Chinese Art Market's Recovery from Harsh Winter

By Zhang Yan

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Chinese Art Market's Recovery from Harsh Winter

By Zhang Yan

In November 2015， Chinese collector Liu Yiqian spent $170.4 million on Amedeo Modigliani's Reclining Nude at Christie's in New York. that was the second highest price ever paid at an art auction， showing the world the amazing strength of Chinese collectors.

However， the Chinese art market overall is not so good. In January 2016， Art Market Monitor of Artron （AMMA）， an agency studying the local market， released its Survey Report on Chinese Artwork Auction Market - Autumn 2015， according to which， total turnover was 50.6 billion yuan （$7.8 billion），down 20 percent compared to the same period in 2014. For most of Chinese auction houses， it was a year of hardship， as the scale of the auction market was basically equal to that in 2010.

Depressed Chinese Art Market

Based on the data of the report， in the context of declining total volume of trade，the artwork average unit price went up to 247，800 yuan （$38，125）， a year-on-year increase of 13 percent. In the meantime， the turnover in the high price range increased，rather than fell. In the 2015 autumn auction，there were six works sold for more than 100 million yuan （$15 million）. Items priced in 50-100 million yuan （$7.5-15 million） sold for an average of 72.77 million yuan （$11.2 million）， compared to 67.36 million yuan （$10.4 million） in the corresponding period of the previous year.

Trading volume and amount went down，while the average price rose. Faced with the depressed market， collectors abandoned the medium and low end collectibles first， and preferred premium works of art.

The atmosphere of the Chinese art market in 2015 was far from pleasant

The domestic autumn market in 2015 saw many art pieces priced at 100 million yuan （$15 million） or more. The item with the highest price was On Hills in Red by Li Keran， a modern Chinese painter， auctioned at 184 million yuan （$28 million）， far above its floor price of 80 million yuan （$12 million）. Ather that， the Flora and Insects Album by Qi Baishi and a Sakyamuni Buddha statue from the 14th century were auctioned for 115 million yuan （$18 million） and 103.5 million yuan （$15.9 million） respectively.

Despite these eye-catching premium sales， the art auction market in China is still not that optimistic. According to incomplete statistics， the 2015 autumn auction witnessed 116，100 Chinese calligraphy and paintings being offered， with a turnover of 11.596 billion yuan （$1.78 billion）， down 31.78 percent compared to the 2014 figure. It can be seen that both the scale and total amount have slumped since 2010.

According to Gan Xuejun， President of the Beijing Association of Auctioneers，at present， businesses are going through a rough time. Amid the slump of average price and market demand， it is necessary to cut the quantity but improve the quality. In the circumstance that items are hard to be auctioned at a high price and collectors are reluctant to buy， auction houses will surely show be cautious in offering works.

Chinese art auction sales

In the second half of 2015， the macro-economy in China saw a further fall. this indirectly affected confidence in the art market.

The decline in the art market is not solely a Chinese phenomenon. As a matter of fact，in the 2015 autumn auction season， a fouryear rising trend came to an end in London and New York in terms of postwar and contemporary art， as well as impressionist and modern art. In fact， there was overall shrinkage of 25.31 percent.

New Draws in Contemporary Art

The overall market in 2015 had a big impact on contemporary art. According to the AMMA report， market turnover was 2.645 billion yuan （$407 million） last year， a yearon-year decrease of 12 percent.

According to Gong Jisui， AMMA Senior Consultant and Market Observer， contemporary art faces predominant problems. “In the launch stage of the Chinese contemporary art market， purchasers neither understood nor felt a great love for contemporary art.they rushed into the market in a somewhat impetuous way seeking benefit. Due to past overpricing， added to the fact that fine works have already been collected by agencies and individuals， the whole category witnessed product aging and loss of momentum. The market eagerly looks forward to the appearance of young artists who are able to continue the brilliance of the past generation with a distinctive style， which takes time.”

However， that doesn't mean that the contemporary art market has no attractions. Although the total turnover dropped， it should be noted that the average price of contemporary works did rise considerably by 33.44 percent from the previous year. Auction houses have found new approaches to hold a number of special auctions with academic value that have created a good market response. In the 2015 autumn auctions， 26 works were released at the China Guardian “Night of China in Its 20th century & Its Contemporary Art”， of which， 25 were auctioned， including The Young Man Relieved by Shi Chong selling at 37.95 million yuan （$5.85 million）. A total of 13 items were displayed and sold at the “85 New Wave”event， including works by cutting-edge artists Ding Fang， Geng Jianyi and Mao Yan.

A remarkable phenomenon in the 2015 domestic art auction market is that young artists emerged rapidly. Christie's in Shanghai increased the proportion of works by young artists born in the 1970's. It launched the“+86 First Open”， a new initiative that produced a 96 percent sales rate. Tian'anmen Square by Liu Wei brought in 5.45 million yuan （$838，465）， and Plum Blossoms，Orchid， Bamboo and Chrysanthemum by Duan Jianyu was sold for 2.3 million yuan（$353，845）， setting a new record in individual auctions. the prices going under the hammer grew at an amazing pace.

However， not all take an optimistic view of the phenomenon. According to Lin Song，an art critic， fresh artists are appearing at a faster than the normal pace. The biggest problem facing young artists at present is that prices are going up so rapidly that young artists may have been hurried into the market， which may easily lead to price bubbles that will damage their future growth.

Based on the AMMA analysis， the reason why this “young” category develops so fast is that， for many emerging collectors，the categories like oil paintings in the early days and contemporary art have already moved into the stage of high prices in second-hand trade. Holders are reluctant to sell at a low price， while the new rich don't want to buy high and thus need to locate themselves in the market via “new paintings” as the touchstone. Because of that， the price of young artists' pieces fluctuates to some extent. Investors need more careful consideration.

Robust Demand for Purchase and Collection in Asia

Despite the declining global market，Asian collectors have a huge demand potential. Liu Yiqian set the second highest auction price in the world. His was also a record high for a single art piece in history by an Asian buyer. Asia's strength in the collection of Western art shocks the world. Data shows that， in the worldwide auction sales at Sotheby's in the first half of 2015， the turnover of Asian buyers saw a year-on-year increase of 35 percent.

Asian buyers also dabble in different kinds of fine art. They can be found in over 20 categories. Of them， the number of Asian buyers has doubled in the categories of Impressionist and Modern，Contemporary Art， Classic Western Oil Painting， British Painting and Design in the 20th century.

Christie's data shows that， in 2015， the total turnover of Asian art auctions stood at $2.05 billion. When set against Christie's performance of about $6.8 billion in 2014，the Asian element accounted for nearly 30 percent.