Young at heart, and they love art

Auction Scene - Sotheby's HK Modern and Contemporary Asian Art Evening Sale in April 2014.[For chinadaily.com.cn]

Under-40 collectors are becoming big players in the nation's auction market

A young generation of Chinese collectors with eclectic tastes is assuming a growing role in the nation's art auction market, and they're set to lift the fortunes of their contemporaries who paint and sculpt, said industry officials.

"Young buyers and collectors from China are emerging as growing powers in the market. Unlike the classic collectors, who are mostly in their 50s or 60s, this younger group has demonstrated more international taste in purchasing art, and they're readier to accept Western art and culture, said Cai Jinqing, president of China operations for global auctioneer Christie's International Plc.

By "young", Cai means below the age of 40. "Most of them have studied overseas and tend to be more open to the new things," said Cai.

"Cultural values change with time, and young art buyers and collectors are more attracted to the work of people close to their ages," said You Yang, deputy director of the Ullens Center for Contemporary Art, a Beijing-based nonprofit art institution.

And as young collectors take a growing role in China's art market, the nation is becoming a more important player in the global art industry.

In 2013, China remained the world's second-largest art market after the United States, with a 24 percent share, according to the European Fine Art Foundation.

After a slump in 2012, influenced by the global and national economic slowdowns, art sales rose last year in China, the foundation said.

In 2012, global art market sales dropped 7 percent year-on-year to 43 billion euros ($58 billion), mainly due to a 30 percent contraction in China's art market.

Modern and contemporary artworks currently account for only a small portion of total sales, but with the rise of young collectors, this segment has huge potential for development.

"Among domestic auction houses, modern and contemporary artworks only constitute a tiny part of their portfolios, which means that it's quite a promising sector in the future," said You.

In 2013, China's art market recorded sales of 11.5 billion euros, up 2 percent.

"Young collectors are destined to be the backbone of China's art market, but I think that Chinese culture will have more influence on them as they age and Chinese artwork will dominate the market in the years to come," said Xu Xiaoling, China representative of the European foundation.

Also, young collectors' purchasing power is lower than that of their elders, said You.

"You would find that most of the big-ticket modern and contemporary pieces are purchased by classic Chinese collectors, because they have the money for them," said You.

"Young collectors buy the artwork within their means, which will rise over the next few years," he added.

A number of global auction houses established offices in China, and they have been committed to curating local art as well as helping local young artists and collectors to develop, according to You.

As early as 1994, Christie's set up an office in the Chinese mainland. In April 2013, it received a license from the government to operate independently in the Chinese mainland, the first global auction house allowed to conduct such operations in the market.

The Chinese mainland has become one of Christie's four business regions where it operates independently, the other three being Europe, the Americas and the rest of Asia.

"The opportunity in the Chinese mainland is quite big, so it deserves its own attention," said Steven Murphy, chief executive officer of Christie's, in an interview with the 21st Century Business Herald newspaper.

Another international auctioneer, Sotheby's, is also expanding in China. In 2012, it set up a joint venture with State-owned Beijing Gehua Cultural Development Group, through which Sotheby's was licensed to conduct auction business in the Chinese mainland.

Sotheby's holds an 80 percent stake in the joint venture, known as Sotheby's (Beijing) Auction Co Ltd.

In the Chinese mainland market, domestic auction houses such as Beijing Poly International Auction Co Ltd and China Guardian Auctions Co Ltd are the largest competitors for global auctioneers such as Christie's and Sotheby's.

Poly's sales climbed from 6.1 billion yuan ($989 million) in 2012 to 7.9 billion yuan in 2013, while China Guardian's sales grew to 6.6 billion yuan from 5.2 billion yuan during the same period.

In 2012, the two domestic auction houses accounted for 20 percent of the market, while Christie's and Sotheby's took 15 percent.

"Global auctioneers are still getting used to the local market," said You.

Art market observers said that challenges facing global auction houses in the domestic market include figuring out local collectors' tastes and adapting to the policy restrictions and business culture.

But the global players' entry into the Chinese mainland is undoubtedly a boost to the auction business, industry analysts said.

"Global auctioneers have brought new ideas to the market, as well as their more advanced operating models and management. The strengthened competition will drive the art industry's development in the Chinese mainland," said Xu.

Global auctioneers are restricted from running auctions for Chinese cultural relics in the market, including Chinese traditional paintings and calligraphy, porcelain and antiques.

According to the foundation's report, high taxes, regional protection and local collectors' low acceptance of exotic art will make it difficult for China to overtake the US as the center of international art trade.