A Tiger Market
Last November, Peter Bainbridge, of Bainbridges, a small auction house in England, asked his audience to "welcome" a colorful 18th-century Chinese porcelain vase that had been discovered in a modest home in the English countryside. Bidding opened at $1.3 million (the vase did, after all, bear the imperial mark of the Emperor Qianlong), but it quickly became clear that even this estimate was far too low. Within minutes, bids were climbing in seven-digit increments. More than half a dozen hopefuls stayed in the hunt as the vase passed $33 million. By the time the asking price reached $50 million, the pack had dwindled to two. At $70 million, Bainbridge pounded down the winning bid, shattering both his gavel and the record for a Chinese artwork sold at auction.
The sale, which fetched $84.5 million, including auction fees, demonstrates the financial might of collectors from mainland China. Most, if not all, of Bainbridges’ leading bidders were believed to be Chinese, including the buyer of the vase. The sale presaged several record-breaking bidding sessions that followed during the last Asia Week auctions in March. In fact, Bainbridge’s broken gavel furnishes an appropriate metaphor for the flummoxed art world. Over the past decade, and particularly in the last three years, Chinese collectors’ unrelenting pursuit of art and antiques from their homeland has flooded the category with money and utterly transformed the market, bringing top dollar for even mediocre pieces and creating a historic exodus of Chinese art and antiques from the West.
“Ten years ago, the mainland Chinese were not showing up everywhere. Now they are showing up everywhere, and Westerners just can’t compete,” says Robert Blumenfield, a leading American collector of Chinese art and antiques. In May, he declined to bid on an 18th- to 19th-century yellow jade incense burner at Bonhams Hong Kong and was astonished to learn that it rocketed past its $39,000 high estimate to more than $1 million. “It’s insane,” he says.
Just five years ago, China constituted a mere 5 percent of the world’s art market, according to a report released in March by the European Fine Art Fair (TEFAF). By 2010, China had become the second-largest art market in the world, responsible for 23 percent of the total. Only the United States was larger, with a 34 percent market share (down from 46 percent five years before). Artprice, an online art-market information service, went further in a report released in April and crowned China the leader of the 2010 global art marketplace, stating it had climbed from ninth place to first over a 10-year period. In May, Bloomberg speculated that Asian antiques might soon push past Old Masters to become the third-largest-selling category in the Western auction market, besting the Impressionist and modern categories, as well as contemporary works.
Though Chinese collectors exhibit some interest in wine, watches, jewelry, and other types of fine art, they appear to be overwhelmingly drawn to Chinese art and antiques, perhaps expressing a pent-up desire to possess cultural treasures and links to their own historic past. Imperial porcelain and jade are the most coveted categories, and as the art world prepares for the next round of Asian art auctions, scheduled to begin in mid-September in New York, there is no reason to believe demand will cool down. Every boom brings with it the potential of a crash, but certain factors suggest this market surge may be different. Unlike others, this boom is driven by a huge population that has the desire to collect but, until recently, lacked the means and opportunity to do so. As long as China continues to prosper, its citizens are likely to continue to acquire these treasures.
Consider the last round of major Asian art sales in March. A Chinese vase, assigned a presale estimate of $800 to $1,200, made headlines when it soared to $18 million at Sotheby’s New York’s March 22 auction of material from J.T. Tai, the late dealer of Chinese ceramics and art. The Sotheby’s catalog described the piece as “probably Republican period,” or 20th century, but several bidders believed it dated to the 18th-century reign of Emperor Qianlong, fourth ruler in the Qing dynasty, which drove the price skyward. Four days later, Chassaing-Marambat, an auction house in Toulouse, France, garnered $17.4 million for a white jade seal that had been estimated at $1.4 million to $2.1 million and, again, once belonged to Emperor Qianlong. It set a new record for Chinese seals at auction. On the same day at Labarbe, a different auction house in Toulouse, a 79-foot Chinese silk scroll painted with military scenes for Emperor Qianlong in 1739 fetched $31 million against a top estimate of $8.5 million, making it the highest price paid at auction in France for a Chinese work of art. In each case, the buyer was either identified as Chinese or generally believed to be Chinese.
Most market-watchers agree that the enormous flow of cash into the category is also driven by an investment mentality. Art is among the few tools available to wealthy Chinese seeking to invest, and as a result, buyers place a premium on provenance: Mediocre objects can post impressive auction results if they come with a long Western chain of ownership testifying to their authenticity. A craving for status symbols also partly explains collectors’ yearning for objects from the prosperous Qianlong era. “It’s not like the Japanese or the Russian art markets, where there are 10 to 12 [major] buyers; we’re talking hundreds of buyers with spare cash to collect art,” says Ben Janssens of the Ben Janssens Oriental Art gallery in London.
Chinese collectors almost always prefer to remain anonymous for the same reason that Western collectors do: They do not want the world—and particularly the tax authorities—to know that they can honor bids that have more digits than a telephone number. Still, there are some broad patterns to their buying style. When they enter a category, they tend not to abandon it later for new material; the list of things they collect simply lengthens. For example, for a long time, Chinese collectors avoided archaic Chinese bronzes—the vessels used in ancestor-worship rituals—presumably because these objects come from tombs. But because the inscriptions found on some bronzes provide glimpses into the lives of their forebears, appreciation for these pieces has grown, and the category is becoming more competitive. A vessel from the early Western Zhou dynasty, or 1027–771 BC, offered in London in November 2009, set a house record for Bonhams when it earned almost $800,000 against a high estimate of $97,000. (A previous owner, Lord Cunliffe of Britain, had paid about $500 for the bronze in 1953.) The record did not stand for long: On May 12, a wine vessel from the late Shang dynasty, circa 1300–1050 BC, fetched $1.9 million at Bonhams against a high estimate of $1.6 million.
To the annoyance of dealers based in the West, Chinese collectors prefer to do business with auction houses, particularly established brands such as Sotheby’s and Christie’s. “It’s like going to Europe to buy Louis Vuitton,” says James Hennessy, director of the London-based Littleton & Hennessy gallery. “If they buy from Sotheby’s or Christie’s, they feel they have some guarantee that it’s been vetted.” These collectors also seem to value the auction houses’ ability to preserve the winning bidders’ anonymity while trumpeting the top-earning lots. When bidders are identified by Western media outlets, it is usually in the context of the odd bid gone wrong. As of May, Bainbridge and his consignors were reportedly still waiting for the $84.5 million promised for the Qianlong vase. Intermediaries for Wang Jianlin, a 56-year-old Chinese property developer who earned slot 232 on Forbes’ most recent list of the world’s billionaires, issued a statement in April denying Western reports that named him as its buyer.
Some market players have reported a new pattern among Chinese collectors, in which individual bidders target a specific category—such as jades—buy up pieces at an auction or group of auctions, and then vanish, never bidding again at subsequent sales. “They buy and disappear, pushing up prices for one season,” says Joe-Hynn Yang, who worked at Christie’s and Sotheby’s before founding Courage and Joy Inc., an art advisory service in New York. “On a macro level, such turbulence becomes very hard to read.”
London dealer Roger Keverne, who has handled Chinese material since 1974, agrees. “It’s made it very difficult to buy,” he says, “very difficult to price.”
Hennessy plans to move to Hong Kong this summer. “Not to sell,” he notes, “but primarily to source. We’re looking for material that’s not quite in vogue yet. We’re trying to get the smallest edge, but a slight edge is very useful at the moment.”
Blumenfield—whose arly penchant for buying great pieces in bulk, not unlike some Chinese buyers today, earned him the nickname “Hoover man”—has also undergone a transformation. “In the last year or so, I’ve bid on 10 pieces that I adored and would have loved to have had in my collection, but it didn’t happen,” he says. He has started to sell also. He sold about 15 percent of his collection—primarily Chinese antique rhino-horn cups and ivories—at Christie’s 2010 New York auction for almost $14 million. He is planning a second sale at Christie’s for the March 2012 Asia Week. It is, he says, a “fantastic” time to sell.
“There were 700 mainland Chinese at the March 2010 auction—online, in the room—and there were a lot of phone bidders,” Blumenfield says. “It was manic.” He points out that to compete in such an arena requires deep pockets and the drive to learn as much as possible about the material. But when asked if he thinks a Westerner will be able to repeat his success in amassing a collection, he simply says, “No.”
In fact, the art world is witnessing a historic return of material from the West. “Once a piece goes into China, you can be pretty certain it will stay there,” says Jonathan Stone, chairman and international head of Asian art for Christie’s Hong Kong. “That means the supply outside of China is going to start dwindling one day.” Over the past decade, China has also nurtured its own network of auction houses, galleries, and dealers, reducing the need to buy beyond its borders. Yang estimates that as much as 80 percent of Chinese acquisitions will never leave the country.
“It’s exactly correlative to the Old Master paintings of Europe,” he says, referring to the period roughly a century ago when impoverished nobles sold their heirloom pictures to American tycoons, such as Huntington, Frick, and Mellon. “Once they left the great houses, they never came back again.”
In the modern scenario, however, the art is indeed going back home.
Ben Janssens Oriental Art, +44.20.7976. 1888, www.benjanssens.com; Bonhams, +44.20.7447.7447, www.bonhams.com; Christie’s, 212.636.2000, www.christies.com; Courage and Joy Inc., 917.400.4393, www.courageandjoy.com; Littleton & Hennessy, +44.20.7930.0888, www.littletonandhennessy.com; Roger Keverne, +44.20.7434.9100, www.keverne.co.uk; Sotheby’s, 212.606.7000, www.sothebys.com
Some of the fiercest bidding wars break out over these Chinese treasures.
Almost anything from the Qianlong period. Emperor Qianlong ruled from 1735 to 1796, during the Qing dynasty. “Of all the Qing emperors, during his reign, China was the strongest politically, economically, and militarily,” says Kevin Ching, CEO of Sotheby’s Asia. “If you want to possess something from China’s strongest, most prosperous period, you want something from Qianlong.” Qianlong embraced Eastern and Western influences, and his imperial porcelains are particularly elaborate.
Jade, especially white jade. The Chinese appreciation for jade dates back to at least the 6th century BC, when Confucius identified virtues in the stone that he felt humans should emulate. In the past, most of the white jade discovered in China was sent to the imperial court as tribute. “A lot of Chinese collectors focus primarily on the color of the material, not always on the beauty of the object,” dealer James Hennessy says. “Jade is seen as currency, like diamonds. There’s a gauge of value on it.”
Chinese collectors are less interested in these fields of Chinese art and antiques—for the moment, anyway.
Tang dynasty figurines. Chinese collectors have been wary of pottery from the Tang dynasty, which lasted from the 7th century to the 10th century, because the finest pieces were fashioned as grave goods and discovered in tombs. However, archaic Chinese bronzes also come from tombs, and bidders in recent years have gotten past this fact. If the trend continues, then pieces such as a Tang equestrian figurine that sold for $8,750 against an estimate of $8,000 to $12,000 at a Christie’s New York auction in March will seem like true bargains.
Chinese export porcelain. These goods were fired in China for export to the West from the early 16th century to the late 19th century and feature motifs, such as European coats of arms, that appealed to foreign clients. “Art made for the West is not of interest to Chinese collectors now,” says dealer Roger Keverne.