The 5 Biggest Myths About the Chinese Art Market—and the Inconvenient Realities That May Give Investors Pause
Myth 1: The market for Chinese art is a juggernaut.
Reality: Not exactly. The market is growing—but only at the very top end.
On the surface, it all looks fairly robust. In 2017, auction sales of Chinese art and antiques reversed two years of decline—which had coincided with similar downturns around the world—and grew 7 percent year-on-year, to $7.1 billion, according to the latest Global Chinese Art Auction Market Report produced by artnet and the China Association of Auctioneers (CAA).
Beneath the banner figures, however, there are signs that the recovery of Chinese art could be a bit of a dead cat bounce. First, the total is still down substantially from the market’s record high of more than $10 billion in 2011. Second, the numbers—as in the rest of the global art market—are considerably distorted by a thin top end.
Myth 2: It’s only a matter of time before the art markets in Shanghai and Beijing catch up with Hong Kong.
Reality: This is an extremely uphill battle—and one that few seem interested in waging.
Despite their growing presence in Hong Kong, even the big guns from the West have had trouble going deeper into the market in China. Sotheby’s, which opened a joint venture in Beijing with the state-owned Gehua Art Company in 2012, hasn’t held an auction there since 2013. “We have a long way to go before making Beijing and Shanghai as competitive as Hong Kong,” Kevin Ching, the chief executive of Sotheby’s Asia, acknowledges.
Christie’s presence is also limited. The auction house landed in Shanghai to much fanfare and ribbon cutting in 2013, but it now has just one dedicated week of sales and events each year, in September. Rebecca Wei, president of Christie’s Asia, emphasizes her auction house’s commitment to the country but defines its presence as mostly a brand-building exercise for now.
Myth 3: China’s collectors default on art payments left and right.
Reality: This isn’t the whole story. Some of these collectors are just trying to avoid ending up with a forgery.
According to the most recent data, which CAA verified against tax filings, more than half of all money pledged at auction had not actually been paid nearly six months after the winning bids were placed. Analyzing data from 358 auction houses, the artnet and CAA report finds that 51 percent of the total value of sales on the mainland in 2017 had not been fully paid up by May 15, 2018, an increase from the already dismal 49 percent in 2016 and 41 percent the previous year. Of the 18 lots that sold for more than ¥100 million ($14.2 million), only two were paid for in full by this time.
Nevertheless, research suggests that the growing problem may be more nuanced than it seems—and that the blame for nonpayment may not rest solely with the absentee buyers.
Myth 4: Chinese collectors are primarily interested in Chinese art.
Reality: This is changing—fast.
“I would describe the market in China as stable for us, but Chinese buyers’ purchases of Western art have increased most significantly,” says Rebecca Wei. In the first half of 2018, 12 percent of total sales at Christie’s were made in Asia, while Asian buying as a whole accounted for 24 percent ($960 million) of worldwide sales for the same period. Of the money spent by the Asian buyers, Wei notes, 60 percent was for non-Asian pieces (including luxury items), up from 48 percent during the equivalent period last year.
Myth 5: Western collectors are becoming increasingly interested in Chinese art.
Reality: Sit back…this is going to take a while.
Most Chinese artists—apart from a few high-profile contemporary practitioners—have experienced scant interest from Western collectors. And the mainland galleries that support and promote Chinese art have yet to make their presence felt much beyond Hong Kong.