Chinese play smart at Europe fair
Zhang Ji, a wealthy Shanghai-based businessman, is eyeing some 18th- and 19th-century Western paintings for sale in the Netherlands, at the world's largest arts and antiques fair.
But Zhang, who owns a cable- and wire-making factory, is wary because he suspects that the artworks' prices might have been set higher, with Chinese buyers in mind rather than Western ones.
'Now the whole world looks up to China,' says Zhang, one of around 100 potential buyers and collectors who last month were invited to the European Fine Art Fair (Tefaf), an annual event held in the southern Dutch city of Maastricht for the past 25 years.
'The dealers want to sell the artworks to the Chinese, and I have a feeling that they might command a higher price if they sell the works to us than to a regular Western collector because they know that we are rich,' he said.
This year Tefaf extended a warm welcome to buyers from China, who now account for most of the world's buyers of arts and antiques.
According to a study commissioned by the European Fine Art Foundation, which organised the fair, China has overtaken the United States for the first time, with a global share of 30 per cent based on auction and dealer sales last year. The US share dropped by five percentage points to 29 per cent, coming in second, with Britain ranking third at 22 per cent.
In October, many Western dealers tried to find buyers at the Fine Art Asia exhibit held in Hong Kong, but Tefaf decided to use a more direct approach by inviting potential new clients to Maastricht after organisers hosted two introductory events - one in Beijing and another in Shanghai - last year.
That should be no surprise after Forbes reported that the number of US-dollar billionaires in China stood at 84. Another survey, conducted by Boston Consulting Group, placed the the number of millionaire households at more than one million, surging by 31 per cent to 1.11 million in 2010, the world's third-highest after 5.22 million in the US and 1.53 million in Japan.
That is a lot of money looking for somewhere to go, and the art market is becoming ever more appealing. The study also found that the global art market was up by 7 per cent from 2010 to Euro46.1 billion (HK$469 billion) last year, a 63 per cent increase from the downturn in 2009.
The combined value for art auctions sales on the mainland, Hong Kong, Macau and Taiwan totalled Euro9.8 billion, 42 per cent of the global share. A number of spectacular sales were made, such as 20th century Chinese painter Qi Baishi's Eagle Standing on Pine Tree fetching 425.5 million yuan (HK$522 million) at China Guardian Auctions last May.
'There's a lack of other options for investing: the bond market is still underdeveloped, the currency is not highly convertible and the property market has gone through the roof. Art becomes a valid way to store value,' says Clare McAndrew, of the Ireland-based consulting firm Arts Economics, who prepared the European Fine Art Foundation survey.
McAndrew also observes that mainland buyers are at the point of developing a more refined taste in art and luxury collectibles. '[Western] contemporary art will be an accessing point [for Chinese buyers], but more dealers are telling me that they are looking for works that have a historical footprint, not just contemporary trophy pieces.'
In Maastricht last month, the Chinese entourage, whose tour was co-organised by Tefaf and the Chinese Collectors Club, made a low-key appearance at the fair, tactfully arriving on the third day to avoid the busiest times and the heaviest media presence.
The fair traditionally attracts old money, with wealthy Westerners descending on Maastricht in their private jets to be wooed, after the opening by Queen Beatrix of the Netherlands, by 265 dealers from 19 countries. This year, Tefaf attracted 72,000 visitors, 44 per cent of whom were international ones, according to the organisers, with a 'marked increase' in guests from Hong Kong, the mainland, Singapore and Russia.
At a reception on the fourth day of the fair known as 'China Night', Zhang - the Shanghai-based businessman - and other members of the entourage found themselves among many friendly Europeans who spoke perfect Putonghua as they elbowed their way through the crowd in search of potential new clients for their galleries. Such unusual friendliness, however, alarmed Zhang.
'The Chinese art market is huge, and we are like primary school children to them,' he says. 'But I'm telling my friends to be cautious. Don't let them take advantage of us. We are not fools.'
Louie Huang, a well-travelled Shanghai property businessman, was considering buying a 270-year-old European antique clock.
'It's beautiful,' said the 30-year-old, who visited the fair for the first time with his father. 'It still functions and plays music. More importantly, its value will go up.'
Huang declined to name the asking price, but said it could become the first Western piece in his family's collection of Chinese artworks. He said his family had started collecting only five years ago, and that he inherited the interest from his father.
'It's great to see these artworks, but we don't have the knowledge. [Like in the case of] the clock ... I need to study it further before making my decision,' Huang said.
Despite their caution, the delegation spent US$10 million at the fair, half of it in the first few days, according to the organisers.
Many curious mainlanders were spotted inquiring about a range of European antiques and works of art, including Object of the Fair, a pair of monumental marble sculptures portraying a lion and horse, along with a lion and bull. The sculptures are attributed to the workshop of 18th-century Italian sculptor Giovanni Battista Foggini, and offered for sale by the London-based dealers Tomasso Brothers.
And it was not just the invited buyers who were spending. One Beijing reporter covering the fair reportedly bought a Chinese antique bowl for Euro10,000.
Mogul Dong Rongting, who runs Shanghai's famed Dynasty restaurant and hotel, splashed Euro3 million on a 10-carat diamond at jeweller Graff. 'For diamonds, you don't need to know the stories behind them. All you need is a certificate,' says Dong.
But fine art is a completely different story. Dong says that after acquiring material wealth, people will seek spiritual wealth.
'That means we look at arts and culture, and it's not just Chinese art. Now we begin to look at European art,' says Dong, a veteran collector who has been acquiring classical Chinese calligraphy and paintings for more than two decades.
But like other members of the mainland entourage, he too was circumspect. 'Buying an antique piece is not like buying a Louis Vuitton bag. You need in-depth communication with the dealer,' Dong said. 'But it feels that Western dealers don't know about our focus and what we are looking for.'
China's art market is rife with counterfeits, as state news agency Xinhua has reported, and buyers growing up in such a culture cannot help but be more demanding and sceptical.
'We need very clear understanding of a piece's history and provenance. We want all details to be documented, including when it was exhibited, at which museums, the literature references. I can't trust you just because you claim to be an experienced dealer,' Dong says.
'Art collecting isn't something that you can do only because you are rich - you need to learn about the art yourself. At the end of the day, art is not shares. You can't sell them back into the market any time, because if you buy a fake piece, that's it.'
While the Chinese learned a thing or two from their experience at the art fair, the dealers at Tefaf in turn learned much from them. Belgian dealer Fleur Camilli van Kranendonk Duffels said the Chinese buyers knew exactly what they liked and this gauge on tastes would inform her choices for antiques to sell at Fine Art Asia, in Hong Kong in October.
'We could see the Chinese would react to our kind of jewellery, which is all European jewellery. We want to try new possibilities, especially [in a] new market. We shouldn't only restrict ourselves to Europe but we should expand to Asia,' she said.
Across the exhibition hall, London-based art dealer Robert Bowman sold a Euro350,000 work called Maternite by the Russian sculptor Ossip Zadkine, to a Hong Kong collector he met at Fine Art Asia last year. He said that three weeks after the October art fair in Hong Kong, he sold an Auguste Rodin sculpture to a Singapore-based Chinese collector for US$1.8 million.
'It's wonderful that we are starting to sell to Chinese clients,' Bowman says. But he understands that business cannot be done overnight, and that relationship-building plays an important part.
'If they are spending GBP200,000 [HK$2.5 million] to GBP300,000 [on an art piece], I think they want to know more about you. They would come to your gallery, see your stand at Tefaf. Just loving it is one thing, but building a relationship with the dealer is important,' says Bowman, who will be returning to Hong Kong in October.
He does, however, have reservations about appraisal of Western art by buyers from the mainland. 'There's definitely a desire to learn, but perhaps if you are based in Hong Kong, there's a greater chance to [be exposed] to European art,' says Bowman.
Estimated value of China's antiques market alone, as of last year, according to Bloomberg News