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2018 July
Hong Kong: Hub for Art Trade

Over the last few years, Hong Kong has joined New York and London as one of the world’s top three international art markets, with a diverse range of public art spaces and large-scale art exhibitions springing up across the city. Flourishing economic development further inland is also driving rapid growth in the Mainland art market, which has indirectly helped to consolidate Hong Kong’s position as a major hub for art trade.

 

Kevin Ching: Hong Kong’s Diversified Art Community Highly Valued

The spring and autumn auctions held by international auction houses in Hong Kong have been drawing local and overseas collectors to the city and creating an enthusiastic atmosphere for the market. According to Kevin Ching, Chief Executive Officer of Sotheby’s Asia, “Hong Kong is the third largest market in terms of global auction business for Sotheby’s. In 2017, the transaction volume from Hong Kong auctions totaled HKD6.6 billion, which represents about 18% of our global business.” Riding on its edge in art trade, Hong Kong is gradually becoming an Asian art hub. It is also a major auction destination for Sotheby’s.

 

A magnet to local and overseas buyers

Ching sees two main advantages in Hong Kong. Hardware wise, Hong Kong is located at the center of Asia, making it a very convenient location for participation by clients around the world. Software wise, Hong Kong benefits from financial, legal and logistics advantages. It also enjoys low import and export rates for art pieces, and auctions are operated with standardized procedures and high transparency. “We have international perspectives, a highly transparent operation model, stringent legal standards and an open and free business environment. All these are important factors to support the prosperity of the auction sector.” Furthermore, the Hong Kong auction client base is quite diversified. On top of Hong Kong, Mainland and Taiwan buyers, Southeast Asian and international collectors are also keen on bidding.

 

Comparatively, the Mainland auction market has more restrictions. Not only are tax rates higher, the market environment is also lacking in regulations and standards. Prohibited from putting historic relics on auction in the Mainland, foreign-funded auction houses can only engage in the sales of contemporary art pieces and jewelry. For international auction houses and overseas collectors, the Hong Kong market is still more attractive.

 

Mainland buyers are new promising customers

For these reasons, international galleries and auction houses have been drawn to move into Hong Kong. The community has grown from about 10 in 2000 to about 100 in 2015. Moreover, with sizeable art expos such as Art Basel and Art Central held in Hong Kong, the market has witnessed more vibrant exchanges and development.

 

Ching commented that with rapid economic growth in the Mainland in recent years, the size of emerging Mainland collectors has grown for Sotheby’s Hong Kong - from about 10% in 2004 to more than 20%. At its peak in 2011, the number even soared to 40%. This newly rich class has been providing strong momentum to the art market.

 

Discerning collectors’ preferences

As collectors’ tastes become diversified, the local auction scene has been curating new types of auctions to address market needs. Ching quoted Sotheby’s Hong Kong as an example. “We began with ceramic crafts, and the number of auction categories has grown to 11 at present. On top of Asian art pieces, more and more collectors are becoming fond of Western art pieces. In the Hong Kong spring evening auction last year, we introduced Western contemporary art for the first time. The headline piece Mao was sold at a record price.”

 

In Ching’s eyes, most of Sotheby’s clients are not taking part purely for investment’s sake. Instead, they are art lovers. Yet, as art pieces come with very high price tags nowadays, clients naturally consider the value and potential of the pieces. As such, Sotheby’s attaches much importance on sorting out and uncovering in the academic sense. Auction pieces are meticulously handpicked to echo with the collectors' preferences. For example, the many thematic auctions held over the years, such as Zao Wou-ki’s paintings on paper, Long Chin-san’s photographic works and Yoshihara Jiro’s valuable collection, were all 100% sold.

 

Innovative curating develops new markets

Innovative curating concepts are helpful in opening up new markets. The collection of Japanese trendsetter NIGO auctioned by Sotheby’s as well as the thematic collaboration with the highly popular idol and collector T.O.P. are two good examples. Another innovative show, “TURN IT UP”, was curated based on the taste of young collectors. It featured avant-garde pieces by contemporary and street art pioneers as well as emerging artists. “The fact that every item in ‘TURN IT UP’ was sold demonstrates the rapid growth in the number and purchasing power of Asian young art lovers. The auctions were supported by young collectors in their twenties, with the youngest ones below 20. We are also seeing ‘second-generation collectors’.”

 

Sotheby’s has also curated the brand new “Curiosity” series, which touched on natural wonders, Western antiques, tribal art, as well as European sculpture. These were sold side by side with Chinese art pieces. Running for the fourth year, the series is held to broaden the horizons of Asian collectors. Ching is very confident that these novel auction themes are favorable in driving the richness and diversity in the local art market, and both domestic and overseas buyers would keep coming back to Hong Kong.

 

 

Mark Saunderson: Hong Kong’s Art Market has Right Time, Location & People

The Asia Contemporary Art Show has held two exhibitions in Hong Kong every year since 2012 and they have become the longest-running, most successful hotel art exhibitions in Asia. Mark Saunderson, Director of the Asia Contemporary Art Show, has witnessed the ups and downs of Hong Kong’s art market. “When I came to Hong Kong in 1992, there were no more than 10 galleries in the whole territory, never mind any major international exhibitions. Today, numerous art venues and public exhibitions have moved into Hong Kong, and the art market is currently thriving, with a huge amount of trades going on. ”

 

Hong Kong’s advantages attract galleries

Data from this year’s Asia Contemporary Art Show (Spring Edition) shows that more than 14,000 collectors and art enthusiasts attended the event, while estimated sales rose to HKD28 million, representing record highs for both figures. Some 85% of participating galleries successfully sold works, demonstrating the flourishing market conditions. Saunderson explained, “The sale prices of our artworks vary from HKD20,000 to HKD150,000, attracting buyers with different levels of spending power, so trades are by no means limited to famous works worth millions.”

 

Turning to the issue of how Hong Kong has come to be a place that nourishes new forces in the arts, Saunderson believes Hong Kong’s excellent business environment, in terms of its geographical advantages and excellent tax and legal systems, have all put it ahead of other regions in Asia, which are also the key reasons why he originally decided to hold exhibitions in Hong Kong. “Hong Kong is a free port with no sales tax, VAT or import tax, plus it has an outstanding geographical position that makes it easy to deliver artworks anywhere in Asia, as well as allows it to serve as a bridge to the Mainland market. ”

 

It is worth noting that Hong Kong also has simple customs procedures, which facilitate the inflow and outflow of talent, collectors and capital, while registering a company in Hong Kong takes no more than a couple of days and costs as little as a few thousand Hong Kong dollars. These factors have attracted a large number of world-class artistic talents to move into Hong Hong, including international gallery brands such as America’s Gagosian, Britain’s White Cube, and France’s Galerie Perrotin. Renowned international auctioneers like Sotheby’s and Christie’s also have their Asian headquarters in Hong Kong, providing a more complete package of services for art dealing. As Saunderson noted, the most important thing for art dealing is the ability to “bring it in and out”, and Hong Kong has an abundance of just this type of mobility.

 

Chinese art enters world stage

In the past, the relative economic strength of the economies of Europe and America meant that the art market was dominated by Western works. However, as the Chinese economy continues to grow stronger, collectors have increasingly begun to transfer their attention to Chinese artists with a more Eastern outlook, with many Chinese artists making a presence on the global stage. Many industries and sectors make extensive use of Hong Kong’s geographical position and its system of “interconnection” with the Mainland. Art exhibitions are actively recruiting Mainland talent, and the Asia Contemporary Art Show is no exception in this regard.

 

Taking the Spring Edition of this year’s Show as an example, the exhibition featured “Intersections: China”, which highlighted the creativity of Chinese artists. Speaking in candid terms, Saunderson noted that many contemporary Chinese paintings and sculptures have proved extremely popular, with works by artists such as Gao Xiaoyun, Ding Wenqing and You Yang almost selling out. “Chinese artists have boundless creativity, and there are guarantees in terms of both the quality and quantity of work.”

 

An increasing number of high net worth individuals from the Mainland are getting involved in art dealing and Chinese art investors are becoming increasingly influential. On the question of what opportunities the development of Chinese art presents for Hong Kong, Saunderson believes that both the art exhibitions and the customer groups will become increasingly diverse. “While there is no shortage of exhibition facilities in the Mainland, tax rates are significantly higher and shipping and trading costs are also high, which reduces people’s willingness to participate in the market.” For this reason, galleries from the Mainland are flocking to Hong Kong to develop their business. Saunderson disclosed that many Mainland buyers come to art exhibitions especially to view and emulate them, which helps to consolidate Hong Kong’s position as a center for art dealing.

 

Online sales platforms reduce costs

According to Saunderson, sky-high rent is a potential problem for the development of local art: “It takes a certain amount of space to exhibit artworks, but rent in Hong Kong is amazingly expensive, so to cope with the cost, some galleries have no choice but to focus on more commercial artists with greater market potential, stifling opportunities for niche artists to survive.” To solve this problem, Saunderson founded Asia Contemporary Art Buyer, Asia’s largest art website. The website has developed into a year-round artwork sales platform with over 12,000 works currently online. However, Saunderson warned that anyone involved in art cannot rely on a single route, and so it is also vital to work with galleries, websites, auctioneers and exhibitions to publicize art more widely.

 

A number of large art venues are opening in Hong Kong soon, including M+ and Hong Kong Palace Museum in West Kowloon Cultural District, providing more expansive spaces for artists to show their works. In Saunderson’s opinion, this will undoubtedly raise awareness and participation in the arts among Hong Kong residents. “I am very optimistic about the local art market. Local artists are mostly developing spontaneously through civil organizations, which is a very healthy and natural ecosystem. I’m convinced that Hong Kong people have the ability to take the unique sense of local art to an even higher level. ”