Learning Mandarin: Chinesepod - Art rush gains steam in China

CHINA / Foreign Media on China

Art rush gains steam in China
(iht.com)
Updated: 2006-07-19 10:57

http://www.iht.com/articles/2006/07/18/bloomberg/sxrich.php

Michelle Yu took her windfall from investing in Chinese Internet
companies such as Sina Corp., quit her job as a marketing director for
property developer Soho China and invested in Chinese contemporary art.

In April, the 36-year-old graduate of Yale University School of
Management in New Haven, Connecticut, spent 290,000 yuan, or $36,200, on
two paintings at a Beijing auction. Her goal: to double her money in a
year.

"I believe these paintings will be good investments," said Yu, relaxing
on the sofa in her 344-square-meter, or 3,700-square-foot, penthouse,
which overlooks Beijing's forested Chaoyang Park. "Whether it's Chinese
real estate, club memberships or paintings, I believe there's a
tremendous potential for growth at least through 2008 when Beijing hosts
the Olympics."

Yu paid 170,000 yuan for "Change, Sound of Phoniness," a wall-size
painting by Xin Haizhou, from the Sichuan Academy of Fine Arts, showing
four young Chinese with quizzical expressions.

Chinese investors are beginning to collect contemporary Chinese art as
they accumulate wealth. Oil paintings, statues and other works created by
artists since the 1980s used to sell for no more than $1,000 a piece a
decade ago. Today, they can go for $600,000 or more.

Sales at the latest autumn and spring contemporary art auctions in Hong
Kong more than doubled to 276 million Hong Kong dollars, or $35.5
million, from a year earlier, according to Christie's International and
Sotheby's.

Philip Hoffman, chief executive of the Fine Art Fund in London, said he
may start a $25 million to $50 million Asian contemporary-art fund this
year after being approached in February by several Korean and other Asian
banks.

Hoffman's Fine Art Fund, started in July 2004, buys Western art dating
back to the 15th century. The fund delivered a 35 percent return in the
past year, Hoffman said in a phone interview from London. He said he
believes Chinese contemporary art can return a minimum of 10 percent to
15 percent.

After painting propaganda posters for years, some Chinese artists are
beginning to savor success. Beijing-based Yue Mingjun used to live on 400
yuan a month in the early 1990s, selling his paintings for $100 or less
and doing freelance advertising work.

Today, he lives on a 1.2-hectare, or three-acre, estate near Beijing. He
employs a cook and two maids and drives a $60,000 Volvo sedan.

"I was poor even as recently as 1993," said Yue, 44, as he puffed on a
cigarette. "But I didn't know it. Everyone was poor then. I just wanted
to paint."

A former oil-rig worker who went on to graduate with a degree in fine
arts from Hebei Normal University near Beijing, Yue was influenced by the
Tiananmen Square killings in 1989, he said. His painting "Gweong Gweong"
(Roar, Roar), showing People's Liberation Army jets dropping "bombs" on a
crowd of smiling people in the square, sold for $636,000 at a Christie's
auction in Hong Kong last November, a record then for a contemporary
Chinese piece.

"Even we were surprised," said Ken Yeh, deputy chairman of Christie's
Asia. "We were estimating Gweong Gweong would sell for $45,000 to
$60,000." He said the work was bought by a non-mainland Chinese collector.

Yue sold Gweong Gweong for $5,000 in 1994 to a Hong Kong buyer whose name
he can't recall.

"Whoever bought Gweong Gweong made a lot of money," Yue said. "I just
made a little money, but I'm benefiting from the record sale. New
commissions for my art are pouring in. I can't paint fast enough."

The increase in Chinese art prices is attracting overseas buyers.
Sotheby's held its first New York sale of contemporary Chinese-Asian art
in March, raising $13.2 million, said Hong Kong- based Henry
Howard-Sneyd, managing director of Sotheby's in Asia.

"Western interest in Chinese contemporary art is expanding
exponentially," said Michael Goedhuis, owner of Goedhuis Contemporary
galleries in New York, Paris and London.

"I see my collection as a long-term investment as well as, to some
extent, a permanent acquisition," said Richard Born, a New York-based
hotelier, who bought some of Yue's works. "It is simply a matter of
supply and demand, which will certainly push the prices of the better
contemporary art higher as the enormous wealth continues to accumulate
inside China."

China had 320,000 U.S. dollar millionaires in 2005, up 7 percent from
2004, Cap Gemini-Merrill Lynch said in a June report.

Contemporary Chinese art is only at the beginning of an upward cycle,
Howard-Sneyd said.

"Most contemporary or avant-garde Chinese art, especially by well-known
artists, sells for well under $100,000," he said. "China's newfound rich
are looking at it as a market because prices are more attractive and
there are more opportunities."

Traditional Chinese brush paintings by famous artists sell for as much as
10 times the prices of contemporary art, Howard-Sneyd said. "Paradise of
Parrots," a work by octogenarian Wu Guanzhong, fetched 30.25 million yuan
in November at an auction in Beijing by China Poly Group, according to
the Hong Kong art magazine Orientations.

China's 4,000 auction houses sold 10 billion yuan worth of art last year,
up from 800 million yuan in 2000, said Wang Fenghai, deputy secretary
general of the China Association of Auctioneers in Beijing. "There is no
question that rich Chinese are turning to auctions as a way to buy art,"
he said.

Overseas auction houses, including Sotheby's and Christie's, currently
are prohibited from holding sales on the mainland.

A government crackdown on property speculation may be encouraging some
Chinese to switch to art, said Karen Smith, a Beijing-based art historian
and author of "Nine Lives: The Birth of Avant-Garde in New China," about
nine Chinese artists.

The government imposed property sales taxes in 2004 on speculators who
sold property within two years of purchase.

"In the past, it was foreign buyers who bought all the contemporary
Chinese art," said Smith. Now, "most foreign buyers can't compete.
There's so much money flowing around."

Some collectors and critics are concerned that the boom in prices is
leading some buyers to overpay for inferior art, which may cause prices
to slump as investors shun the works.

"There's a huge demand for what is a rather limited amount of works and
the result is that works by less talented artists are put on the market
to meet demand," Smith said. People will "start waking up to the fact
that they have paid a not insignificant amount for less- than-enduring or
meaningful works - white elephants, in short."

Zhang Xin, an art collector who runs Beijing-based developer Soho China
with her husband, Pan Shiyi, agrees.

"Even artists who have never exhibited abroad are beginning to demand
prices of 1 million yuan," Zhang said. "These prices are unsustainable."

Soho China's Beijing headquarters includes a 600-square-meter, or 6,458-
square-foot, gallery with works by artists including Ai Weiwei, who
collaborated with the Swiss architects Herzog & de Meuron to design
Beijing's Olympic stadium.

Yeh, of Christie's, said prices have room to climb. "Contemporary Chinese
art still has a way to go before we approach prices that are in the
bubble range," he said. "Prices are really just beginning to go up."

In her penthouse, Yu said the investment isn't the only attraction: "When
a stock loses value it's worthless," she said. "But a beautiful painting
will always look nice in your living room."

Friday, January 4, 2008

Chinesepod - Art rush gains steam in China

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