A hundred years ago, the American poet Ezra Pound told a generation of western artists to Make it new, an injunction he took from a saying of Tching Tang (1766-1753 BCE), the first king of China’s Shang Dynasty. Pound understood this maxim to be meaning that the artist has a duty to constantly renew oneself, and his tagline inspired a generation of modern artists and writers to push themselves to be more original.
Today, this kind of cross-pollination should have resumed. After all, China is now one of the largest art markets in the world; the third- and fourth-largest art auction houses are Chinese, and Chinese collectors are a familiar sight in the highest-profile art fairs. But a variety of market dynamics and economic forces may be making this latest cultural exchange more one-sided than might be expected, as China buys more fine art from the West than it sells.
In this four-part series, we look first at the rise and evolution of China’s art market over the past four decades; next, at ways in which Chinese collectors may now be reinforcing market dynamics that reduce sales for Western and Chinese artists; and third at possible strategies to pursue to change this dynamic. To conclude, we talk to Tim Schneider, a leading art economics writer, about the challenges facing small galleries and less established artists in China and the West, and how they can compete in today’s winner-take-all global art economy.
Part 1. The rise of China’s new art market
People have been making art in China for at least 4000 years, but as with so many things in China, the modern era of China’s art market dates from the early 1980s, when the government opened the economy to private enterprise and the country began to recover from the ravages of the Cultural Revolution (1966-1976), a period when most art, new and old, was derided as decadent and counter-revolutionary.
Since then, China’s art market has mirrored the growth of many other parts of the economy, as China evolved over four decades from being an exporter of low-value knock-offs to a creator of more valuable originals, to becoming a major importer of art.
It takes a village
The story of two villages near the city of Shenzen, in southeast China illustrates this dynamic very clearly.
In the 1990s, a group of artists in Dafen Village found that there was strong global demand for copies of Western masterpieces by da Vinci, Rembrandt, Van Gogh, and other major artists. By 2006, thousands of artists had moved to the town, and at one point, some analysts claimed that as many as 60% of the world’s oil paintings were produced in Dafen workshops.
Unlike the high-end art world, which focuses exclusively on the 1%, Dafen’s 1200 galleries produce copies intended for the walls of the 99%. Four years ago, in 2015, as many as 8000 painters toiled in Dafen, some organized in assembly lines.
Today, those numbers have reportedly declined, as more efficient techniques have evolved. Photo reproductions touched up with oils have taken the place of “original” copies, reducing the need for armies of painters to make “real” copies. At the same time, the market for higher-end copies and originals is growing, and now represents 20-30% of Dafen’s output, according to a Harvard case study.
Almost next door, in Wutong Art Village, another kind of copying began at around the same time, as artists transformed an ancient village into a Western-style arts district. The online news magazine Quartzdismisses Wutong and similar art villages as “a branding strategy to draw domestic tourism and encourage the consumption of art objects, leisure goods, and coffee.”
Such villages may be easy to belittle as centers of creative production, but they do often succeed as a macroeconomic proposition. Using art as what economists call a positive externality – a nice thing that doesn’t generate much money in itself but enriches the things around it, like a city park – has historically generated a lot of value. In Western arts districts from London’s SoHo to New York’s Williamsburg, artists have often served as the shock troops of gentrification. As government planners no doubt understood, under certain conditions, simply adding a little bohemian cachet to a rundown neighborhood or vacant factory district often translates into a stronger local economy – and in this case, a new destination for Chinese tourists looking for picturesque places to visit.
Keeping up with the collectors
Chinese art collection on the grand scale began in the 1980s, when the government began to give people back some of the work that had been confiscated from their families during the Cultural Revolution. This new supply helped spark the domestic market for art and antiques, building an appetite that eventually could be satisfied only by looking abroad for antique work owned by foreign collectors.
“The Mainland Chinese collectors and dealers started coming into the market around the early 2000s,” recalls Clare Chu, owner of the Asian Art Studio, a Los Angeles-based firm that specializes in antique jade, snuff bottles, and scholars’ objects, such as elaborately carved brush pots and ink stones.
The Chinese dealers have been quite daring, Chu says. “As soon as they get their visas, they get on the plane, they don’t care whether they speak the language or not, they just go around looking for their own heritage to buy back, and they go everywhere, they literally go everywhere – down to South America, Brazil, Argentina.”
In 2012, a Belgian dealer of Chinese art told Chu that someone had walked in and offered to buy the entire gallery. Online too, the competition among buyers became much tougher. Earlier, she said, “if you were trying to buy anything online, you had a chance of finding something special, a sleeper that nobody else had found, but by that time, every tiny auction, anywhere in the world, was covered by somebody.”
But chutzpah has its limits. In the beginning, there could be awkward moments as Chinese art-hunters learned new customs. In China, winning bidders often decide not to pay in the end – in 2017, only 49% of the total sales value of auctions were paid, according to a Chinese Association of Auctioneers report – and it seems to have taken Chinese buyers a while to learn that the custom is different in the West: Chu remembered attending Western auctions where Chinese bidders who had bought work at the major auction houses without realizing that placing the winning bid meant not that they had the option to buy a piece but that they actually owned it – and had to pay up.
Other lessons have been less painful. Mainland Chinese collectors have learned a lot from the auction houses, taking cues in particular from the catalogs. “The Chinese Mainland collectors are very influenced by what is on the front cover, what are the major pieces, what their friends are buying,” says Chu.
In addition, exhibitions also taught would-be collectors more about traditional art, which many people had not seen. Interest in such objects could be intense: a joint show of traditional Chinese art and objects that Chu and a number of other Western dealers held in Shenzhen five years ago attracted thousands – with crowds so excited to learn more about their own culture that organizers had to call in the army to keep the lines in order.
As a result, many collectors have become much more sophisticated in a very short time. With jade, for instance, they are now developing a more expert eye, according to Chu. Once many collectors just looked for an even color, when in fact certain very precious pieces are not evenly colored: some jade carved for the imperial court in the 18thcentury had flaws in it, because the emperor had ordered his carvers to use all the jade they were given and incorporate any flaws or unevenly colored bits into their designs. Now that this is understood, this old jade have become very popular among Chinese collectors, according to Chu, while “three years ago, they wouldn’t look at it.”
All this buying and bidding by savvy Chinese collectors has scared Westerners out of the market. “If you walk into Sotheby’s New York, and into a major Chinese auction during Asian Week, you’ll find very, very few Western people in there,” Chu says. “The Western collectors have been priced out of the market for the most part, and the Western dealers basically are all getting older and starting to retire. And because of the level that Chinese art is at now, it’s very hard for young dealers to come in unless they’re part of a family business.”
However, there has been one significant headwind: a restriction on removing capital from the country put in place in 2012, which has pushed the cost of Chinese collectibles down about 12%, according to Chu.
This reduced participation by smaller Chinese collectors, but not larger collectors, thanks to a special loophole: collectors buying art for a museum could still take money out of the country. Seven years later, China and Hong Kong now have more than 1500 private museums. Some are small and analysts predict they won’t last, but others seem likely to last for some time: Sir Li Ka-shing, the Hong Kong billionaire, recently donated nearly $400 million to launch a new museum of traditional Buddhist art in Hong Kong.
Big, Bigger, Biggest?
This should be the best of times for the Chinese art world, and in one sense, it is: China is now the second-largest art market on the planet. The top three markets – the US, the UK, and China – account for 83% of the world sales volume, with the US bringing in 42% of that $63 billion total, followed by China at 21% and the UK at 20%, according to 2017 Arts Economics numbers.
Beyond while the Chinese art market as a whole keeps getting bigger, the market for traditional art has lost ground. Worldwide, sales of traditional Chinese art have dropped substantially over the past eight years, to $7.1 billion in 2017 from $10 billion in 2011, while sales of contemporary art, particularly Western art, have climbed. Christie’s, for instance, reported that in the first half of 2018, 60% of its purchases by Asian buyers were for non-Asian pieces (including luxury items), compared to 48% for the first half of 2017.
As we shall see in Part 2, this concentration of market power in Western galleries is not actually leveling the playing field anywhere but the auction room: the sources of demand may be global now, but a lot of contemporary art is still bought and sold — and often even made — in New York and London.
Next: Part 2. Why Chinese money hasn’t reshaped the global art market