An Auctioneer Showdown Looms in Asia; “I don’t think we’ll ever see it like it was two years ago. You now just don’t see that crazy mainland Chinese buyer who bids up and up.”

April 4, 2013, 6:58 AM

An Auctioneer Showdown Looms in Asia

By Jason Chow


‘Mao’s Song Poem of Snow, No.2′ by Zeng Fanzhi. See more of what’s hitting Hong Kong auction blocks this season

HONG KONG  – Sotheby’s and three Asian auction houses expect to sell more than $300 million in art, antiques, wine and jewelry this week, with a Mao portrait by Zeng Fanzhi and a Qing dynasty bowl among the most expensive items.

Despite the flurry of activity and glut of high estimates, art insiders are watching nervously for signs of China’s luxury appetite. Last year, art-auction sales in Greater China, which includes Hong Kong, fell 37% from 2011, according to data compiled by Art Market Monitor of Artron.

“Everybody’s looking at these sales—Sotheby’s, mostly—as a test to see if the market is coming back,” said Catherine Kwai, a gallery owner in Hong Kong. “I don’t think we’ll ever see it like it was two years ago. You now just don’t see that crazy mainland Chinese buyer who bids up and up.”Sotheby’s spring sales began Wednesday with wines from the now-shuttered Spanish restaurant El Bulli, an auction estimated to fetch more than $200 million. But the showdown begins Saturday, when the New York auctioneer holds its sales of Chinese paintings and contemporary art just as China’s two largest houses, Poly Auction and China Guardian, host their own Chinese art, antiques and jewelry sales. Tiancheng International, a Hong Kong firm that is the smallest of the four, also holds a sale, featuring Chinese paintings, that day. (Christie’s, another major auctioneer, holds spring sales next month in Hong Kong.)

The highest-priced category for Sotheby’s this season is Chinese antiques and ceramics, which goes on the block Monday. The top item for sale is a red bowl with a floral design from the Qing dynasty. Only 11 centimeters in diameter, it is expected to sell for as much as $9 million.

“I’m cautiously optimistic,” said Kevin Ching, chief executive at Sotheby’s Asia. Collectors in China have told him they expect a better spring sale compared with last year, he said, now that the Chinese political leadership transition has settled. “That uncertainty is gone.”

Still, politics are weighing on the appetite for luxury spending. Because Chinese government authorities continue to crack down on conspicuous displays of wealth by officials, splurges on items like watches, jewelry and other pricey products have become less frequent among China’s rich, and many luxury brands are reporting a slowdown in growth.

Market confidence has yet to return to all categories. “Series 1, No. 4,” Fang Lijun’s brooding portrait of two men walking at the sea, is expected to lead Sotheby’s contemporary art sale. But its $1.9 million estimate is far lower than the April 2011 standout: Zhang Xiaogang’s “Bloodline—Big Family,” which sold for more than $7 million, exceeding estimates. “There are few big-ticket paintings at this sale,” said Jehan Chu, an art adviser based in Hong Kong focused on contemporary Chinese art.

Meanwhile, the mainland Chinese auction houses, which just entered the Hong Kong market last fall, continue to their push into the former British colony.

Poly, the largest auction house in China and third-largest in the world, is expanding fast, doubling the number of items it is selling from its inaugural Hong Kong sale. Alex Chang, its managing director for Hong Kong, said the company is poised to gain market share during the weekend two-day sale, which is estimated to bring in some $50 million. “Healthy competition is good,” he said.

Poly’s most expensive item is “Mao’s Song Poem of Snow, No. 2” by contemporary painter Zeng Fanzhi. The painting, which depicts Chinese communist leader Mao Zedong and includes a transcription of his poem “Ode to Snow,” is estimated to go as high as $2.8 million. Nationalist works have sold well for Poly in the past: In December, the state-owned company auctioned off a patriotic work called “Ode to my Country” by 20th-century ink painter Qi Baishi for $11.6 million at a sale in Beijing.

China Guardian, China’s second-largest auctioneer, expects to sell about $25 million this weekend. Though its sales fell by 54% last year, its chairman, Yannan Wang, said it hopes to get back on track by promoting its strongest categories, such as antique furniture, a sector she feels that Guardian is in the “leader position,” and contemporary ink paintings.

Tiancheng, which held its first sale in 2011, thinks it can find its own audience during the busy weekend by focusing on contemporary Chinese works with traditional aesthetics, a field of art that it believes appeals to new and younger collectors.

Meiling Lee, director at Tiancheng, points to Yang Yongliang’s “A Bowl of Taipei” as an example. Mr. Yang, a young artist who works in Shanghai, digitally reworked photos of skyscrapers and cityscapes to create composite images that resemble idealized, rural Chinese landscapes.

Ms. Lee estimates it to fetch $23,000. “We’re trying to come up with more thematic and curated sales to find new buyers,” she said, adding that Tiancheng’s works are often more “attractively priced” than the other firms.

Despite the increased rivalry, market leader Sotheby’s said it doesn’t see the other auction houses as a threat. “There is no competition as such,” said Mr. Ching. “The only thing [the Chinese houses] do well in is Chinese paintings, and they’re still miles behind us in other categories” such as antiques and jewelry, he added.

Ms. Wang at Guardian agreed that Chinese paintings are her firm’s strongest area, making up almost 60% of overall sales, but said that its origins allow it to offer items at its mainland sales that the international firms typically ignore, such as coins and historical letters.

“We’re trying to be one of the international houses, but our whole company is specialized in Chinese art and history,” she said. “We’re rooted there.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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