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THE ASIA BOOM : Pacific Rim Movers and Shakers : 'The aim is simple. We want to be the king of sound in the world.' Nam Sang Eun, president of Young Chang Musical Instrument Co. Ltd.


SEOUL — Nam Sang Eun, president of Young Chang Musical Instrument Co. Ltd., credits his firm's growth over the past four decades to the same strengths that have fueled other South Korean industries: "low wages and quality workers."

"Quality workers we still have," Nam said. "But low wages are gone. We have to overcome that problem."

Founded in 1956 as a small piano assembly factory, Young Chang now has more than 4,000 employees who annually churn out more than 110,000 of the mostly hand-crafted instruments, competing with Japan's Yamaha Corp. for the position of world's largest producer of traditional pianos.

As the firm looks toward the 21st Century, it has mapped out a two-pronged strategy for survival and continued growth: First, Young Chang is moving some of its most labor-intensive work to China, where wages are far lower than the $1,230 a month that its South Korean workers earn. Second, it is expanding into the production of high-tech electronic instruments, including synthesizers and digital pianos.

"The aim is simple," Nam said. "We want to be the king of sound in the world."

Young Chang's key step in broadening its business was the 1990 purchase of the Massachusetts firm Kurzweil Music Systems Inc., manufacturer of a line of musical synthesizers. Inventor Raymond Kurzweil made his mark in the music field in the mid-1980s with a machine called the Kurzweil 250 Digital Synthesizer, which was highly respected by professional musicians. But the firm failed to succeed in the home instrument market and was under bankruptcy protection.

"We conducted a market survey and found out that Kurzweil had the best-quality electronic sound instrument in the world," Nam said. "So we purchased the company."

After Young Chang bought Kurzweil, the manufacturing of synthesizers and other Kurzweil products was shifted to South Korea, while the firm's research and development center remained in Boston. The product line was expanded, with more emphasis on instruments for amateur musicians as well as top-of-the-line professional products.

"The piano market will always be there for professionals, but ordinary people may easily get bored with the piano," Nam said. "So we thought that, to survive in this industry, we needed to develop something electronic."

But Young Chang intends to preserve its core business of making traditional vertical and grand pianos. While the United States and Japan are mature markets for pianos, with household ownership at about 25%, only 12% of South Korean homes have pianos, Nam said. So domestic demand is likely to remain strong for many years, he said.

The key to Young Chang's plans for the future is China. Computerized equipment for manufacture of steel frames, which hold the piano strings taut, has recently been moved from Young Chang's South Korean factories to China.

Two new Young Chang factories capable of producing finished pianos are due to open in China next month, with 70% of production targeted for the Chinese domestic market and the rest for export.

Young Chang is also rapidly expanding as a supplier of sound chips used in personal computers that have audio capability for multimedia uses.

"Next year our profit will be $4 million just from sales of sound chips to multimedia manufacturers," said Won Chang Sun, general manager of Young Chang's export sales division. "We are moving from traditional to high tech: More value added."

Times researcher Chi Jung Nam in Seoul contributed to this report.

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