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People's Daily Online>>Opinion

The art of making money

By Tania Lee (China Daily)

13:15, January 27, 2012

Where to invest or stash that extra cash. Tania Lee reports.

It's a good time to be a contemporary artist in China. Rapid changes in society, driven by a thriving economy, have fueled creativity and strong high-end demand. As a result, China is now home to almost half of the world's 100 top-earning contemporary artists.

Chen Yifei is one of them. In May, his large oil painting Wind of Mountain Village went under the hammer for almost 69 million yuan ($11 million). It set a record for Beijing at the time, according to Artprice, a French company that tracks global deals. This, and other purchases, have boosted China, in economic terms, to the top of the fine-art marketplace. But should this feat be applauded or rather a cause for concern? Valuating the contemporary Chinese art market purely by auction sales would be like judging a book by its cover. The art scene certainly lies deeper than that. In fact, much of the business is conducted though private, underground dealers or galleries, making it difficult to determine the real value of an art work. Given how quickly the market has risen, could it all come undone after a sudden price check?

Real price questions

The Chinese contemporary art market is still very thin. Don Thompson, professor of marketing and economics in the MBA program at the University of Toronto, recently wrote in The Art Economist that a significant chunk of the top of the nation's contemporary art works has been purchased by a handful of wealthy mainlanders (including Zhang Rui and his wife (see profile right). They are known as "super collectors" and are subject to follow-the-leader style behavior. If these families were to find a new passion, would it affect market prices?

Western demand for contemporary Chinese art is small, but growing. A strong indication that the market is expanding beyond borders is the structural choices made by Chinese auction operators. China Guardian Auction Co Ltd, the second-biggest auctioneer in terms of revenue last financial year for instance, opened its first overseas office in New York this month. "We are taking the American market very seriously," said Li Yanfeng, the auctioneer's manager of contemporary art. Since Chinese art collectors are more driven by finance and fashion, could the emergence of more Western galleries featuring contemporary Chinese art stabilize the market?

The White Rabbit Gallery in Sydney showcases one of the world's largest private collections of contemporary Chinese art. Judith Neilson, the wife of one of Australia's wealthiest men, fund manager Kerr Neilson, runs the nonprofit organization and said her collection includes about 600 works by more than 250 artists. Asked if she believed Chinese contemporary art is undervalued, she said, "We don't believe so. There is a huge interest in contemporary Chinese art in Australia. Even in Sydney we are seeing an increase in the number of commercial galleries showing modern Chinese. The market is still quite buoyant and prices remain high."

Another factor to consider is that several Chinese banks have art-investment funds. China Mingsheng Banking Corp Ltd is said to have been the first to start seriously investing in Chinese contemporary art. In April it bought out the entire collection of Huang Yong Ping's Leviathanation - an installation of a giant fish sticking out of a train - from Tang Contemporary Art Gallery in Beijing's 798 Da Hanzi Art District. Purchases by banks represent a high percentage of the contemporary Chinese market than the art funds in any Western country, as indicated by Thompson. A run of redemptions would force the sale of a lot of works.

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