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Kawai Musical Instruments Manufacturing (7952 JP — US$153 million) is one of Japan’s largest piano makers.
It’s famous for its higher-end Shigeru Kawai pianos, which are used in concert halls around the world. These pianos are close to Steinways in terms of quality and can cost up to US$240,000. But Kawai also sells mid-priced pianos for younger learners and enthusiasts in 80 countries around the world.
In addition, Kawai runs music schools with over 4,000 classrooms and 100,000 students attending each year. It also has a materials business, using what it learnt in piano manufacturing to serve automaker and semiconductor customers. And it also has a number of smaller businesses, including music software, health equipment manufacturing, insurance agents, etc.
The story began in 1927 when Koichi Kawai was an apprentice to Torakusu Yamaha, the founder of Kawai’s larger competitor, Yamaha. After another firm took over Yamaha, Koichi felt it was time to start a business of his own. And for the next few decades, he made handcrafted pianos to the highest possible standards.
In the 1950s, his son Shigeru Kawai took the business to the next level. He took Kawai pianos to the average consumer through mass production techniques. He also innovated in terms of material science, improving the performance of Kawai’s piano action mechanisms through ABS plastics and later carbon.
After Shigeru Kawai stepped down in 1989, the business started to stagnate. Of course, this was at the top of Japan’s bubble economy. However, Kawai also lost market share against Yamaha, and its brand name is not particularly well-known outside the enthusiast segment.
Kawai enjoyed a boom during the COVID-19 pandemic, but that was short-lived. The post-COVID normalization was exacerbated by weak demand in China, which is suffering from falling property prices and changes in regulation that have made households less willing to spend on music education.
In 2024, the former president’s son-in-law, Kentaro Kawai, took over as CEO. And I think he will be a game-changer for the business. At 47 years old, he’s young enough to take risks. But at the same time, he has an excellent background for the job. He studied economics at Kobe University and then spent many years in the insurance industry, where he met his future wife.
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