Lai See | CLSA veteran Andy Rothman bids farewell to his employer

Andy Rothman, CLSA's China macroeconomic strategist in Shanghai since 2000, is leaving the company. He is joining Matthews Asia in a newly created role at the firm's headquarters in San Francisco, according to a statement by the company. He'll be responsible for developing China-focused research on economic and political developments. Prior to CLSA, Rothman spent 17 years as a diplomat with the US Foreign Service, which included a period as head of the macroeconomic and domestic policy office of the US Embassy in Beijing. Matthews Asia is an independent, privately-owned asset manager with US$25.9 billion in assets under management as of the end of last year.

Some of Rothman's responsibilities at CLSA will be assumed by Francis Cheung, CLSA's head of China-HK strategy.

With all the hullabaloo surrounding the listing of the mainland's leading art auctioneer Poly Culture, one aspect of the company appears to have been swamped by the rush for its shares. We are referring to the "risk" factors and in particularly buyers' default risk. We are grateful to the online newsletter Week in China for drawing our attention to the section of the firm's prospectus which notes, "We generally collect auction receivables from the winning bidder after auction." Readers may be surprised to learn that this is by no means a routine practice. The prospectus concedes that the firm's "business, financial condition and results of operations could be materially and adversely affected" if buyers don't pay up. There is a bigger default risk for Poly if it delivers auctioned artworks to buyers with a good credit record "and/or long-term relationship with us", and they don't pay.

Poly says the accumulated settlement rate for its art auction sales for 2010, 2011, 2012 and the first ten months of 2013 were respectively 74 per cent, 56 per cent, 56 per cent and 53 per cent. These percentages were derived by dividing the amounts buyers have paid by the "hammer prices" reached at auction. Alarmingly the actual amount taken in recent years was almost half the price reached in the auction. Why is this such a problem in China? Money transfer problems are sometimes cited, or the art work is alleged to be fake. On one occasion a buyer cited patriotism as a reason for not paying. In 2009 Christie's sold two bronze sculptures to a local art dealer who, after the auction, refused to pay. His reasoning was that the sculptures had been looted from Beijing's Summer Palace during the Second Opium War, and he wanted to disrupt the sale.