BusinessWeek Online, January 28, 2006
China's New Eye for Fine Art
The deputy chairman of Christie's Asia says mainlanders are buying up
works from their own country as well as the West
More than 300,000 Chinese have a net worth of more than $1 million,
excluding property, and by some estimates mainland millionaires control
some $530 billion in assets. What do these folks spend their hard-earned
yuan on? Mainland Chinese are the world's third-biggest buyers of luxury
goods, so the likes of Gucci, Prada, and Cartier are selling billions of
dollars worth of scarves, bags, watches, shoes and more to them
annually. And Bentley Beijing has sold a half-dozen 728 stretch limos --
at $1.2 million each, the world's most expensive car -- more than any
other dealership in the world.
But China's new-moneyed class is getting interested in more than just
fast cars, designer clothes, and extravagant timepieces. Growing numbers
of mainlanders are investing in art and antiquities, snapping up
everything from ancient Chinese scrolls and traditional ink paintings to
the works of French Impressionists. BusinessWeek Asia Correspondent
Frederik Balfour spoke with Ken Yeh, deputy chairman of Christie's Asia
in Hong Kong, about the auction house's efforts to woo more Chinese
collectors. Edited excerpts follow:
How important is the Chinese market to Christie's?
It's very important. There is tremendous potential there, because when
people have extra disposable income they will start thinking about
buying art. From recent years the percentage of Hong Kong sales from
mainland China has gone from zero to 20%. That's a huge increase.
What are mainland collectors buying?
First off, they will buy porcelain and Chinese scrolls and modern
paintings from the late 19th and early 20th centuries. These are in the
style of traditional Chinese classical painting, using brush strokes and
ink and paper.
Artists include Lin Feng Mian, Li Keran, Zhang Daqian, and Wu Guan
Zhong. Some local collectors will pay a huge price for those artists. I
know that a Wu Guan Zhong recently sold in the mainland for about $4
million. Many local auction houses in mainland China are also doing very
Are mainlanders buying contemporary Chinese art?
Not that I'm aware of, though this isn't an area of my expertise.
Contemporary Chinese art is bought primarily by Southeast Asians,
Taiwanese, people from Hong Kong, as well as European and U.S. collectors.
What about Western art?
Eventually they will start buying Western art. There will be a very
substantial increase. That's one of the main reasons I relocated to Hong
Kong from New York last year. Christie's knows there is a lot of
potential in mainland China, so one of my main jobs is to develop the
Western painting market there.
We have done two previews of impressionist paintings in Shanghai, in
advance of auctions in New York and London. In the past two years
mainlanders have bid on Renoirs, Monets, and Van Goghs in New York and
London auctions, though they only got the Monets. There is also a
middle-aged Shanghai businessman I know of who paid $1 million for a
Picasso in a private sale. I can't give more details.
Does Christies try to educate Chinese collectors?
We have been bringing the highlights of our Hong Kong auction sales of
Chinese porcelain, jewelry, and watches, as well as traditional
classical, modern, and contemporary art to Shanghai and Beijing. Our
specialists give lectures to small groups of collectors, usually
sponsored by investment banks.
Personally, I did a few talks in Shanghai and Hangzhou on how to collect
to Western painting. We usually work closely with private bankers and
investment bankers and invite 40 to 50 people. For example, we worked
with HSBC in Shanghai in 2004. The reaction in Hangzhou was very
positive about Western art. They are keen to learn and did their own
So a Chinese buyer might someday purchase Van Gogh's Sunflowers?
You never know.
BusinessWeek Online, January 28, 2006
In China, To Get Rich Is Glorious
More Chinese are becoming millionaires -- and driving a fast-growing
market for luxury goods
By Dexter Roberts and Frederik Balfour
Wang Zhongjun is loaded and happy to flaunt it. He wears Prada shoes,
Versace jackets, and a Piaget watch. He smokes Cohiba cigars from Cuba.
He drives a white Mercedes-Benz (DCX ) SL600, a silver BMW Z8, and a red
Ferrari (FIA ) 360. His art collection includes hundreds of sculptures
and paintings. Value: $30 million or so. Home sweet home is a 22,000
square-foot mansion north of Beijing with antique British and French
furniture, a billiard room with bar, and an indoor pool. When he tires
of swimming, Wang can head to his stable (annual upkeep: $500,000) of 60
horses from Ireland, France, and Kentucky. "Entrepreneurs in China today
feel much safer than before," says Wang, a 45-year-old movie producer
who served in the Chinese army, studied in the U.S., and learned
painting before backing internationally acclaimed films such as Kung Fu
Hustle. "We are more accepted by the media, government, and society today."
That's for sure. Even though Deng Xiaoping declared that getting rich is
glorious nearly three decades ago, just a few years back China's
millionaires were running scared. When a Forbes Magazine survey of
China's richest appeared in 1999, wags called it the "death list" after
a tax crackdown targeted many who made the cut and landed some in jail.
Now China is embracing them. More than 300,000 Chinese have a net worth
over $1 million, excluding property, according to Merrill Lynch & Co.
(MER ). And mainland millionaires control some $530 billion in assets,
Boston Consulting Group estimates. "There has been a revolution in
attitudes toward wealth," says Rupert Hoogewerf, who authored the 1999
list. He now runs Hurun Report, a Shanghai-based company specializing in
information about China's rich, which just released a survey on
millionaires' buying habits. "People don't appreciate how much cash
there is running around in China today," he says.
"DIZZY" OVER SHOES
Many people might not appreciate it, but luxury retailers sure do. Just
five years ago mainland buyers accounted for 1% of global sales of
luxury handbags, shoes, jewelry, perfume, and the like. Today the
Chinese are the third-biggest high-end buyers on earth, with more than
12% of world sales, Goldman, Sachs & Co. (GS ) reckons. Within a decade,
China will likely leapfrog Japan and the U.S. to become the top luxury
market, predicts Goldman analyst Jacques-Franck Dossin. "China is
experiencing huge wealth creation, and there is lots of conspicuous
consumption related to that," Dossin says. "People want to show they are
How? By buying custom clothes, diamond-encrusted watches, pricey cars,
gourmet meals, and fine wine. Zhao Hui, a chain-smoking 38-year-old
restaurateur, real estate developer, and Ferrari owner from Shanghai,
says he speaks no English, but he manages to pronounce "shopping" and
"Tiffany" (TIF ) as he shows off his $50,000 Franck Muller watch.
Richard Hung, a 43-year-old manager of a pharmaceutical company, has a
closet filled with dozens of Armani, Gucci (GUCG ), and Canali suits and
more than 100 pairs of Italian shoes. "I get dizzy when I look at
shoes," he says. Where to wear those duds? Try Beijing's exclusive Chang
An Club, where few blink at the $18,000 initiation fee. "Our members can
afford it," says General Manager Antonius van Gevelt, adding that Chang
An aims to keep its fees higher than rival gathering spots. The rich
"want to join the most expensive club in China," he says.
Luxury marketers are happy to serve up plenty of flash and bling to keep
sales rolling. Louis Vuitton, which has a dozen boutiques across the
mainland, in November served up 1,500 bottles of Veuve Clicquot and
platters of pâté de foie gras at the celebrity-packed launch of a new
Beijing store. And fashionistas still marvel at Miuccia Prada's "skirt
show" last spring, when she took over seven stories of Shanghai's art
deco Peace Hotel.
Pricey wheels do pretty well, too. The Rolls-Royce outlet in Beijing is
one of the brand's top-selling dealerships. And Bentley Beijing has sold
a half-dozen 728 stretch limos -- at $1.2 million each, the world's most
expensive car -- more than any other dealership in the world. For
thriftier millionaires without an extra million to drop on
transportation, Cadillac, Mercedes, or BMW are eager to help. Shoppers
at any of a dozen "Cadillac Experience Centers" in the mainland, for
instance, can relax on a black leather sofa and enjoy a glass of
Rosemount Cabernet in the "Cadillac Cafe" while browsing through
photo-rich brochures that describe the brand's 102-year history. "Our
whole showroom supports our brand: It's modern, sophisticated, and not
your traditional luxury vehicle," says Stuart J. Pierce, who oversees
the Cadillac brand at Shanghai General Motors Co. (GM ).
Now the luxury goods marketers are looking far beyond Beijing and
Shanghai to find China's millionaires. Cadillac plans to have 40
showrooms in China by the end of 2007, and last year dispatched a 1959
El Dorado convertible on a seven-city "heritage tour" to drum up
interest nationwide. At this month's ice festival in the frigid northern
city of Harbin, watchmaker Cartier has created a massive ice replica of
its flagship Paris store. "Our aim is to have the second- and third-tier
cities become a more important part of our business," says Daniel Chang,
who oversees Cartier's sales in northern China.
Lately China's new moneyed class has gotten interested in more than fast
cars, flashy threads, and extravagant timepieces. Growing numbers of
mainlanders are snapping up everything from ancient scrolls and
traditional ink paintings to French Impressionists. Christie's
International says mainland buyers account for 20% of purchases at its
Hong Kong auctions, compared with virtually none five years ago. And
while most collectors prefer Chinese art, mainlanders now bid on
Renoirs, Monets, and Van Goghs in New York and London, and a Shanghai
businessman paid $1 million for a Picasso in a private sale. "There's
tremendous potential," says Ken Yeh, deputy chairman of Christie's Asia
(see BW Online, 2/6/06, "China's New Eye for Fine Art").
Even as the likes of Cartier, Christie's, and Cadillac try to separate
China's millionaires from their wealth, others aim to help them preserve
it. Although foreign banks are barred from marketing their offshore
services inside China, they are discretely wooing mainland clients via
their Hong Kong offices, figuring those who have made money abroad are
fair game. And soon, banking regulations in the mainland are to be
relaxed. "In the long term, China can surpass Japan as a major market
for wealth management," says Kaven Leung, who oversees Citigroup's
private banking efforts in China.
Diamond watches. Armani suits. Silver Bentleys. Private banks. Getting
rich in today's China is indeed glorious, and spending is even better.
with kind regards,
Matthias Arnold (Art-Eastasia list)
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