China opens its doors to foreign auction houses this month as part of its obligations as a member of the World Trade Organisation. The move allows Christie’s and Sotheby’s among others to set up salerooms on the mainland. Will they rush in to capitalise on the growing number of buyers in China?
The 9 November auction at Christie’s London of the outstanding collection of Chinese porcelain and enamels from the Alfred Morrison Collection, Fonthill House, appeared to consolidate an emerging trend; a rash of more or less unknown buyers from mainland China prepared to pay extraordinary prices for Chinese works of art with a solid, preferably Western provenance.
But, despite appearances and recent feverish reports in the newspapers concerning the supposed all-consuming Chinese buying power, all is perhaps not as it seems. According to sources at both auction houses, Chinese mainland collectors actually account for less than 10% of all works of art sold in Asian sales worldwide, and they tend to restrict their buying mainly to later ceramics and works of art, with virtually no interest in early sculpture, bronzes and pottery. This issue as to who buys at auction is somewhat complicated, as a substantial number of those referred to as “Chinese buyers” actually hail from places outside China, such as Taiwan, Singapore and Hong Kong. Neither is the traffic all one-way: within the last six months, a substantial number of works of Chinese art, sold at auction in the last two to three years and for record prices, has re-appeared on the market, in most cases selling for even higher prices.
The reason for this appears to be two-fold: on the one hand, China’s booming economy has created a generation of new rich who sink their wealth into all manner of building projects and ventures that consume large amounts of cash. With a “hot” market, hungry for good quality pieces, works of art are relatively easily converted back into hard cash. Another reason for the rapid re-appearance of recently sold works of art could be an irresistible urge—engrained in the Chinese psyche—to gamble, leading to buying for “investment”, in this case, read: speculation. Such activities inevitably create a dangerous bubble, one that most Western art market observers feel cannot be far from bursting. In addition, sure signs that the Chinese economy is slowing down do not bode well.
So, will foreign auction houses start selling Asian art in China? Not if one believes what is being said in the market. One of the major stumbling blocks would have to be the arcane Chinese legislation concerning the export of works of art, which stipulates that no work of art dating to before 1949 is allowed to leave the country. Ostensibly, this leaves precious little material of interest for a major auction house to sell, with the exception perhaps of contemporary Chinese paintings, an area that has certainly become more prominent in recent times. Even if, officially, auction houses can obtain certification from the Cultural Relics Bureau, everyone knows that bureaucracy in China is such that permits might not be so easy to get hold of. Equally, the practice —long established with Chinese auction houses—of labelling certain works of art as exportable in sales catalogues, only to change this designation to non-exportable just before or even during the auction, will be less than encouraging for non-Chinese auction houses. If, as we have seen, mainland Chinese bidders constitute only a small proportion of buyers, it follows that any foreign auction house selling in China will scarcely be able to survive on Chinese buying alone. The uncertainty concerning whether or not a work of art can be exported will almost certainly deter foreign buyers, resulting in an absence of healthy competition. It is often said that Chinese collectors buy “with their ears”, not with their eyes, meaning that they have a fundamentally mistrusting attitude towards the authenticity and quality of any object offered for sale, and are strongly influenced by what is being said about the pieces inside and outside the saleroom, particularly if such opinions are offered by experienced foreign collectors and dealers.
Although it is seems likely that in the long run, as attitudes and laws relax, major Western auction houses will almost certainly start selling in China, there is not much to tempt them to do so at present. It is difficult therefore to see this “open door policy” as anything more than a political move, designed to show willingness to potential foreign investors. For the time being, foreign auction houses will most probably sit on the fence, meanwhile continuing to strengthen their successful and smoothly run operations from established and more transparent market places such as Hong Kong.
The writer is a London dealer in Chinese art.
Originally appeared in The Art Newspaper as 'China—a tough, but ultimately crackable, nut'