MIlos Zeman Xi Jinping

Matt Atlas

Petrof Suffers Fallout As Czech-China Relations Sour

Petrof, a leading European manufacturer of pianos headquartered in Hradec Králové, lost a CZK 5 million deal to supply pianos to China due to Chinese backlash after Senate President Miloš Vystrčil led a delegation to Taiwan. According to the company’s president and owner, Zuzana Ceralová Petrofová.

According to Petrofová, a client in Beijing canceled a CZK 5.3 million order citing Vystrčil’s visit to Taiwan.

Vystrčil’s trip to Taiwan was strongly criticized by China, which considers Taiwan a breakaway province. China’s Foreign Minister Wang Yi told the Czech Republic’s second-highest constitutional official that China would force him to pay a high price for violating the one-China principle.

Petrof is worried that the deterioration of relations between the Czech Republic and China will further harm its business in China, which makes up 35 percent of its sales. Petrof pianos are also manufactured in China under other brands; last year, it was almost 6,000 instruments.

“A customer for Beijing and the surrounding area has written to us that there is talk in China that the Chinese government wants to impose sanctions on the Czech Republic and its goods and that he does not have to pay fines. He asked us to suspend orders of supplies,” said Petrof. Petrof’s largest business partner in Ningbo, China, asked the company to clarify where the Czech Republic and China’s relations stand.

Petrof’s clients are waiting for everything to turn out. The situation in Czech-Chinese relations is unclear to them, and they do not understand politicians’ gestures. “They don’t know if we are their friends or their enemies. I’m sorry that our diplomacy can’t work it out. It’s uncomfortable for us,” she said.

Petrof does not know if it will take part in the international musical instrument fair in Shanghai at the end of October, the largest expo of its kind in the world. “We don’t know at all if we will exhibit and whether we can get visas,” said Petrof.

The coronavirus pandemic has hurt Petrof’s sales this year. The company initially forecast sales of CZK 290 million, which will not be fulfilled due to the epidemic. In May, the company estimated a decline in sales of 40 to 50 percent, and now it expects a reduction of about 20 percent to CZK 230 million. The smaller decrease is mainly due to good sales in the Czech Republic, Europe, and Russia. Demand in China also began to recover in July.

Last year, Petrof, which dates back to 1864, had a profitable year. The company increased its revenues by nine percent year-on-year to CZK 310 million, which was their best result in the last 11 years. And a net profit of CZK 11 million.