After the high values achieved in recent New York Asian art auctions, the art world’s eyes focus to Sotheby’s Hong Kong, with Chinese selling art, jewellery and wine this week.
Sotheby’s also held up well in New York, selling over US$41 million (HK$318.3 million) of Chinese ceramics and classical paintings – way above the US$22 million (HK$170.8 million) minimum expected, while Christie’s sold US$45.7 million (HK$354.8 million) – nearly three times the estimate, reported Britain’s Daily Telegraph. Bonham’s made healthy sales of US$9million (HK$69.9 million).
This week sees Sotheby’s in Hong Kong launch into a heavyweight round of sales, expected to fetch up to US$200m (HK$1.55 billion), which would rank Hong Kong third behind leading global venues London and New York. But these estimates just show how far the Chinese art market has slid since the dizzy heights of April 2011, when similar auctions raised $447m (HK$3.47 billion). It wasn’t just Sotheby’s: rivals Christie’s saw sales slump from $904m to $685m from 2011 to 2012. While mainland China charged ahead to became the world’s biggest art and antiques market in 2011, it tanked in 2012, while the rest of the world held reasonably steady.
So why is China a different story? Two recent art market reports have highlighted the slide in Chinese art sales. According to French auction data producers Artprice, in association with China’s Artron, fine art sales in mainland China fell by 44.2 per cent from US$9 billion (HK$69.9 billion) in 2011 to $5.1 billion (HK$39.6) in 2012. Shortly afterwards, the European Fine Art Fair (TEFAF) estimated the sales drop to be even worse, estimating it at more than 50 per cent for Sotheby’s and Christie’s in Hong Kong and China’s mainland auctioneers, Poly and China Guardian.
According to British newspaper the Daily Telegraph, there are various explanations: “the most obvious being that the Chinese market was so overcooked in 2011 that a radical adjustment was inevitable.”
Maybe it just dawned on Chinese collectors and investors that this was a good old fashioned bubble and that their art was now way overpriced. This also coincided with the check in the mainland economy and the political pause as China waited to see what changes the new leadership would bring.
Fakes largely to blame
But more than that, as the Telegraph points out, buyers’ tolerance of the large number of fakes flooding the mainland market had reached saturation point. So much of art dealing is based on provenance and confidence, and there’s no surer way to kill a golden goose that with counterfeit eggs. Then there was what the newspaper calls “the Bainbridge vase” factor, or bogus sales that skewed the figures. The 18th-century vase that was “sold” by Bainbridge auctioneers, Ruislip, in England, in 2010 for a record £51.6 million (HK$609.2 million), but was never paid for. It was reported as being re-sold to a different buyer by Bonhams earlier this year for £20-£25 million (HK$236 million-295 million).
In fact, research by Artron and the Chinese Ministry of Commerce and the Chinese Association of Auctioneers found many of the recorded sales in mainland China that pumped up the numbers were not sales at all. In 2011, only 45 per cent - less than half - of recorded sales in the rmb10 million-plus range were real sales. “It was not until 2012 that more accurate reporting seems to have been applied, when some 50 per cent of lots in China were actually recorded as unsold,” notes the Telegraph.
Tax avoidance may also have played a role, particularly the 30 per cent tax on works of art imported into China. The import tax crackdown may have prompted China Guardian and Poly Auctions to relocate their sales of imported art to tax-free Hong Kong instead. Their autumn 2012 sales reaped more than US$100 million (HK$776.3 million) between them.
This week, both are back in auction action again in Hong Kong, and will be joined by new auction house Tiancheng International, set to offer 300 traditional and modern Chinese paintings valued at US$15 million (HK$116.5 million). The Telegraph says China Guardian’s sale is valued at US$25 million (HK$194.1 million); Poly’s at $51.5 million (HK$400 million). After such strong recent sales in New York, it will be interesting to see if the market buys in this week in Hong Kong. Or will it be a case of nervous vendors keeping their best gems at home for now, and nervous buyers leaving their cheque books behind until they believe it’s a forgery-free zone.