Chinese Art Market in Decline

The Wall Street Journal is reporting that based on recent reviews the Chinese art market suffered a 37% decline in sales from in 2012 from 2011.  The figures are based upon reviews by Artnet and the Chinese Association of Auctioneers.  Also a very interesting finding, nearly half the lots at auction in China went unsold. Collectors seem to question how things are represented by the auction houses as well as having concerns over quality.

The Wall Street Journal reports
China's opaque, fraud-riddled art market suffered a much-steeper decline last year than industry experts previously suggested, with roughly half of the country's auction offerings going unsold in 2012, according to a report published Wednesday by a pair of auction watchdogs.

Details about the sales performance of China's auction houses have been difficult to glean since the country's art market started to boom five years ago. Some top auctioneers in mainland China have refused to talk about pieces that they sold for record prices at auction but which were never paid for afterward because the winning bidders suspected the artworks were fake. These nondisclosures were legal but ultimately painted a rosier picture of the Chinese art market than actually existed.

Now, amid growing scrutiny of China's art-selling practices, researchers are poring over sales data anew and presenting a fuller—and darker—portrait of the Chinese market than the auction houses had painted.

Globally, last year's auction sales of Chinese art fell 37% from 2011 to $6.9 billion, according to Artnet, a New York firm that tracks auctions. The firm arrived at its total with help from the China Association of Auctioneers, a Chinese trade group that has started agitating for tougher auction standards in China.

"There's been so much hype about the Chinese art market, but collectors have burning questions about the quality of the works being sold and the things the auction houses say they're selling," said Katharine Markley, Artnet's lead market and strategy analyst. "We wanted to get a more realistic sense of the bubble."

The resulting 2012 Global Chinese Antiques and Art Auction Market Annual Statistical Report is among the first to provide sales breakdowns from major houses like Sotheby's BID -1.56%  and Christie's alongside mainland China's 355 auction houses.

Artnet, an industry data heavyweight, said it teamed with the Chinese auction group in part so that its Mandarin-speaking researchers could check the mainland houses' sales data against the tax filings these houses submitted to China's Ministry of Commerce. As a result, researchers were able to parse details about the houses' actual sales totals, which often fell shy of the totals the houses presented to collectors, according to Ms. Markley.

The report said the high end of China's art market took the hardest hit last year, as collectors shied away from paying premiums for pieces whose authenticity might not hold up under greater scrutiny by outside experts. Specifically, 409 Chinese works—mostly paintings or calligraphy—sold for more than $1.5 million around the world last year, down sharply from the 831 works sold at that price level in 2011. Chinese paintings and calligraphy were in greater demand among bidders within China, whereas Chinese jades and porcelain proved more popular among collectors elsewhere.

The report also found that the average price for artworks sold within China dropped by nearly a third last year to $16,300, even as prices for similar pieces remained relatively stable at houses located elsewhere in Asia, including Hong Kong and Taiwan, or in New York. Beyond China, the average sale price for a Chinese work of art hovered around $56,000, a slight uptick from the $55,600 average for similar works the year before—suggesting that collectors had greater confidence in bidding for artworks trading outside China.

Clare McAndrew, a researcher with Arts Economics, another art-data firm, said she hadn't seen the new Artnet-CAA data but confirmed that her latest research, also aided by CAA, is revealing a gloomier picture of China's market—at least for 2012. Between the spring of 2011 and spring 2012, Ms. McAndrew said 40% of Chinese works that were auctioned for more than $1.5 million were still unpaid for six months after the fact. An additional 15% of works that fetched as much at auction were only partially paid.
Source: The Wall Street Journal

1 comment:

Arthur Leeper said...

The WSJ article is an interesting one and I have a lot of respect for the reporters there, but I would urge those who are interested to balance this article with the series of three articles on this subject that have run recently in the NY Times. What has happened in China is fairly chaotic, but the entire auction industry there is less than twenty years old, as is the Chinese Government's understanding of how they might think to regulate that industry. Auctions outside China have a far longer history, and still are evolving.

In speaking of the "Chinese Art Market" I would gently suggest that the sales inside the Peoples Republic of China are an important part of that overall market, but the auctions in the US, Hong Kong and Europe are equally important. The account of questionable results and reports from auctions suggest that the auction industry in China is keenly interested in portraying themselves as the central marketplace for such material. As can sometimes happen, their enthusiasm may have gotten the better of them. Give them a few more years and those growing pains will very likely be resolved. but while that segment of the market for Chinese art is thrashing around a bit, I think a view of the broader market would suggest a greater degree of continuity than the WSJ article seemed to suggest. A visit to an important Asian Art auction in New York could clarify that point.