look at them," and that requires keeping the guitars tuned correctly. "We have a great partner here in Ivan Music: really smart, young and energetic. A lot of distributors are set in their ways; we're very lucky that we have a distributor that will work with us. They attend NAMM every year, and come to our factory to see what we're doing. If you have a good partner as your distributor, they can tell your story; they can sell your brand. That goes a long way to get the public to know who you are, as well."
This was his sixth trip to Music China. "When we first started doing it, [Taylor Guitars'] numbers were very small. Now, we do about 10 times the business here," Kayye said. He told us, and we observed, that there aren't many American companies at Music China. He suggested that, "Most companies use their distributor to tell their story," but "Taylor is different: We spend the money to come here because, although I want to be part of my distributor [see upcoming Ivan Music comments], I also want to tell our story. Who tells the story the best? Someone who works at Taylor…someone who lives that lifestyle. It's very important to us."
How important is it to reach the Chinese market? Kayye stated, "If you haven't paid attention to the Chinese market by now, you've probably lost that foothold that you could gain. This marketplace is growing. We sell a lot of high-end guitars in China. We're not a cheap brand at all. Most manufacturers come to China and try to sell cheap…but you can never go cheap and then more expensive." He added, "China is now the number one importer of Mercedes and BMWs. Chinese people want the luxury items; they don't want the common brands they've grown up with."
As far as the consumer in China, he noted, "They want to emulate the stars they see playing our guitars. So, in that sense, it's a huge opportunity for us. We paid attention to this market. It's a long commitment…a long process. That's why working through distributors is very important. We don't want someone just to sell our guitars; we want someone to share our brand story with other people."
Thus, we spoke with his distributor, which carries a number of brands.
• Andrew Pak, CEO, Ivan
Music, whose company operates exclusively in China. The company's line card includes Alvarez, BBE Sound, B.C. Rich Guitars, Breedlove, Ddrum, G & L, Goodwood, Hartke, Kustom, Levy's Leathers, On Stage, Parker, Randall, Rodriguez, SKB, Taylor Guitars, Vater Percussion and Washburn.
Pak said that the China market differs from the U.S. in that, "In the U.S., you have a few major chains, such as Guitar Center, Sam Ash or Internet companies (American Musical Supply, for example), but, in China, for the guitar market, there are no chain stores. Ninety percent are individual dealers." These are guitar stores only, he reported, adding that there are a few chain stores, but they offer piano, brass and woodwinds, or traditional instruments. "It's a different market," he noted. And, more than half are "tiny stores…maybe 20 to 30 square meters. Only in the major cities are there stores selling guitars, but they are 100 to 200 square meters." It costs about $150,000 USD to build the low-end store offering guitars, amps and accessories. Acoustic guitars have seen substantial growth. "Over the last two years, that grew more than 50 percent" he told us, adding that "Brand names grow fast."
"In China," he said, "we don't have as good of a margin as in the U.S. The U.S. is more monopolized by a few giants and you have MAP price policies. It's still a growing market with a lot of competition."
• Harvey G. Levy, Levy's Leathers, told us, "This show is important to me because a large majority of my international distributors from Asia and Europe come here and then, before or after, visit suppliers around the area. This gives me a third opportunity during the year to talk face-to-face with most of my international distributors by just being in one spot [after NAMM and Musikmesse in Frankfurt]." For his company, the China market is "very small at the moment. I could not justify coming if it wasn't for my international distributors here."
Competition for Levy's is "mostly Chinese," he told us, although there is "a bit of counterfeiting" (a topic covered extensively in our pages, and the subject of continuing industry advocacy). "With the guitar straps, our brand name carries a lot of weight. We spent 25 years building our brand and, hopefully, that's carrying the day."
Regarding the economy, he said, "In spite of all the bad news, we've had a pretty good increase this year [in the U.S.]. Not as good as in Canada, but fairly strong. Europe has had certain strong pockets, and other weak ones. We're still growing in Asia."
Comparing Music China with Musikmesse, Levy said, "I see all of my distributors at NAMM, 75 percent in Frankfurt and 35 percent to 40 percent here." He exhibits at Music China "so I can talk to my distributors. Ivan Music is my distributor, so they are dealing with the Chinese customers. My display is really just a backdrop. All of these products are what [Ivan Music] sells to their customers."
• David Hakim, General Manager, Samson Technologies, told us that, as a pro audio company doing audio and wireless, as well as the bass amplification Hardke amplifiers, "The China markets were very large growth areas for Samson and all of our brands over the last 18 months, and we see that continuing for many years to come." Coming out with the right family of products that meet those market demands is key for Samson, which projects "a huge growth opportunity throughout all of the countries within Asia, Africa and the Middle East."
• John Lamb, On Stage Hands/The Music People!, observed that the Music China show "gets bigger every year. Until now, we haven't been looking to do business in China." He added, "We used distribution with people around the world but, for next year, we've set up our own company in China [for small accessories]."
When we asked about counterfeiting, Lamb told us, "What is attractive to people is that we're an American brand and, in China, that's important," even though the product is manufactured in China. "So," he added, "although they can buy many similar products, we developed full-color packaging and retail display packaging so that it's a ready-to-market line with an established brand identity."
Music stores in China comprise "a really immature market," he said. "It doesn't exactly mirror what we're used to in the U.S., or even in Europe. There are some strictly import distributors, but a lot of distributors in China are manufacturers that also may distribute a product or two." He added, "The music stores are, for the most part, local mom-and-pop types, but there are bigger installations. Over our Web site, we've run into installation people and audio people. It's a booming market. It's very grass roots…an immature market that's growing rapidly, but it hasn't developed to the chain store-type yet."
His company has been attending this show for about five years, and has seen it grow every year. The quality of attendee is up, he reported, adding that, "We keep gathering a larger and larger percentage of Chinese retail dealer business cards…people looking to buy our products in China."
As far as attendees from around the world, he offered, "People have to prioritize: Where am I going to spend my show dollars? The January NAMM show seems to be the winner. Frankfurt and Shanghai now are going to suffer in attendance. I have distributors in Europe who don't attend Frankfurt because they just did all their business in January at NAMM."
So, is Messe competing with itself, we asked. "Yes," he said, "and, now, they're starting a show in Moscow. I think they're looking to capitalize on the emerging market. Other than seeing a very regional attendance, we've talked about whether we should go to the Moscow show. I don't think we will; it's a matter of economics. We do InfoComm and other shows in the audio market, so it's a matter of prioritizing; right now, the Moscow show has no priority." He stated that about 10 percent to 15 percent of his business is international, showing a significant growth over the last three years.
• Scott Davies, American DJ, attends Music China "for international exposure and branding." He noted, "This is our second Shanghai show."
"The DJ market is completely different here from the U.S.," he stated. "China is an emerging market in that fashion. The only correlation to the U.S. would be like a wedding DJ. As far as actual parties, I don't see that here yet. It's growing."
The economy is mostly responsible for that change. He related, "It's a natural evolution with their growing middle class that can afford these things."
He saw installers at the show. "Distribution is still a part of the emerging market. It's limited, but people here now recognize our brand because it's easier to sell than a local brand is. They know we would stand behind the products. Here, when you buy a hair dryer or cell phone at a mall, for example, if you plug it in, you nod your head that it works and leave the store, that's it. When you leave, you own it."
American DJ doesn't sell through distributors at this point. "We're not selling directly into China. We're brand building," he said. It's an "emerging market," he repeated. In the U.S., the company's non-DJ business is about 50 percent. "Worldwide, we have every market segment…some architectural…Elation is our higher-end product covering the high-end concert venues, stage and theater; Acclaim is our architectural line."
To conclude, then, whether attending Music China, Messe Frankfurt, NAMM or any of the other industry-related shows, music plays a key role. It might occasionally be "A Hard Day's Night" at the shows, but they are well worth the visit.
Music China was held in conjunction with Prolight + Sound Shanghai, which also recorded record exhibitor and attendee numbers. For information about next year's events, planned for October 11 to 14, go to www.musikmesse-china.com or www.prolightsound-shanghai.com.
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