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December 10, 2016

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Home » Feature » Art and Culture

After cool-down, art market showing signs of recovery

By Tan Weiyun | December 10, 2016, Saturday | Print Edition

CHINA’S art and antique market may be rebounding after a four-year lull if results from the recent Beijing Poly 2016 Autumn Auction are any indication. Held last Sunday, the auction saw the sale of three classical Chinese paintings for a combined 663 million yuan (US$96 million).

Results from other autumn auctions are also encouraging. Beijing Rom Bon achieved sales of 360 million yuan, while China Guardian Beijing recorded 2.3 billion yuan in sales, up 25 percent from the previous year.

“The market is adjusting and rebounding, but it still has a long way to go. The heydays of 2011 are unlikely to happen again,” says Ma Xiaoyan, initiator of the China National Art Investment Fund, who has been in the art industry for more than 15 years.

China first emerged as an important marketplace for domestic sales in the early 2000s, fueled by a rapidly growing auction sector and pent up demand from an expanding group of wealthy Chinese collectors and investors.

From the early 2000s to 2011, the country witnessed frenetic growth in auction sales, with total values soaring by more than 500 percent over the period. These results made China one of the world’s leading art and antique markets.

But after several years of seemingly unstoppable growth, the market cooled considerably in 2012. The past four years marked a painful recovery period, tempered by more cautious purchases and a moderation in prices.

“The market is entering a new phase of maturity, pointing to an outlook for healthy, long-term growth,” Ma says.

Over the past 10 years, statistics show returns from art investment dramatically exceeding returns from stocks and real estate. Chinese millionaires also allocate about 18 percent of their assets toward art investment.

One example of the vast sums circulating during the market’s more exuberant days involves Wang Jianlin, founder and chairman of real estate developer Dalian Wanda Group. Wang is said to have spent 2 million yuan on 200 paintings by then-unknown artist Fan Zeng in the early 1990s. By 2011 works by Fan, then a darling among collectors, were selling for as much as 69 million yuan each.

Early contemporary works from once obscure artists are also red-hot today. Single canvases from Li Keran’s seven-painting “Mountains are Reddened” series sell for well over 100 million yuan these days, but were sold by the artist for just 80 yuan to the Rong Bao Zhai Art Gallery in the 1970s. Paintings from Qi Baishi and Zhang Daqian that were left to moulder some 40 years ago are now auctioned for millions of yuan.

Dramatic stories like these have lured many into the country’s art market, propelling values to sometimes shocking levels. “On one side, it’s a good thing. It means Chinese people have started to pursue spiritual abundance now that their material needs have been satisfied. They now care more about their inner lives,” says Ma. “But on the other, the explosive growth did harm to the market as well as the artists.”

Some have blamed speculators for hyping mediocre artists and pushing their paintings to unrealistically high prices. This influx of hot money created a bubble that ultimately collapsed.

“I’ve seen many people collect a house full of expansive trash,” Ma says.

In an example of market disorder, Tianjin Artwork Exchange created a scandal in 2011 when the value of two artworks from “lessor” artists rose by over 500 and 600 percent respectively in the span of 19 trading days.

“It was abnormal and insane. Someone was behind it and orchestrated the whole thing,” Ma says.

This incident was followed by an eventual market meltdown that same year.

“The good thing I’ve observed in recent years is that buyers are more rational and mature with aesthetic ability ascending to a new level,” Ma noted.

But in her view, the market is still in recovery. “Opportunities often hide in risks,” she says. “The art market is getting onto the right track and it’s time to follow the trend.”

Many investors continue to wait on the sidelines, waiting for the right moment to return. “Love for art comes first. Investment is a secondary consideration,” says Ma, who is now trying to foster real art lovers by giving lectures and speeches. “With a passion and love for art, you can always find a way to learn and practice. Armed with knowledge, experience and a healthy mindset, you can then try investment.”

She gave an example of a Japanese couple, both ordinary office workers, who saved a fixed amount of their monthly salaries to collect the works of a talented yet unknown artist at first.

After several years, the couple had a rich collection, without knowing that the artist became famous, until auction houses contacted them to sell the pieces.

“Art is fair to everyone, no matter if you are rich or not. You don’t have to start with a famous artist. You can grow together with a talented young painter, but you should have foresight, based on professional knowledge and proper guidance,” Ma says.

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