Tuesday, September 25, 2012

Competition for a slice of the lucrative Chinese art market is hotter than ever

Estimates for Sotheby's autumn sales in Hong Kong are pitched at around $205 million (£126 million), writes Colin Gleadell. 

China on a plate: this 'nine-dragon charger’ (1723-35) is expected to fetch up to $5 million
China on a plate: this 'nine-dragon charger’ (1723-35) is expected to fetch up to $5 million 

Demand for Chinese art and antiques may have cooled, but competition for a slice of this lucrative market is hotter than ever. In just over a week’s time, Sotheby’s holds its autumn sales in Hong Kong, where estimates for the series are pitched at around $205 million (£126 million), a far cry from its $350 million sales this time last year, or the $447 million achieved the previous spring.
At the same time, the world’s fourth-largest auction house, Beijing-based China Guardian, is making a play for the wider international market by holding its first auction outside mainland China, in Hong Kong. And, to make matters more interesting, Sotheby’s has just announced that it will be holding sales in China.
To take the last point first, the significance of this is potentially huge. Last year, China overtook America to become the largest auction market in the world, with art sales estimated at $12 billion in 2011. But until now, no foreign auction house has been allowed to conduct sales in China. Both Sotheby’s and Christie’s have had offices there since 1994, and in 2005 Christie’s licensed its name to Beijing’s Forever auctioneers, providing expertise and know-how and promoting its brand.
But Sotheby’s has stolen a march on its rivals by establishing a joint venture, in which it holds 80 per cent of the equity, with the Beijing state-owned Gehua Art Company. Given the approval of the Chinese government, Sotheby’s (Beijing) Auction will be the first international art auction house in China.
As a bonus, it will, in an exclusive arrangement, be able to hold auctions and exhibitions in a $100 million tax-free storage facility, or free port, which Gehua plans to build next to Beijing’s main airport. International buyers and sellers, or even mainland investors who keep the work in the free port, will therefore be exempt from the various import and VAT charges that apply in China, amounting to 34 per cent.

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