Is China the Number 1 Art Market?

Forbes reports on the Chinese market being less than transparent when it comes to reporting sales and the market share.  The article questions the trade reports which assert that China is now the largest consumer in the art market.  The article questions the finalization of purchases (as we know, many large sales, and even some on a smaller scale are not fully settled), as well as issues with reporting true and manipulate/massaged sales numbers, as well as authenticity.

The article is a very interesting read.

Forbes reports

That your purchases at Poly are helping to feed China’s military and oppression machine is bad enough; but worse, according to many familiar with China’s auction racket, you may be getting taken in the process – even if you’ve never bought anything from Poly.  Artificially-inflated prices and manipulated sales have so disrupted the values for Chinese art and antiques that the true value of many of them remains unclear – meaning that buyers of Chinese art, antiques and antiquities worldwide are likely to pay far more for things than they’re worth.  (And that’s before we calculate the explosive growth of fakes, which comprise, according to Murphy, as much as eighty percent of the material offered at Poly and a fair share of what one finds even at more respectable houses, like China’s number two auctioneer, China Guardian.)

Basically, there appear to be a pair of schemes through which such manipulations take place, both often geared either toward money laundering or the bribing of government officials, according to Murphy and Melanie Ouyang Lum, an American dealer in Chinese art based, until recently, in Shanghai and Beijing. Observed Lum, “the results at Poly are staggering. There’s a sense that they are creating a facade to encourage people from in and outside of China to invest in China’s art market, not real estate and bonds.  If China is going to keep money in China, it needs strong investment vehicles.”

Among the more common schemes is one used chiefly to assist in bribes or in the building of art exchanges and investment trusts popular among Chinese investors.  According to both Murphy and Lum, Poly (and possibly others) frequently guarantee sellers that an item attain a certain price – and then allow the seller himself to bid. Should general bidding stop below the level of the guarantee, the seller will bid the guaranteed amount, establishing a false but recorded value for the work.  But since, as an officer of a competing auction house remarked, “you don’t pay yourself,” sellers in these cases pay only a small commission to Poly – a meager sacrifice for the reward of making a $50,000 antique soar to ten times its actual value literally overnight.

Source: Forbes