ARTnewsletter Archive

China: On the Verge of a Vibrant Art Market

There are an estimated 200 auction houses in mainland China, but not a single salesroom run by international giants Sotheby’s and Christie’s. That may change, however, with the country’s membership in the World Trade Organization (WTO) and a new rule, effective Dec. 11, that allows foreign auction houses to set up shop on the mainland.

NEW YORK—There are an estimated 200 auction houses in mainland China, but not a single salesroom run by international giants Sotheby’s and Christie’s. That may change, however, with the country’s membership in the World Trade Organization (WTO) and a new rule, effective Dec. 11, that allows foreign auction houses to set up shop on the mainland. Though no one in the art world expects drastic changes in the Chinese art market to occur overnight, many art dealers and auction house officials are cautiously optimistic about the new initiative.

The market for Chinese artworks is booming both inside and outside China. But so far, only Chinese companies have been permitted to profit from transactions on the mainland. Prior to Dec. 11, the international auction houses have been restricted to selling in Hong Kong, a free port. “There’s a lot of money in China,” acknowledges Christie’s international managing director Marc Porter, “and where there’s money, there’s an art market.”

China’s auction market has been gathering steam since the 1990s, when politically connected entrepreneurs (many of them sons and daughters of Communist leaders) began emptying government warehouses, selling Chinese artworks that had been confiscated from their owners during the cultural revolution of the 1960s and ’70s. In just one decade these private and government-owned businesses cropped up all over the mainland. Today some are major operations. One of the top mainland firms, China Guardian, tallied more than $57 million at a four-day auction in November of Chinese paintings, furniture, rare books, porcelain and stamps.

Neither Sotheby’s nor Christie’s appears poised to open auction rooms in Shanghai or Beijing at this time, largely because the Chinese government still presents many hurdles.

New regulations concerning the auction industry were recently posted on the Web site of the Chinese Ministry of Commerce. These are unavailable in English, but, according to Sun Weide, a press officer at the Chinese Embassy in Washington, D.C., the text includes “lots of requirements.”

There is an endless tangle of restrictions on the import and export of Chinese artworks. Auction houses can’t deal in antiques created before 1949, nor in some contemporary artworks, for instance. It is unclear if modern artworks in the classical mode, such as brush painting—one of the hottest areas of the market—also will be disallowed. It seems that what can be sold is still up for debate. And in a nation sensitive to cultural patrimony, the Chinese appear to be restricting the foreign houses to categories such as jewelry, cars and recent artworks.

“China has very strict cultural heritage laws that make anything worth buying virtually unexportable,” explains Henry Howard-Sneyd, managing director of Sotheby’s China, Southeast Asia and Australia, “whereas our auctions in Hong Kong permit sales to collectors worldwide.” Sneyd maintains a long-range view of China’s potential as an art market. “China is exciting,” he says, “because it is getting wealthy while making everyone else wealthy.”

Comments Andy Foster, Christie’s international business director for Asian art: “For foreign auction houses [China] still presents a limited opportunity. Of course, Christie’s continues to explore future possibilities on the mainland.”

In spite of the new laws, some longtime dealers say they don’t expect the new rules to impact the market right away. “The Chinese give lip service to their obligation under the WTO that they allow competition,” suggests James Lally, a New York art dealer of Chinese works who worked at Sotheby’s from 1969 to 1984 and helped establish the company’s Hong Kong branch. “They are well set-up in Hong Kong and don’t have a tremendous advantage by duplicating operations at this stage.”

So, for now, both houses are keeping their efforts in Hong Kong, where sale totals recently surpassed Asian sales in New York and London (see ANL, 12/8/04). Christie’s is doubling its space, moving sales from the Marriott Hotel to an area in a vast new harborside convention center. This comes on the heels of strong fall sales.

Record-Setting Sales in Hong Kong

The Hong Kong auctions have exploded as the Chinese economy picks up steam and newly wealthy entrepreneurs seek to buy back some of their cultural heritage.

Christie’s Hong Kong pulled in a record $63.7 million at art auctions in October, nearly double their sales totals from October 2003. The Sotheby’s series of sales totaled $45 million.

Bidding was fierce for material that appeals to the conservative Chinese collector—especially anything with an Imperial provenance. A rare blue and white 15th-century Ming brush-washer brought $3.4 million at Christie’s. Sotheby’s set a record with the sale of a Qianlong (1736-95) famille-rose vase that fetched $5.3 million.

While ancient and classical Chinese art is in great demand, this material may not be the basis of a business when Sotheby’s and Christie’s do decide to enter the mainland market. The safest and easiest selling category is likely to be Chinese contemporary art, which is not affected by the stringent cultural protection laws.

Both Sotheby’s and Christie’s tested out this market in the fall, holding first-time auctions of contemporary Asian painting in Hong Kong. The sales were hugely successful, with more than 94 percent of the lots finding buyers. Christie’s sold more than $6.5 million on Oct. 31, with most of the buying done by Asian private collectors. Sotheby’s Chinese contemporary art auction, also on Oct. 31, totaled $2.95 million, with eight of the top ten lots falling to Asian private collectors.

The market for contemporary Chinese painting appears to have considerable potential. “The market in China is fragmented and rather erratic,” says New York dealer Michael Goedhuis. However, he noted, “it’s still substantial and crackling.”

Goedhuis sells mainly to Western buyers but believes that once Chinese buyers join the fray, Chinese paintings will became among the most coveted artworks. Right now Chinese contemporary paintings are still a bargain. Goedhuis ran the numbers and determined that the average price for a work by one of the top 20 international artists is $300,000/500,000.

In comparison, the top Chinese paintings are still priced around $30,000. For instance, at Art Basel Miami Beach, Dec. 2-5, one gallery from mainland China had an exhibit: Shanghai gallery Shanghart hung their small booth with large canvases, from $5,000/30,000, by such artists as Li Shan, Yang Fudong, Zheng Guogu and Zhou Tiehai.