A new generation of entrepreneurs is snapping up works by international contemporary art stars to amass major and sometimes museum-worthy collections. But the recent arrests of several art-world figures have buyers worried about government scrutiny
China’s mainland auction houses, led by China Guardian and Poly International, both of Beijing, brought in nearly $5 billion in sales in 2011, according to the annual report from Artprice, the French art data analysis firm. And Christie’s and Sotheby’s Hong Kong raised another $1.8 billion (Sotheby’s and Christie’s are not permitted to operate auctions in mainland China). These figures were fueled by the rise of a new class of Chinese mainland art collectors, who have made their presence felt both at auction and in galleries throughout the region.
None of this is so surprising, considering that, according to the Hurun Report (China’s equivalent of Forbes), there are now close to a million millionaires in China and some 115 billionaires, second only to the United States. It was just a matter of time before, after purchasing homes and luxury goods, they would turn to art.
“The strong purchasing power of mainland Chinese buyers fueled by their increasing wealth contributes to the persistent, strong art market in recent years,” says Kevin Ching, chief executive officer of Sotheby’s Asia. “Chinese participation started in 2005, and, in terms of percentage by hammer, has increased from 5 percent in early 2005 to nearly 40 percent in 2011.” The reach of Chinese collectors is now extending well beyond Hong Kong, as mainlanders have begun acquiring international art. Christie’s reports that for the first half of 2012, collectors from Greater China (which, for the auction house, includes Hong Kong and Taiwan, as well as mainland China) accounted for 25 percent of sales worldwide—up from 16 percent in 2011.
François Curiel, president of Christie’s Asia, notes that the presence of mainland collectors has been felt in sales of Western art as well, including a painting by Giorgio Morandi in London that went for $3.4 million to a Beijing collector and a $22.5 million Monet, sold in New York in May 2011, with a mainland Chinese collector as the underbidder.
But all this activity has attracted the attention of the Chinese government, which imposes a high import tax on purchases of artworks brought into the country. This past summer, the director of an art-transport company, a German citizen, was arrested for underreporting the value of imported art works. Several leading collectors were also detained, including a top executive of Minsheng Bank, which has been buying heavily in anticipation of opening its new art museum in Beijing in 2013. This has put fear in the minds of many mainland buyers, and had a chilling effect on the spring auction sales, which saw a sharp drop in participation in Beijing and Hong Kong.
Most Chinese collectors are private about their purchases for fear that showing off their treasures might raise a red flag and lead to corruption charges. “I have a warehouse in Hong Kong,” is one of the first things I am told by Yu Mingfang, senior vice president of Belle International Holdings Limited. The company, China’s top shoe manufacturer and retailer, was listed as the eighth largest company in Asia by Businessweek. He wants me to know that his recent acquisitions of valuable works of international art—by artists such as Damien Hirst and Luc Tuymans—have not been brought back to his home in Beijing and are therefore not subject to customs duties.
Still, as he sits in his spacious office decorated with both antiquities and contemporary paintings, as well as his wine collection, Yu is happy to share stories about how he acquired more than 100 world-class artworks in under four years. As he performs an elaborate tea ceremony, one of his recent passions, he explains how the artist Zeng Fanzhi, whose record price is $9.6 million, opened doors for him, enabling him to socialize with people like David Zwirner, François Pinault, Jay Jopling, and Larry Gagosian, who represents the artist.
But Yu, 55, has been looking at contemporary art for almost two decades, visiting museums as he traveled on business. He remembers an early trip to the Pompidou Center—“the museum with tubes on the outside”—and seeing a room filled with works by Raoul Dufy. Now, he has a small Dufy hanging above a mantelpiece in his office. Across the room is a large painting by Zeng of a tiger in the moonlight—one out of ten paintings he owns by the artist. “I loved art for a very long time, but I couldn’t afford it,” he says, “but once I was financially capable, I began collecting.”
Yu is different from the stereotype of the mainland collector, who is focused exclusively on Chinese artists and is avaricious, rapidly buying and selling at auction just to make a profit. Yu has never sold a work; he is saving his collection for a museum he hopes to build one day. “I am looking for a site by a park, like the Metropolitan Museum of Art,” he says. In China, where private museums are opening in Shanghai, Inner Mongolia, Heilongjiang, Wuhan, Chengdu, and Nanjing, all in this year alone, Yu is just one of a pack with such plans in mind.
Collector Wang Wei and her husband, Liu Yiqian, are in the process of opening their own exhibition space in the Pudong District of Shanghai. Called the Dragon Museum, the nearly 40,000-square-foot structure is scheduled for completion in November. The couple has reportedly spent more than $31 million on the project. Its anticipated operating budget, expected to exceed $774,000, will be covered exclusively by personal funds. In China, there is no such legal entity as a tax-exempt private museum, and there are no tax benefits for donations to museums, so the founder has to underwrite all operating costs. The museum will house Wang and Liu’s collection, considered by some to be China’s largest. It consists of revolutionary material, modern oil paintings, antiquities and relics, and blue-chip contemporary Chinese art.
While the plans seem ambitious, they are easily within reach of Liu, whose worth is valued at over $540 million by Forbes. The collector, who made his first fortune in the handbag trade, supplemented by stock-market investments, could fund the museum entirely on his own with his profit from the sale of Qi Baishi’s 1946 ink painting with calligraphic scrolls Eagle Standing on Pine Tree with Four-Character Couplet in Seal Script, which he purchased for $2.5 million in 2005 and sold for $65 million at China Guardian in Beijing in 2011. It set a record for a work of Chinese modern art.
Another couple making a mark on China’s art scene is Su Yan and her husband, Li Guochang, chairman of China Forestry Holdings. Their collection of more than 1,000 works ranges from antiquities to contemporary Chinese paintings. Su, 34, recalls that when they first married in 2000, she knew little about contemporary art but did share her husband’s love of collecting antiquities. Then, it all began to change in 2001, when the couple met the artist Chao Ge, a realist painter who is quite popular in China. “We saw a catalogue of his work,” she says, “and it touched me so much that we went to Chao Ge and offered to buy several paintings.” However, she explains, the artist refused to sell because he cherished his works and did not want to sell to strangers. “Before that we thought buying contemporary art is all money, but this taught us that there is something more.”
Now, Su’s activities are all about teaching people to view art as more than an investment. She and her husband founded the China Contemporary Art Foundation in 2008 (in Hong Kong, where not-for-profits are permitted, unlike in mainland China). The foundation is involved in various activities, including supporting forums to encourage art criticism; publishing two magazines, Art Bank and Art Times; and managing the Wall Art Museum, which has operated in temporary locations. Currently, Su is hoping to complete a permanent home for the Wall Art Museum. The $20 million complex is slated to be built in the Sanlitun District of Beijing, an upscale area that already hosts an art hotel, created by fellow Beijing collector Zhang Rui. Former Guggenheim Museum director Thomas Krens, who is now running a cultural-development firm with many projects in China, will serve as an adviser to the Wall Art Museum.
Among the most public collectors in Beijing are Yang Bin and his wife, Yan Qing, who owns Aye Gallery. Not only is the couple planning to build a museum, but Yang has made collecting into an amusing activity that he encourages his friends and colleagues to join. Yang, 55, is one of China’s biggest car dealers, specializing in Buicks, Chevrolets, and Cadillacs. Like many Chinese collectors, he bought his first works in 2000 to decorate his home and office, concentrating on Chinese realist painters, whose works have proved extremely valuable in the Chinese domestic art market. Now, he boasts about his latest purchases, which range from ten new paintings by the Chinese master Liu Wei, whose works sell for over $1 million at auction, to a 1984 painting by Jörg Immendorff, purchased for $1 million from a gallery in Germany.
“I bought Anish Kapoor because he gave me the idea for my ceiling,” says Yang, pointing out the mirrored convex form above his head. “Contemporary art has a connection with contemporary life. Older works have no connection with my life,” he explains. When asked how he learned about contemporary art, he responds, “I have a party at my house almost every day, and I invite a lot of people. They talk about art, and I learn a lot.” He is typical of Chinese collectors in that he has bought and sold a considerable amount at auction, often bringing along friends to bid against him. Sometimes he does it for sport and other times to support an artist he favors. “Some of my friends, I push them to buy some,” he admits. “It is good for them. For investment, at the least, but above that, maybe it changes their life.”
While Yang is not planning to build his own museum, he has taken the unusual step of sponsoring art exhibitions, including one devoted to his collection at the Ludwig Museum Koblenz in 2008, and another, “Dramatic Journey,” a recent show at the Beijing National Convention Center, featuring vintage Cadillacs among artworks by Andy Warhol, David LaChapelle, Stuart Davis, Zao Wou-ki, and blue-chip Chinese contemporary painters like Wang Guangyi, Fang Lijun, Zhang Xiaogang, and Yue Minjun.
Some Chinese collectors remain loyal to Chinese art. Interior designer Tang Ju has more than 500 works by Chinese realist painters, including Xia Xiaowan, Leng Jun, Wang Yidong, and Luo Zhongli, whom many consider the father of contemporary Chinese painting. Tang, 48, whose father was an artist, wants to assemble some 100 works to show in a museum devoted to realism, which he considers an important aspect of Chinese contemporary art. Such works are far more popular in China than are others by artists with international reputations, such as Zhang Xiaogang or Zeng Fanzhi.
Other collectors, like Qiao Zhibing, don’t need a museum. Qiao houses his collection in his karaoke palaces in Shanghai and Beijing. In less than three years, he has put together a contemporary collection that includes works by Olafur Eliasson, Matthew Day Jackson, Antony Gormley, and Damien Hirst, as well as Chinese artists. He was introduced to contemporary art in 2007, when Pi Li of Beijing’s Boers-Li Gallery brought him to Basel, where he purchased a work by Zhang Enli from Hauser and Wirth. “Collecting contemporary art is inspiring,” he says. “If I only collected Chinese art I would be limiting myself to a small region. I don’t want to do that. I want to look out, internationally.”
All of these collectors contradict the Chinese stereotype that has emerged over the past few years—namely, that they are simply speculators who refuse to pay on time for the art works they purchase. Sotheby’s, for example, has had to file lawsuits 13 times since 2006 against mainland buyers for nonpayment. Most recently one was lodged against a successful bidder of HK$34.1 million ($4,383,000) worth of paintings. As a precaution, both Christie’s and Sotheby’s, as well as mainland firms, now require advance deposits from buyers. “There have been ‘teething’ issues when mainland Chinese buyers started participating in our auctions on a larger scale around 2010,” acknowledges Curiel of Christie’s Asia. “Indeed, some collectors did not realize they were legally bound to complete the transaction once the hammer goes down. So in response to that, we developed a deposit system for new clients, at 20 percent of the low estimate of the property clients wish to bid on. This has dramatically reduced the default rate,” Curiel explains.
“The auction houses are still very much a secondary market and very remote from what’s happening in the Chinese art community,” says Meg Maggio of Pékin Fine Arts, who has been a dealer in Beijing since the late 1990s. “I’ve never had a problem with payment. I feel the mainland collectors are still an unknown entity. The mainlanders are a question market; people don’t really understand what they are doing; they don’t know them well; there is a huge language barrier,” she adds. “And the mainland collectors are learning the ropes publicly, but I think they are learning very quickly.”
Total auction sales this spring for Sotheby’s Hong Kong, Christie’s Hong Kong, China Guardian, and Poly International Beijing dropped 32 percent from $2.2 billion in autumn 2011 to $1.5 billion. The overall result is 43 percent lower than the peak of the Chinese art market in spring 2011. Some might attribute this trend to a maturing of the Chinese buyer, who has grown more particular with experience about which works are worth $1-million-plus prices. But others close to the scene are certain that this has to do in great part with the recent government detentions of influential collectors and art handlers.
In April, Nils Jennrich and Lydia Chu, employees of the Hong Kong–based art-handling company Integrated Fine Art Solutions, were threatened with life sentences, accused of helping buyers avoid $1.6 million in import duties. Some observers thought it was politically motivated because the company handled Ai Weiwei’s art. Since then, Wu Jin, editor-in- chief of Hi Art magazine, Huang Yujie, chairman of Beijing Bonwin Contemporary Art Investment Co., and He Juxing, brand manager of Minsheng Bank, were also detained. Sotheby’s Hong Kong and Christie’s Hong Kong were asked to cooperate. Despite reports in the news that the firms turned over client lists, according to Curiel, the extent of cooperation was limited to providing information on prices of certain items. Sotheby’s Kevin Ching confirms that they cooperated, though they were never a target of the investigation. Hong Kong has no import or export duties, making it a free zone for art sales, which is why many mainland collectors keep works in warehouses there. China, on the other hand, applies customs duties of up to 34 percent, making it prohibitively expensive to bring art into the country.
“Auction results were most likely down this spring because of the government’s interest in Sotheby’s and Christie’s clients, and certain shippers were put into jail for misrepresenting the values on imports, which freaked everyone out,” says Peter Boris, who oversees the Pace Gallery’s operations in Asia. “The memory is still too fresh about how the Chinese government can usurp things.” In July, the Chinese government announced plans to open the Beijing Freeport of Culture and erect an 893,404-square-foot facility next to the Beijing Capital International Airport, thereby creating a space where art works can be brought tax-free. Scheduled to open in late 2013, the freeport in no way precludes the payment of custom duties once the artwork leaves the port and enters mainland China.
Acknowledging that some collectors may be mere speculators, while others have a deeper sense of engagement, Boris states, “The great thing is that, whether they are type A or type B, they are supporting artists, and that speaks volumes about what might come in the culture.”
Barbara Pollack is a contributing editor of ARTnews. Additional reporting by Sammi Yiyuan Liu.