PIONEERING APPROACH: Tong Zhicheng (right), former chairman of Pearl River Piano Group Ltd., led the group to tap into overseas markets ZHUANG JIN

Amateur pianist Tong Zhicheng politely accepted the compliments after playing a piece of music for his guests. "I could have been another Lang Lang if I had enough time for practice!" he said.

But Tong had little to be jealous of in regards to the young classical pianist's successes on the stage. Tong, too, has made a name for himself in classical performances--he is the former chairman of Pearl River Piano Group Ltd., the Guangzhou-based and state-owned piano maker that in 2002 replaced Yamaha of Japan as the world's largest piano maker, 10 years after he became head of the company.

While Tong made Pearl River the global choice for low-end pianos, his successor Huang Weilin had to deal with shrinking demand and profits in mature markets. He shifted the company's focus to domestic sales and expanded into emerging markets. He then moved into the high-end segment, which generates higher returns and stronger brand recognition. He created Kayserburg, a new brand that targeted professionals.

The two years since taking over the company have proven Huang's marketing expertise and diligence--the piano maker has posted an 8 percent, 18.9 percent and 44.7 percent increase, respectively, in first-quarter sales revenue, export volume and total profit this year despite the shaky global market for the instrument and the ongoing global economic downturn.

Prove yourself

Tong started his career as a piano tuner with Pearl River Piano when he was 16 years old. Like many craft-oriented executives, he has shown a keen awareness of technology's important role in piano manufacturing. He understands the piano and almost every manufacturing process to make it based on the more than 50 years he has been with the company.

"Our success in Western markets, the cradle of the piano's history, is the only true testimony to the high quality of our products," he said. With this belief, Tong made high quality and exporting his top priorities after his tenure as head of the company started in 1992.

To boost quality, he brought in a high-priced consulting team of foreign industry executives--each of them charged about 20,000 yuan ($2,928) daily, which was more than double the then annual income of the average Chinese staff.

"We had to tighten our belts in order to hire them," Tong said.

To improve product design and manufacturing efficiency, he installed computer-assisted equipment according to their advice, and forged a $10-million joint venture with Yamaha in 1995.

But quality alone doesn't guarantee success overseas. When Pearl River Piano opened its first overseas sales office near Los Angeles in 1999, the company employed a local staff of master sales people instead of sending Chinese. That strategy, coupled with high-quality products at competitive prices, allowed the company to make a mark in the low-end market, where first-time buyers can purchase an upright piano for $2,000. The company seized a 10-percent share of the U.S. market in 2002 and pushed average prices down by 10 percent in 2003.

Tong crafted long-term goals at the outset of the company's venture into the U.S. market. "Our biggest motivation in the United States right now is to allow customers to know us and bring home our pianos," he said. "The money can be made gradually."

Pearl River Piano became the world's largest piano maker in 2002 with an annual output of 71,000 pianos, a number that almost tripled production when Tong became head of the company 10 years ago.

Tong also bought a mature German brand called Ritmüller to complement the Pearl River name and boost sales in European markets. The company opened its European office in Munich with a focus on design, research and development in 2004.

However, after Pearl River Piano won brand recognition overseas through exporting at thin profit margins, demand for low-end family pianos shrank because of market saturation and declining interest in playing the instrument among young people. Global piano production has decreased from around 700,000 in 2002 to 400,000 in 2005.