Chinese Mainland Auction Market Continues to Contract, Promising a Newly Rational Era

Chinese Mainland Auction Market Continues to Contract, Promising a Newly Rational Era
The scene at China Guardian Auctions this spring
(Courtesy of China Guardian Auctions)

BEIJING — The spring auction season wrapped this month in mainland China having confirmed the trend established last fall of a sharply contracting market, which in the face of the country’s economic slowdown is turning increasingly choosy. Market leaders China Guardian and Poly Auctions saw their spring takes drop by 60 percent and 50 percent respectively compared to spring 2011. In that record-breaking season a year ago, Guardian recorded total sales of RMB 5.323 billion and Poly even more with RMB 6.13 billion. You only have to compare those numbers with this year’s figures —  RMB 2.06 billion ($323.5 million) for Guardian and RMB 3.03 billion ($476 million) for Poly — to see just how much juice has drained out of the market in 12 months.

Not that this came as a great surprise to anyone. The founder of China Guardian, Chen Dongsheng, went on record in an interview with Chinese art market website Artron late last year predicting (pretty accurately as it turned out) a 40 percent contraction in the market in 2012. In fact, as we reported previously many in China believe a cooling market is a good thing, creating a more discriminating and rational atmosphere for sales. A story this week in China’s Global Times, for example, which attempted to parse the lukewarm results this season for Chinese market favourite Qi Baishi (1864-1957), pointed to the lacklustre quality of the offerings and the fact that many of the works were by no means new to the market. Last spring neither lack of quality nor evidence that a work was being flipped would have been deterrents, as prices then seemed to only have one way to go.

This was not to say that this season didn’t have its high points. Guardian sold seven superb decorative works of art associated with the Emperor Qianlong (reign years 1735-1799,) including a jade seal for RMB 69 million ($10.8 million,) while Poly set a new artist record for Chinese traditional modern painter Li Keran (1907-1989,) selling his “Landscape in Red” (1964) for RMB 293.25 million ($46 million.) Poly was at pains to point out that the work had been sourced from overseas, a provenance that is a particular selling point in an increasingly suspicious market. Having both set up offices abroad in recent times, competition between Poly and Guardian is increasingly about who can source and secure the best consignments from abroad.

It’s worth noting that even in this chillier market the results from China’s big two auction houses are still more than competitive with those achieved this spring by Christie’s and Sotheby’s Hong Kong. Both Guardian and Poly bested Sotheby’s spring results in Hong Kong, and even though Christie’s Hong Kong’s $351.7 million take for spring shaded Guardian’s $323.5 million, it was trumped in turn by Poly’s $476 million. Christie’s and Sotheby’s, however, can take heart from the fact that their results continue to be built on a broader foundation than the mainland houses. While the heart of Guardian and Poly’s market is in Chinese traditional modern painting, Christie’s and Sotheby’s continue to dominate the sectors of Chinese porcelain and works of art and contemporary art, not to mention areas where the mainland doesn’t even attempt to compete like wine, watches, and jewels.