|Trained engineers and passionate guitarists, Jack Peng and Kevin Liu founded Kepma out of dissatisfaction with what they described as a “dysfunctional” Chinese guitar industry, overly focused on price at the expense of quality. “We thought there was a better way,” said Jack.|
A Different Kind Of
Chinese Guitar Company
Investing in automation, spurning OEM contracts, and striving for global brand acceptance, Kepma enters the U.S. market with high-end acoustics that promise “boutique quality at mainstream prices.”
ARE U.S. GUITAR CONSUMERS willing to pay more than $1,000 for a Chinese-made acoustic guitar? It’s an intriguing and still unresolved question. There’s ample evidence to suggest that country of origin is no longer an important consideration for most consumers; witness the global success of Apple’s Chinese-made iPhone and computers. Yet guitarists are a conservative bunch, and American-made instruments continue to dominate the premium segment of the market. Kepma Guitars is looking to deliver a definitive answer in the coming months as it introduces its line of Elite Series acoustics to the U.S. market. Company management is betting that the underlying value of its guitars will easily justify the premium price tag and overcome any origin concerns.
Kepma Guitars may be unknown in North America, but it’s the top-selling premium brand in China. The ten-year-old company has earned this standing with a tightly focused line of acoustics priced 20% to 50% higher than other Chinese-produced guitars. Unlike most of its domestic competitors that focus on low price and glossy cosmetics, Kepma employs premium components and materials, striving to build instruments that compare favorably with those produced by leading U.S. manufacturers. Tony Moscal, who heads Kepma’s U.S. operations, says the keys to gaining a foothold in the U.S. market are showing what makes the company’s guitar making superior—and putting Kepma guitars in the hands of potential buyers. “If we can do that, we’ll have a real shot,” he says. “Kepma delivers boutique quality at mainstream price points.”
"Kepma is unlike any company
I’ve ever dealt with.
They aren’t chasing volume,
they aren’t trying to hit a price point,
they’re just working hard to build
Premium price points aren’t the only thing that set Kepma apart from other Chinese-based guitar makers. The company has invested heavily in automation rather than the widespread practice of relying on low-cost labor. Management has also sworn off the quick sales boost provided by OEM contracts, opting instead to focus all resources on building the Kepma brand. The company has distinguished itself in the Chinese market with an artist program, slick advertising, and well-crafted point of purchase materials. The product line has also been intentionally limited to flat top acoustics in three basic body styles. This unconventional approach has yielded comparably unconventional success. Over the past decade, Kepma has evolved from a small local builder to a large-scale operation producing more than 25,000 guitars a month.
Moscal, who has had considerable experience dealing with offshore guitar factories in posts at St. Louis Music and Peavey Electronics, says that “Kepma is unlike any company I’ve ever dealt with. They aren’t chasing volume, they aren’t trying to hit a price point, they’re just working hard to build world-class instruments. It’s refreshing.”
|Solid wood construction, premium components from around the world, and a tasteful inlay characterize Kepma’s flagship D-2.
A Sick Guitar Industry
The founders of this enterprise are a pair of trained mechanical engineers who also happen to be enthusiastic guitarists. As childhood friends, both Jack Peng and Kevin Liu were drawn to the guitar. Jack saw it as a source of income: he built a thriving teaching studio, scrambling to stay a few lessons ahead of his pupils. For Kevin, a self-described introvert, playing guitar was a cherished solitary activity. With an eye towards a future career, in college both studied mechanical engineering but maintained their enthusiasm for the guitar. Upon graduation Jack took a job with a guitar manufacturer while Kevin went to work for a trading company that handled, among other things, the exports for several guitar companies.
Initially enthusiastic about working in the guitar business, both soon soured on what they described as industry “dysfunction.” From his position in the factory, Jack watched with dismay as management approached the guitar like a piece of furniture, placing a priority on cosmetics and durability—to avoid warranty claims—at the expense of playability or tone. The resulting instruments, as he puts it, “had no life to them.” Constantly training new hires while simultaneously struggling to hit ambitious production quotas also took a toll on product quality. At the trading company, Kevin was equally dismayed, observing that price was the overriding consideration in virtually every transaction. OEM buyers would shift orders between factories to save as little as a dollar per guitar. The resulting fear of losing big orders led guitar makers to cut corners, substituting inferior materials and ignoring production standards. After two years, Jack and Kevin decided to strike out on their own with an entirely different approach.
With just under $100,000 in capital, raised from friends and family, on April 4, 2009 Kepma was launched in a 10,000-square-foot space in Foshan City. Jack and Kevin outfitted their new plant with equipment and raw materials acquired at bargain prices from a nearby guitar company that had recently gone bankrupt. Six months later, they relocated operations to Huiyang City, a hub of guitar making, to be closer to raw material and component suppliers.
|Handwork is used where it really counts (above), but tedious and demanding tasks like buffing have been automated to achieve improved consistency (below).|
Back To The Drawing Board
At the two-year mark, Kepma had yet to turn a meaningful profit and was on the brink of collapse. Dire conditions led Jack to radically overhaul the company strategy. He abruptly dropped a dozen models from the product line, opting to produce a single instrument, the A-1 dreadnought. Building a broad range of guitars at different price points had over-taxed the fledgling company’s resources, from both financial and production standpoints. With this “less is more” approach, he directed the Kepma team to labor over every detail of the A-1 with an eye towards perfecting the guitar and improving production efficiencies. By year end, these efforts were rewarded with a surge in orders and a solid profit. Chinese guitarists gravitated to the A-1, recognizing its inherent value and establishing Kepma as a quality brand.
In the process of refining the A-1, Jack also came to the conclusion that automated production equipment was necessary to deliver a consistent high quality. With positive cash flow, Kepma relocated again to a larger factory in Dongguan and began investing heavily in computer-controlled woodworking and finishing equipment. Jack explains, “Most people think guitar making is a traditional, labor-intensive process. But from my experience as a mechanical engineer, many of the production processes can be done more efficiently and consistently by machine.”
Investment in advanced production equipment has continued unabated, and today Kepma’s climate-controlled 200,000-square-foot plant is one of the most automated in the world. At one end of the spotless facility, CNC routers turn out bridges, braces, and other component parts to exacting tolerances. At the other end, robotic equipment applies lacquer and buffs bodies and necks, achieving a finish that is both thin, to improve resonance, and lustrous. Computer-controlled machines are also utilized for tasks like side bending. At the final stages of production, each guitar is processed through a Plek machine to ensure consistent fretwork. Kepma may be a Chinese company, but its production equipment has been sourced from around the world and includes Hass CNC machines and Epilog laser tools from the U.S., Bacci finishing machinery from Italy, and Plek fretting equipment from Germany.
|A vibrating device is affixed to the tops of finished guitars for 300 hours to “break in the top,” delivering the feel of a well-played instrument right out of the case.
New Technology For Wood
Kepma is also leading the wood technology charge with a newly installed wood thermal modification system, the first of its kind in China. Using a very precise algorithm, it dries and “ages” the woods used for guitar tops and necks. This system is also used to create torrefied spruce tops for select models.
Consistent component parts make for a more efficient final assembly and set-up process. However, they don’t eliminate the need for skilled labor. That’s why Kepma invests in training new hires in the fundamentals of guitar building. At a well-equipped on-site training center, complete with jigs and instructional videos, trainees are taught production techniques before actually going onto the factory floor. In addition, they get a thorough introduction to the essence of a “good guitar,” so they understand quality standards and the importance of each step in the production process. The training is costly, but it prevents beginners’ mistakes on the factory line from ending up in the hands of a player.
Kepma’s automation investments have actually resulted in a more skilled workforce. Machines have eliminated tedious and physically demanding jobs like buffing, and the improved efficiencies have led to higher wages. The end result has been a stable workforce of 300, unusual in China, where factory tenure is often measured in months, not years.
"We want retailers who can tell our story
to be rewarded profitably."
When they aren’t focusing on how to improve efficiency and consistency on the factory floor, Jack and Kevin have taken a similarly scientific approach to the fine points of guitar design. At a “lab” in the Kepma facility, technicians have analyzed about 80 guitars from some of the world’s leading manufacturers. Using an anechoic chamber, they have precisely quantified desirable tonal characteristics. They’ve also taken instruments apart to better understand construction techniques. The resulting data sets have been applied to refine Kepma’s line of flat top acoustics.
Jack readily acknowledges that Kepma has absorbed valuable lessons from other guitar builders. However, he says the company has also added some original twists to the manufacturing process that improve musical performance: most notably with tap tuning. Dating back at least 300 years to renowned violin makers like Stradivarius, “tap tuning” involves tapping a spruce top to identify the dead spots, then shaving down the excess wood. Although time consuming, the process yields a more resonant instrument. Jack and Kevin recruited noted luthier Roger Siminoff to help them better understand the tap tuning process. They followed up by incorporating it into Kepma’s high-volume production system. Tops for every Kepma guitar are analyzed for frequency response, then precisely tapered and shaped to optimize response. Once assembly is completed, a vibration device is then attached to each top for 300 hours, to break it in, giving a brand new guitar the sound and feel of a well-played instrument right out of the case. As befits a premium-priced guitar, Kepma’s Elite Series instruments destined for the U.S. market are outfitted with high-quality components: Graph Tech nuts and saddles, Elixir strings, and a choice of U.S.-made Fishman or L.R. Baggs pickups.
|Members of the Kepma team at their factory in Dongguan.
Finally Ready For The U.S.
It was only after mastering these production techniques that Jack and Kevin felt confident about exporting to the U.S. The Kepma factory was running at capacity addressing the domestic market, so they felt no urgency to develop an export business. However, the two concluded that a presence in the U.S. was essential to their aspiration to create a truly global guitar brand. Kepma made its U.S. debut at the NAMM show in January to gauge the reaction to its guitar line. Based on what Moscal describes as “a very positive response,” Kepma US is moving forward, opening retailers and establishing a headquarters in the Southeast. Moscal says that Kepma’s tap tuning, unique design/manufacturing process, and the resulting tonal quality are what set Kepma guitars apart in a crowded acoustic guitar marketplace. He elaborates, “There’s a lot of volume done with guitars at the $200-$500 price point, and the market for guitars over $1,200 is dominated by a few well-known brands. Kepma fits perfectly in between with beautiful solid top and all solid wood guitars that play and sound amazing. There’s nothing else that compares.”
"We’ve had European and U.K. artists
touring for Kepma in China.
They get an expanded fan base
and millions of YouTube followers.
It's an attractive proposition."
In keeping with its unconventional approach, Kepma is moving cautiously to develop its retail distribution network. Moscal is looking to open select brick-and-mortar retailers with proven ability to present a new premium brand. An elegant and comprehensive website, complete with a video factory tour detailing the production process, a description of the product line, and testimonials, is designed to drive store traffic. But distribution will remain limited because “we want retailers who can tell our story to be rewarded profitably,” Moscal adds. “We’re still in the early stages, but the initial response has been encouraging.”
To support retail distribution, Kepma is in the process of developing an artist program with a unique twist. The company’s strong presence in China offers Western musicians an opportunity to gain an audience in what Moscal describes as a “musically starved market.” He explains, “We’ve had European and U.K. artists touring for Kepma in China. They get an expanded fan base and millions of YouTube followers that they can monetize. Couple that with a great guitar and it’s an attractive proposition.”
Moscal brings decades of guitar industry experience at both retail and wholesale to his new post, and he acknowledges the challenges of launching a new brand. However, when he ticks off the benefits of Kepma guitar—“absolute consistency of build quality, premium woods and components, full Plek treatment worth $250, and tap tuning”—he remains steadfastly optimistic. “We’re offering incredible quality at an affordable price. It’s a winning combination.”