Nakwon Musical Instrument Arcade in Jongno, Seoul, on Tuesday afternoon. Once known as the "mecca of musical instruments," the place was quiet during the day. While there were not many shops that had closed or gone dark, passersby were hard to spot. Going further inside, instruments and speakers were piled high along every corridor, with merchants keeping their posts among them, wearing bored expressions.
A piano dealer met at Nakwon Arcade said, "The musical instrument industry is probably the most troubled sector in our country right now." The dealer, who said he has been in the instrument business for more than 60 years, lamented, "Market conditions have never been this bad," adding, "We haven't been able to escape losses for years." He continued, "In the late 1980s, the three companies — Young Chang, Samick and Yamaha — sold nearly 8,000 pianos a year domestically, but now it's probably fewer than 100." He said, "Even when we list them on secondhand trading platforms, there's no one who wants to learn, so in many cases we end up paying around 130,000 won to dispose of them."
Another merchant, who has sold instruments at Nakwon Arcade for 45 years, also said, "In the past there were many piano lesson studios around every school, but these days it's hard to find even one," adding, "The rising share of apartment living, with more people worrying about noise between floors, has also had an effect." He continued, "At our peak, there were more than 40 piano companies in Nakwon Arcade, but now only about 10 remain," letting out a deep sigh.
As the quieted Nakwon Arcade shows, demand for instruments has declined amid a shrinking school-age population, and the educational instrument market is also on a downhill path. The contraction in demand is confirmed by the numbers. In the case of pianos, most are now brought into the country produced at overseas factories. This is because falling demand has made it difficult to secure profitability through domestic production alone. According to import-export statistics from the Korea International Trade Association, piano (HS9201) imports last year amounted to $9.33 million, down about 40% from $15.77 million in 2023.
Amid this situation, iPark Young Chang, one of the two pillars of the domestic musical instrument industry, filed for corporate rehabilitation last month after sustained losses, and the court decided to commence rehabilitation proceedings on the 18th of this month. iPark Young Chang's revenue was cut in half from 64.1 billion won in 2023 to 31.1 billion won last year on a consolidated basis, and operating losses also continued from 2020. Analysts say that with profitability deteriorating due to the contraction of the acoustic instrument market, the specialized construction business it entered to diversify was also insufficient to lead an earnings rebound.
The situation at Samick Musical Instruments, the industry leader, is not much different. Samick operates both an instrument business and a district energy business as part of diversification, and since 2023 the share of instrument business revenue has fallen below 50%. First-quarter instrument business revenue this year was 27.3 billion won, down slightly from a year earlier. Even taking into account that the district energy business carries a higher weight in the first quarter each year, the shrinkage of the instrument segment is clear, according to assessments. Over the past three years, total revenue has stayed at a similar level, but operating profit plunged nearly 65% from 6.5 billion won in 2023 to 2.3 billion won last year on a consolidated basis.
The slump in the musical instrument industry has continued for decades. Most domestic instrument production factories have relocated overseas for reasons such as cutting labor costs. The Korea Musical Instruments Industry Association, which supported instrument companies' imports and exports, also voluntarily disbanded in 2012 amid the industry's slump and declining exports.
According to the Korea Institute for Industrial Economics and Trade, the domestic instrument market shrank 28% over a decade, from 399 billion won in 2000 to 288 billion won in 2010. Since then, even concrete statistics showing the market's size have essentially not been compiled. In particular, the consensus in the industry is that the piano market has already reached saturation.
Still, Nakwon Arcade merchants placed at least some hope in digital instruments. An electric guitar retailer met at Nakwon Arcade said, "As K-band growth becomes as pronounced as K-pop, demand among middle and high school students is rising." Another speaker retailer also said, "Digital instruments such as digital pianos and electric guitars have steady demand, so sales are relatively better."
