It's tough enough to survive in the music business. But Brian Bethke has managed to carve out a living in a small corner of it by moving to China.
Bethke runs Absara Audio, a company he founded in China last year to make foot pedals that create sound effects for guitar players. "I realized there was a way to build pedals in China and do a better job than we could in the U.S.," says the 27-year-old Bethke. While his business partner, David Koltai, takes care of sales and distribution from his apartment in Brooklyn, N.Y., Bethke oversees manufacturing in Shenzhen, just north of Hong Kong.
China's main advantage is cost. The two guitarists save 40% by having the pedals made in China, even though they still import two tough-to-manufacture parts from Britain and Taiwan. If Absara were to use only Chinese-made components, Bethke says he could trim costs by another 20% to 30%. Plus, distribution to Europe and Japan is cheaper from China than from the U.S. "A lot of companies wish they could do this," says Bethke, "but they don't know who to trust."
This isn't the China of gleaming skyscrapers and factories filled with thousands of laborers. Bethke runs his shoestring operation from a $200-a-month ground-level apartment in a grubby tenement district 15 miles from Shenzhen's center, while Absara's customer-service number in the U.S. is Koltai's cell phone. With help from two friends, Koltai designed the company's sole product, the Pigtronix EP-1. It's an "envelope phaser," a pedal that gives a guitar an ethereal, breathy sound. Bethke employs just one other person in China, a receptionist. Koltai and Bethke use a free Internet phone service for their almost daily phone conversations.
They need the savings. Bethke figures that Absara sold 1,200 pedals in its first year, for revenues of roughly $100,000. He says the company is close to breaking even on its operating expenses, but it will be another year before he recoups his $100,000 investment. This year he expects sales of perhaps $300,000 as Absara introduces two new pedals: a distortion box that adds a note an octave higher than the one played (an effect Jimi Hendrix often used) and a delay pedal (which gives a sound similar to that of The Edge, the guitarist in U2).
That's not to say working in China is a breeze. Bethke, who speaks Mandarin, spent months searching for the right partners, visiting factories and comparing circuit boards made by competing manufacturers. Eventually he settled on five shops to make the various parts and assemble the pedals. Koltai and Bethke test every pedal they make, and when they plugged into one batch, more than half were balky. They sorted through 1,000 circuit boards and ultimately trashed 800 -- but not before convincing the factory owner that the problem was his responsibility. "If you don't protect yourself, you run the risk of getting bad quality," says Bethke. "A lot of factories just want to do the minimum necessary to get their money in the bank."
Bethke dreams of being a top manufacturer of music-related electronic gear in China -- even if it means doing some work for others. Michael Stratton, who makes cases for arrays of pedals, has hired Absara to manufacture his cases. Stratton hopes to halve costs by moving production from Kansas to China. Bethke says he'd also consider buying U.S.-based brands and transferring their manufacturing overseas. "We really just want to be known as a low-cost producer of high-quality effects pedals," Bethke says. No matter which partnership -- or country -- that requires.
By David Rocks