China's biggest art auctioneer resists official efforts to reform the market

Eight years ago, as personal incomes on the mainland soared, China Poly Group, a state-run conglomerate that began life selling weapons for the People's Liberation Army (PLA), decided to venture onto another sort of battlefield - the art market.

The corporation had already expanded into theatres, sports cars, real estate and even television sitcoms, and the new division, Beijing Poly International Auction, soon joined the others in Poly's imposing modernist office tower in the capital, where visitors can shop for a painting on the third floor, or a missile system on the 27th.

In its short life, Poly Auction has risen to become the third-largest auction house in the world, behind Christie's and Sotheby's. Its 2012 reported sales totalled nearly US$1 billion and its auction rooms now buzz with the energy of thousands of new consumers eager to buy a piece of their cultural history or invest in the recent art boom.

But while the art market in China remains robust - its US$14 billion in sales last year make it the second-largest in the world after the US - it is also rife with fraud, forgeries and payment defaults that, experts say, are undermining the confidence of consumers.

Fearing that buyers will flee the market, government ministries and the China Association of Auctioneers, are pushing corrective initiatives, including asking auction houses to report sales that fall through and training experts to better identify forgeries.

At first glance, Poly Auction, as a state-backed business that accounts for 11 per cent of the country's auction revenues, would appear to be an ideal place to start.