The Chinese contemporary art market is in trouble, and James Li is welcoming it.
"May the crisis continue so that speculators will have to dump their leveraged purchases at fire-sale prices," said the Beijing and Brazil-based collector of Chinese contemporary oil paintings and Asian contemporary art.
As recently as May, Christie’s day sales and inaugural evening sale of Asian contemporary and 20th century Chinese art sold a record-breaking US$104.75 million. Just six months and a financial crisis later, half the lots in the evening sale for the same category went unsold. The total take dropped to just US$18.14 million.
Out of the shadows
While sales are down, it’s not all bad news, according to Rose Jiang Wei, owner of Art Channel, a gallery and artist’s residence in Caochangdi, an art district in northern Beijing. As big name artists readjust their prices, other quality artists, long overshadowed by their more famous contemporaries, have a chance to emerge. The crisis also bodes well for collectors of and investors in Chinese art.
The boom in Chinese art started five years ago as the country came under the global spotlight ahead of the Beijing Olympic Games. Western speculation played a large role in boosting prices for contemporary artworks as investors sought to flip art for easy profits: UK investment banker Trevor Simon bought Yue Minjun’s Execution in 1996 for US$32,000, and sold it in 2007 for nearly US$6 million.
In five years, the market for contemporary Chinese art grew by 300%, said Tiffany Beres, international affairs officer for China Guardian Auctions, mainland China’s largest and most international auction house.
As the market rocketed, prices soared out of reach for all but elite buyers. In November 2005, Zeng Fanzhi’s Pink 2,3 sold for just under $75,000; in 2008, he set a world record for Chinese contemporary art at auction for his Mask Series 1996 No. 6, which fetched US$9.6 million.
With no other artists to take as points of comparison and no established way to judge the quality of Chinese art, prices for works from emerging artists quickly escalated to those of their more established international counterparts. Buying turned into a free-for-all that saw some cashing in on buyer’s na?veté.
"There’s a ton of junk out there," said Beres. "You don’t have to be a collector to see that. Just go to Songzhuan or 798 [an art village and a Beijing art district, respectively] to see how Disneyland-like it’s become."
But as the industry grew, so did the critical community following it. Now, experienced dealers can ensure that art is worth the prices being paid by collectors and investors, said Jiang at Art Channel.
A tighter market is bringing prices and expectations down to earth, and that is good news for investors and collectors.
"This is a fantastic opportunity for cash buyers [of Chinese contemporary art], perhaps the best buying opportunity we’ll see in the next 10 years," said Rhea Papanicolaou, business development and communications coordinator of the Fine Art Fund, an international art investment group. Works that previously attracted heavy speculation will drop by as much as 20%, she says, though prices will stay high for rare and high-quality works.
"It’s definitely not all doom and gloom," added Jonathan Stone, international business director of Asian art at Christie’s.
Christie’s fall auction saw several 20th century pieces set new auction records for the artists. Yun Gee’s Old Broadway in Winter and Yu Chengyao’s Magnificent Landscape both sold for more than $745,000, and Zao Wou-Ki’s Hommage à Tou-Fou took in over $5.8 million.
Though the financial crisis has scared away spectators and speculators, there will always be an interest from connoisseurs and those with a real love of art, said Li, who is currently in Beijing.
"Good art will always sell," he said.