China’s Mega-Collectors

Posted filed underChina, Collectors.

china collectors
A new generation of entrepreneurs is snapping up works by international contemporary art stars to amass major and sometimes museum-worthy collections. But the recent arrests of several art-world figures have buyers worried about government scrutiny.

Barbara Pollack reports for Artnews: “China’s mainland auction houses, led by China Guardian and Poly International, both of Beijing, brought in nearly $5 billion in sales in 2011, according to the annual report from Artprice, the French art data analysis firm. And Christie’s and Sotheby’s Hong Kong raised another $1.8 billion (Sotheby’s and Christie’s are not permitted to operate auctions in mainland China). These figures were fueled by the rise of a new class of Chinese mainland art collectors, who have made their presence felt both at auction and in galleries throughout the region.

None of this is so surprising, considering that, according to the Hurun Report (China’s equivalent of Forbes), there are now close to a million millionaires in China and some 115 billionaires, second only to the United States. It was just a matter of time before, after purchasing homes and luxury goods, they would turn to art.

“The strong purchasing power of mainland Chinese buyers fueled by their increasing wealth contributes to the persistent, strong art market in recent years,” says Kevin Ching, chief executive officer of Sotheby’s Asia. “Chinese participation started in 2005, and, in terms of percentage by hammer, has increased from 5 percent in early 2005 to nearly 40 percent in 2011.” The reach of Chinese collectors is now extending well beyond Hong Kong, as mainlanders have begun acquiring international art. Christie’s reports that for the first half of 2012, collectors from Greater China (which, for the auction house, includes Hong Kong and Taiwan, as well as mainland China) accounted for 25 percent of sales worldwide—up from 16 percent in 2011.

François Curiel, president of Christie’s Asia, notes that the presence of mainland collectors has been felt in sales of Western art as well, including a painting by Giorgio Morandi in London that went for $3.4 million to a Beijing collector and a $22.5 million Monet, sold in New York in May 2011, with a mainland Chinese collector as the underbidder.

But all this activity has attracted the attention of the Chinese government, which imposes a high import tax on purchases of artworks brought into the country. This past summer, the director of an art-transport company, a German citizen, was arrested for underreporting the value of imported art works. Several leading collectors were also detained, including a top executive of Minsheng Bank, which has been buying heavily in anticipation of opening its new art museum in Beijing in 2013. This has put fear in the minds of many mainland buyers, and had a chilling effect on the spring auction sales, which saw a sharp drop in participation in Beijing and Hong Kong.

Meeting China’s mega art collector

Chinese businessman Zhang Rui reveals eight-hundred pieces of contemporary works, most of them stored away in his home that doubles as a private art space.

Most Chinese collectors are private about their purchases for fear that showing off their treasures might raise a red flag and lead to corruption charges. “I have a warehouse in Hong Kong,” is one of the first things I am told by Yu Mingfang, senior vice president of Belle International Holdings Limited. The company, China’s top shoe manufacturer and retailer, was listed as the eighth largest company in Asia by Businessweek. He wants me to know that his recent acquisitions of valuable works of international art—by artists such as Damien Hirst and Luc Tuymans—have not been brought back to his home in Beijing and are therefore not subject to customs duties.

Still, as he sits in his spacious office decorated with both antiquities and contemporary paintings, as well as his wine collection, Yu is happy to share stories about how he acquired more than 100 world-class artworks in under four years. As he performs an elaborate tea ceremony, one of his recent passions, he explains how the artist Zeng Fanzhi, whose record price is $9.6 million, opened doors for him, enabling him to socialize with people like David Zwirner, François Pinault, Jay Jopling, and Larry Gagosian, who represents the artist.

But Yu, 55, has been looking at contemporary art for almost two decades, visiting museums as he traveled on business. He remembers an early trip to the Pompidou Center—“the museum with tubes on the outside”—and seeing a room filled with works by Raoul Dufy. Now, he has a small Dufy hanging above a mantelpiece in his office. Across the room is a large painting by Zeng of a tiger in the moonlight—one out of ten paintings he owns by the artist. “I loved art for a very long time, but I couldn’t afford it,” he says, “but once I was financially capable, I began collecting.”

Yu is different from the stereotype of the mainland collector, who is focused exclusively on Chinese artists and is avaricious, rapidly buying and selling at auction just to make a profit. Yu has never sold a work; he is saving his collection for a museum he hopes to build one day. “I am looking for a site by a park, like the Metropolitan Museum of Art,” he says. In China, where private museums are opening in Shanghai, Inner Mongolia, Heilongjiang, Wuhan, Chengdu, and Nanjing, all in this year alone, Yu is just one of a pack with such plans in mind.

Collector Wang Wei and her husband, Liu Yiqian, are in the process of opening their own exhibition space in the Pudong District of Shanghai. Called the Dragon Museum, the nearly 40,000-square-foot structure is scheduled for completion in November. The couple has reportedly spent more than $31 million on the project. Its anticipated operating budget, expected to exceed $774,000, will be covered exclusively by personal funds. In China, there is no such legal entity as a tax-exempt private museum, and there are no tax benefits for donations to museums, so the founder has to underwrite all operating costs.”

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