Picture source @Visual China
text | Understand finance
Piano often means higher economic strength and cultural taste, and was once loved by the middle class. Piano top luxury brand Steinway mentioned in its prospectus that from 2016 to 2021, the compound annual growth rate of the Chinese piano market was 20.4%.
But the piano industry has collapsed recently. In the past month, Zhujiang Piano and Hailun Piano fell by 16% and 25% respectively. The stock price fell sharply because the piano market collapsed. Industry data quoted by Guangming.com show that piano sales are only 15% of their peak levels.
Sales declines in consumer goods are common, but sales declines as large as pianos are rare. This is largely because the piano market is already "puffy". The
piano is expensive and infrequently used, and its target users are at least the middle class. However, under the influence of the extra-point policy, China’s population is 4.2 times that of the United States, and piano sales are 10 times that of the United States. With the economic downturn and the cancellation of the bonus points policy, piano sales began to decline sharply, followed by the decline of the entire piano industry chain.
This article holds the following views:
1 and Pianos are consumer products that are most likely to be abandoned by the middle class. In comparison with luxury goods, luxury cars and other categories linked to the middle class, piano sales have declined the most. The reason is that pianos are bulk discretionary consumer goods and are not necessary to buy. Compared with luxury goods and luxury cars, pianos also lack the ability to show off.
2, The lack of commercialization in the downstream performance market determines that piano sales will inevitably fall back. Domestic piano sales are 10 times that of the United States, but there is a huge gap between the commercialization of the domestic downstream performance market and competition market and overseas. After the favorable policies disappear and piano sales rely on the internal demand of the industry, it will be found that the social demand for pianos and other musical instruments is not that great, and a decline in piano sales is inevitable.
3, The entire piano industry chain has reached a period of decline. The decline of the industry is not only reflected in the sharp drop in piano sales, but also involves the entire industry chain. When the children who learn piano disappear, not only the music shops can't sell the piano, but the training institutions can't recruit students either. According to incomplete statistics, at the beginning of 2022, there were 650,000 domestic music training institutions, and by the end of the year, about 30% of them had been closed.
The bubble of piano sales has been burst
In the TV series "Flowers", there is a scene like this:
Mr. Bao went to Reiko's house, and when he went upstairs, he saw a child playing the crisp piano sound under the guidance of the piano teacher. This is the longest background music in an era when the door to upward class mobility has just opened.
In the late 1980s, China gradually opened its doors to the outside world, and the piano, as the most elegant representative of imported products, had a strong attraction for the Chinese people. Later, the policy of extra points for art candidates in the high school entrance examination was implemented, which sparked a nationwide piano craze overnight.
From 2016 to 2021, China's piano market has a compound annual growth rate of 20.4%. The rapidly growing market has given rise to inflated piano sales. China's population is 4.2 times that of the United States, but piano sales are 10 times that of the United States.
But after the prosperity, the piano sales bubble was burst. In the first three quarters of 2023, Zhujiang Piano's revenue fell by 31.47% year-on-year; net profit fell by 93.54% year-on-year; Hailun Piano's revenue fell by 21.99% year-on-year, and its net profit fell by 24.70% year-on-year.
However, the data from piano brands does not fully reflect the sales volume of piano terminals. In the first three quarters of 2023, Zhujiang Piano's inventory turnover days increased by 168 days compared with the same period last year, and Hailun Piano's inventory turnover days increased by 188 days.
The sharp increase in inventory turnover days shows that piano terminal sales are becoming increasingly difficult to sell, and brand owners may have squeezed the goods into channels. It takes a long time for channels to digest inventory. According to comprehensive statistics from the "Piano Business Business News", it will take at least 3-5 years for the piano industry to consume all the production capacity in the past 10 years.
Piano stores face consumers directly and can better reflect the sales status of pianos. Zheng Yonghong, founder of Dayi Piano Store, mentioned that the sales volume of the music stores he knows of will generally drop by more than half in 2023. "Poster News" reported that Jinan City Piano Store's sales last year were only 10% to 15% of the same period the previous year. According to industry data cited by Guangming.com, piano sales are now only 15% of their peak levels.The trigger for
piano sales is that the policy dividends have been exhausted. The Ministry of Education issued the "Notice on Enrollment of Ordinary Primary and Secondary Schools in 2018", which clearly mentioned that the enrollment scale of students with special talents should be gradually reduced until it is canceled before 2020. . The path to art exams and further studies is blocked, and the underlying logic supporting the “piano craze” is no longer there.
However, the path to art entrance exams was blocked as early as 2020, and the sharp decline in piano sales occurred in 2023. This shows that there are obviously deeper reasons for the sudden drop in piano sales.
The first consumer product to be abandoned by the middle class
Piano has always been a consumer product with a high threshold.
The threshold of piano is mainly reflected in two aspects: First, the extremely high purchase price of pianos. Pianos below 100,000 yuan can only be heard. For beginners to start playing, pianos for beginners basically start at 300,000 yuan. Even the lowest-end assembled pianos or miscellaneous pianos currently on the market often cost over 10,000 yuan. However, the poor sound quality of such pianos will affect the students' aesthetics and teaching effect. If the children want to take a professional route in the future, they will also need to replace the assembled pianos with higher-end pianos. The product.
The second is the extremely high cost of piano teaching. The piano teaching cycle is long and the price per customer is high. The training fee in a fifth-tier small city can reach 300 yuan per hour. It takes 4 to 5 years to get started, and 20 years to enter a major. From the beginning of piano learning to graduation from college, the most conservative situation to train a piano music student is at least 1 million.
Comprehensive piano prices and subsequent teaching fees, luxury goods are just for fun, the real middle class still has to look at pianos. But the core user base is the middle class, which means pianos are most vulnerable to consumption downgrades.
After the economic slowdown, advantageous industries have passed their dividend period, society has changed, real estate stocks and other wealth have depreciated, and the wealth of the middle class has been most affected. Therefore, businesses related to the middle class are in a period of decline. Take Porsche as an example. The main buyer group of Porsche is the middle class. As the purchasing power of the middle class declines, in the first three quarters of 2023, Porsche sales in China fell by 12% year-on-year.
During the same period, the revenue decline of the two major domestic piano brands was greater than that of Porsche. To a certain extent, it shows that in businesses linked to the middle class, pianos are the most easily discarded products.
First of all, pianos are bulk non-essential consumer goods. Pianos are just one way to cultivate children's musical literacy. In the past, when parents had strong consumer confidence, they were willing to pay for the high premiums for pianos. However, after the economic downturn, piano learning is not mandatory. , also learning musical instruments, guitar, flute, drums, saxophone, etc. can cultivate students' musical ability, and the price threshold has been greatly lowered. The price of a guitar only costs hundreds or thousands of yuan, which is far lower The starting price for a piano is NT$10,000, with no upper limit. An industry insider also mentioned that pianos have diverted a lot of customers away from guitars, flutes and other musical instruments.
If it is not a must-have product, it must have the attributes of showing off like a luxury product if it wants to win the favor of users. Pianos have certain attributes of showing off. Pianos mean having higher economic strength and cultural taste. In China, there is a group of piano consumers who buy them for decoration in their own large villas.
Although the product has the attribute of showing off, it is inconvenient to show off the piano. Luxury goods are mostly found in categories such as luxury bags, luxury cars, and luxury watches. These categories have a distinctive feature: they are easy to show off. The piano aspect has been completely destroyed, and the use scenarios of the piano are very limited. Hermès can be carried around, but the piano can only be kept at home. Therefore, if a user is in a show-off mentality and purchases something that is not a must-have item, the piano will most likely not be the first choice.
Due to the superposition of various factors, the piano has become the consumer product most easily abandoned by the middle class.
Piano performance industrialization is not strong
A few years ago, a professor at the Central Conservatory of Music pointed out that China’s piano craze is abnormal and has too much blindness, and has not cultivated a piano performance market. In other words, China's piano industry chain is not sound. Many students have bought pianos, but in the downstream, there is not a large enough piano performance market to help piano practitioners commercialize.
Specifically, although there are many people learning piano and domestic piano sales are 10 times that of the United States, there is a huge gap between domestic downstream industrialization and overseas.Compared with the European and American music markets, China does not have a large number of music schools and symphony orchestras, nor a large enough performance base.
Although there is no direct data comparison between China and overseas performances, it can be seen from the performance plans of pianists that there is a huge gap in the domestic performance market. Domestic pianist Yuja Wang ranked first among pianists in the world in terms of number of performances in 2022, but all of her performances were overseas. It was not until December 2023 that Wang Yuja returned to China for the first time in four years to hold a large-scale solo concert tour.
not only does not have enough support from the performance market, but the domestic piano industry does not have a strong commercial awareness. For example, piano competitions at home and abroad operate in different ways. Players in international competitions go there for prize money, while most domestic competitions have no prize money, and some instead require rounds of expensive registration fees. It is not difficult to understand that
piano sales cannot match the commercialization of downstream performances. As mentioned above, the growth of domestic piano sales largely relies on the policy of extra points for college entrance examinations, and is not a market created under normal industry conditions. When the favorable policies disappear and piano sales rely on the internal demand of the industry, it will be found that the demand for musical instruments such as pianos is not that great in society as a whole, and a "shuffle" of pianos is inevitable. The
reshuffle is not just a sudden drop in piano sales, but involves the entire piano industry chain. For example, when the children who learn piano disappear, not only the piano shops can't sell the piano, but the training institutions can't recruit students either. Training institutions have also seen a wave of closures. According to incomplete statistics, at the beginning of 2022, there were 650,000 domestic music training institutions, and by the end of the year, a total of about 30% of them had closed.
There have been many cases in history where the industry collapsed due to insufficient commercialization. A recent case is football. The domestic football industry has never formed stable income generated from copyright, advertising and other intrinsic value of the industry. Clubs rely on blood transfusions from their parent companies. When the parent company cut off its football business, the football industry was no longer self-sufficient. In the past five years, 10 teams in the Chinese Super League have been disbanded.
Returning to the piano industry, when learning piano is just to generate electricity for love, in this environment where uncertainty is becoming more and more apparent, more and more ordinary people will choose to abandon the "poetry and distance" style of music dream, and the entire piano industry chain It will also slide down.
