Hoshino Gakki Co. Ltd. - Company Profile, Information, Business Description, History, Background Information on Hoshino Gakki Co. Ltd.

No. 22, 3-CHOME
Nagoya 461-8717

Company Perspectives:

Hoshino Gakki Company started out in a period when Western music was still in its infancy in Japan. In the decades since then, a period of 94 years, we have kept step with Western music development in Japan. But the road has certainly not been an easy one. It was a period characterized by war and a long trail of difficult trials and obstacles. That Hoshino was able to emerge today as a leading instrument maker is due in large measure to our customers, lovers of fine music and fine musical instruments who entrusted their hopes and dreams to us. It's also due to the many people in the industry who, in both material and immaterial ways, have given us their unstinting support over the years. We want to express our sincere thanks to all these people. With the incredible variety of musical genres and forms now available, many new needs and demands have emerged in the area of musical instruments. In order to respond appropriately to those needs, Hoshino had to match up two totally different areas of technology: electronics with its quest for the newest sounds, and traditional instrument-making techniques, the crystallization of generations of sensitive craftsmanship. Today, Hoshino combines its 94 years of experience with a spirit of meeting future challenges as it dedicates itself to even greater efforts in research & development and product creation.

History of Hoshino Gakki Co. Ltd.

Hoshino Gakki Co. Ltd. is best known for its two world-famous brands of musical products: Ibanez guitars and Tama drums. Both brands number among the best-selling and most-respected in their categories, although Hoshino itself manufactures only the Tama drum line through its Hoshino Gakki Hanbai and Hoshino Gakki Manufacturing subsidiaries. For the Ibanez brand, Hoshino provides research, design, and prototype construction support, while also handling worldwide distribution operations. Production of the wide range of Ibanez models is contracted out to third-party manufacturers, including Hoshino's primary and long-time partner in Japan, Fuji-Gen Gakki, which also produces guitars for Fender (notably the Squier line) and domestic brand Greco, as well as products for the Roland and Casio brands. Since the 1990s, Hoshino has contracted a growing portion of its guitar production to manufacturers in Korea and China. The company's U.S. subsidiary also produces custom-built and prototype guitars for the company's star endorsers. That subsidiary was also a partner in designing the theme restaurant On Stage Cleveland in partnership with the Rock and Roll Museum and HMSHost. The restaurant opened in 2001. The company has additionally stepped up its distribution presence in Europe, acquiring Serlui BV of the Netherlands, in 2002. Hoshino is led by Yoshihiro Hoshino, grandson of the private company's founder. In 2001, Hoshino total operations posted sales of approximately ¥20.68 billion ($175 million).

Western Music Pioneer in Turn-of-the-Century Japan

Hoshino Gakki was founded in 1908 by Matsujiro Hoshino in the city of Nagoya, Japan. Hoshino originally operated as a bookstore that also sold sheet music. This activity led the company into forming a wholesale business as well, and Hoshino began supplying music stores around Japan. Hoshino's sheet music distribution business quickly led the company into distributing musical instruments as well, and this activity became its main focus. Hoshino became particularly interested in Western music and musical instruments, which were just then beginning to enter the Japanese market. Hoshino later expanded its original shop into a series of instrument showrooms, becoming one of the first in the country to feature Western-style organs.

By 1929, Hoshino established its own musical instruments company, Hoshino Gakki Ten, which took over the company's wholesale distribution as well as import and export business. The rising demand for Western instruments led Hoshino Gakki Ten to begin producing its own musical instruments in 1935. Among the first of these was a Spanish-style guitar, which the company produced in order to capitalize on the sudden interest in the instrument following a Japanese tour by Andrés Segovia. Hoshino acquired the rights to label its guitar the Ibanez Salvadol, reasoning the Spanish-sounding name would prove more attractive as a brand. The company later acquired the Ibanez brand outright.

Hoshino's operations were completely destroyed by bombs during World War II. Following the war, Hoshino rebuilt, at first concentrating on its import and export business. In 1955, the company moved into a new headquarters building in Nagoya. In that year, Hoshino decided to focus its efforts on the booming overseas market and especially the markets in the United States and Europe, by then swept up in the early years of rock and roll. Hoshino's products were to remain absent from the Japanese market until the early 1980s.

Hoshino returned to manufacturing in 1962 with the establishment of TAMA Seisakusho Inc., which began producing electric guitars and guitar amplifiers, under the Ibanez and other brand names, as well as drums, largely under the Star brand name, introduced in 1965. Hoshino joined the tide of Japanese-made musical instruments then flooding Western markets as demand for electric and acoustic guitars skyrocketed in the 1960s. Many of Hoshino's guitars were sold through nontraditional channels, such as department stores and supermarkets. The company also used a variety of brand names for its products.

By the mid-1960s, however, Hoshino's manufacturing operation was unable to keep up with demand, and in 1966 the company turned to third-party manufacturers to build its guitars. Then, in 1970, Hoshino began a partnership with another manufacturer, Fuji-Gen Gakki, located in nearby Matsumoto. Fuji-Gen took over nearly all of the company's electric guitar manufacturing operations, while the TAMA subsidiary continued to make acoustic guitars and drums. Hoshino was to remain Fuji-Gen's main customer into the 21st century, accounting for half of its production. As Hoshino continued to focus on the export market, Fuji-Gen claimed the domestic market, launching its own brand of guitars, Greco, which were often based on Hoshino designs and became the leading high-end guitar brand in Japan.

If Japanese-built guitars were regarded as inferior quality, mass-produced products at the start of the 1960s, by the end of the decade a number of Japanese guitar makers, including Fuji-Gen, had boosted their quality levels to compete with, and even surpass, their American and European competitors. It was at this time that many of the more famous guitar makers, such as Fender and Gibson, had seen their own quality standards begin to slip, while their prices remained quite high. Meanwhile, copying designs among guitar makers--particularly as a number of guitar models, such as the Fender Stratocaster, Gibson Les Paul, and Hofner "Beatle" bass, became well-known instruments--had become an industry mainstay, and Japanese guitar markets began to roll out their own copies, offering similar quality instruments that often sold for far less than the original guitar models.

Gaining a Reputation in the 1970s

Hoshino jumped on the bandwagon, launching its first new Ibanez-branded guitar, the 2020. The following year, the company launched its own Les Paul and Stratocaster models, also under the Ibanez brand. Supporting the company's drive to become a name brand guitar maker was the launch of a dedicated U.S. distribution subsidiary, Elger Inc., located near Philadelphia.

In 1972, Hoshino launched its own line of effects pedals, using the Maxon brand name for the Japanese market--marking a return to distribution activities in Japan--and the Ibanez name for the export market. Meanwhile, Ibanez guitars were quickly gaining in popularity as the company began to establish a reputation for the quality of its guitars, which continued to be low-priced copies of popular guitar models. Among the company's launches in the early 1970s were copies of the Fender Jazz bass guitar in 1972, the Gibson Flying V in 1973, the Gibson Double Neck SG in 1974, and the Rickenbacker bass in 1975. The company's Tama manufacturing operation meanwhile was also gaining a reputation for quality, particularly with the 1974 launches of the Royal Star and Imperial Star lines. That year marked the birth of the Tama brand of percussion instruments, although the company maintained the word "Star" in many of new its models. The success of both the Ibanez and Star lines led the company to open a dedicated distribution facility in Seto City in 1976.

By the mid-1970s, Hoshino set out to establish Ibanez as a premium-quality guitar brand. While continuing to produce copy guitars--the company's success in this market made it a target of a Gibson lawsuit--Hoshino began to develop its own guitar designs. Hoshino also jumped on another bandwagon, that of the professional endorsement models that had become popular since Fender hired Eric Clapton to play its guitars in the early 1970s.

During the 1970s, Hoshino stepped up its commitment to quality. As part of that effort, the company sought to go beyond copying other guitar designs and create an original design that would rival the world's legendary guitars. In the mid-1970s, the company met with Fuji-Gen to achieve this goal. The result was a highly innovative guitar, both in look and in technology, that became known as the Ibanez Iceman (and the Greco Mirage in Japan). The guitar was quickly picked up by a number of well-known artists, including Steve Miller and Rick Nielsen. Into the late 1970s, the company added more original designs, including the 2680 (which became known as the Bob Weir model, after the Grateful Dead guitarist) in 1977, which was followed in 1978 by the GB10 and GB20, named after George Benson, and the PS10, which became well-known as the guitar played by Kiss guitarist and singer Paul Stanley. The company also launched a line of MIDI-based guitars, and in 1978 expanded the Ibanez brand to include lines of banjos and mandolins, although these instruments were phased out in the early 1980s.

In 1980, Hoshino changed its U.S. subsidiary's name to Hoshino USA Inc. The following year, the company changed its own name to Hoshino Gakki Co. and established a new manufacturing subsidiary, Hoshino Gakki Mfg. Co., which took over the Tama Seisakusho operation. Tama had meanwhile been building up not only a reputation for quality but for innovation as well, offering a number of new hardware features, such as boomstands, memory locks, and especially double-braced stands, that were later to become industry standards. The Tama brand's real breakthrough, however, had come in 1977, with the release of the Superstar line. This was followed up in 1983 with the successful Artstar model, which became one of the company's best-selling and longest-lasting drum kits.

Premium Quality Instrument Maker for the New Century

In 1982, the company added a new subsidiary, Hoshino Gakki Hanbai, which took over manufacturing and distribution operations for the domestic market as Hoshino began promoting the Ibanez brand in Japan for the first time. The Ibanez brand stepped up its celebrity endorsement activity, building custom guitars for such noted artists as Lee Rittenour, Joe Pass, Steve Lukather, and Allan Holdsworth.

By the mid-1980s, Ibanez had more or less shaken its reputation as a guitar copier--the company had in fact lost the lawsuit brought by Gibson over its copies--and emerged as not only a quality brand but as a guitar innovator. The Japanese guitar industry was finally winning acknowledgment for its quality production, a development highlighted by the willingness of a number of noted brands, including Fender and Gibson, to begin producing certain of their own guitar models and brands in Japan. Meanwhile, guitar playing itself had been changing in the early 1980s, with a new generation of musicians adding new techniques that opened the market for technical innovations.

One of the most innovative of the new guitarists was Steve Vai, who had played with Frank Zappa. When Vai was known to be seeking new guitars--his own had been stolen while on tour--Ibanez leapt at the chance, offering not merely to supply Vai with guitars but also to design a new guitar according to Vai's own specifications. Vai agreed on the condition that the guitar would become a production model, because he wanted to be certain of having a ready supply of guitars. The result was the JEM guitar, the first models of which were launched in 1987.

The JEM guitar and the Vai endorsement instantly placed Ibanez on the worldwide guitar map, and the company now took its place among the world's top guitar makers. Ibanez carefully cultivated its reputation by hand-testing every one of its guitars, a practice that set it apart from many of its competitors. Tama too had risen to the top ranks, rivaling the Pearl, Sonor, and other leading drum brands. In 1988, Hoshino opened a new production facility in Seto City to help meet the demand for the Tama brand.

The rise of the yen against the dollar, coupled with the rising quality standards of Japanese guitars, which brought higher prices, led Hoshino to begin looking for alternative manufacturing markets at the beginning of the 1990s. Korea was fast becoming the newest site for guitar production; in 1991, Hoshino turned to that country, seeking manufacturers capable of matching Ibanez quality. Throughout the 1990s, as the Korean guitar market matured, Hoshino added manufacturers in China as well. The Japanese company continued to provide research, design, and prototype building, while its American subsidiary performed prototype and custom guitar designs for its celebrity endorsers, and its Fuji-Gen remained the manufacturer for its higher-end models. Hoshino's quality commitment extended across nearly all of its instruments--the company took charge of designing nearly all of the components for its guitar, even engineering the production molds used to manufacture the different parts.

Ibanez continued to pick up celebrity endorsers during the 1990s, notably Joe Satriani and Pat Metheny. Hoshino also continued to innovate, releasing its Ergodyne series, constructed from a new manmade material, Luthite, specially designed for its acoustic qualities. In 1995, the company issued an updated version of the Iceman, which had been out of production since the mid-1980s. In 1998, the company innovated again, launching a line of seven-string guitars.

Led by Yoshihiro Hoshino, grandson of the founder, Hoshino had emerged as an important force in both of its core musical instrument markets. The company's rising sales--its 2001 sales of nearly ¥21 billion ($175 million) represented a 28 percent increase over the previous year--and its commitment both to quality and to customer service led Hoshino USA to receive the Music Trades Magazine Company of the Year award for 2001. In that year, Hoshino boosted its U.S. profile with the opening of On Stage Cleveland in partnership with Cleveland's Rock and Roll Museum and HMSHost. The theme restaurant opened at the Cleveland airport in 2001. Hoshino also continued to expand its distribution reach, opening a dedicated European office in Kronberg, Germany in 1999. In 2002, the company acquired the Netherlands' Serlui BV, a major musical instruments distributor for that country.

Principal Subsidiaries: Hoshino Gakki Hanbai Co. Ltd.; Hoshino Gakki Mfg. Co. Ltd.; Hoshino USA Inc; Serlui BV (Netherlands).

Principal Competitors: Sony USA Inc.; Yamaha Corporation; Fender Musical Instruments Inc.; Roland Corporation; Peavey Electronics Inc.; Gibson Musical Instruments Inc.; C.F. Martin and Company Inc.; Avedis Zildjian Company Inc; Ludwig Industries Inc.


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