Asian business people have a tendency to cluster their shops together with others of the same kind. There seems to be some logic to it, as you increase the probability that a customer will buy something if he is given an overwhelming choice. Guitar shops have been until now in the hands of small entrepreneurs opening one shop and trying to make ends meet for their family. Big instrument malls or something similar are unheard of so far. This gives punters a chance to strike a nice deal on a certain instrument (if you are well versed in the art of haggling) but creates problems in terms of corporate conduct and customer service. Also, there is always a chance that you will be sold a fake product which in China are being made to incredible standards. I bet Mr Les Paul himself would not know the difference.
One of the main streets for instruments is the one in the title. Start off at 平安里 subway station and make your way north. You will have countless instrument shops on your left and right. Most of them serve an amateur clientele (acoustic guitars for 20 bucks) but some actually have some serious merchandise such as Marshall and Orange amps or Gibson and Fender guitars. Again, word of warning, while there is genuine merchandise floating around Beijing you are not guaranteed to get it – contrary to the seller’s promises. Do not mistake a great deal for someone pulling wool over your eyes.
Another street selling instruments is the road running east of 鼓楼.
It is in essence similar to Xinjiekou but features Rock Meimei 摇滚妹妹, a place that is rumored to have genuine stuff. As you can see, one can never de definite, which allows for one conclusion only: If you want to make sure that you spend your next 3000 USD on genuine merchandise you may be better off spending them in the US or in Europe. If you just need a temporary solution to have fun when you are bored, get one of the obvious fakes at an appropriate price and throw it away when you leave.