The Chinese Antiques Market

by Mark Allred

Posted 8/06/2015 update 1/1/2018

It is obvious that because China is the source of Chinese antiques, the American antiques market is influenced by what the Chinese domestic market does. More than that, China is an emerging economic political power demanding a world focus. At the same time, their art movement and antique treasures have found new appreciation from collectors in Europe and America as well as the new wealthy middle class in China now able to afford cultural luxuries once forbidden. [1] 

Some four decades after the Cultural Revolution, when many of the country’s centuries-old treasures were defaced or destroyed as a result of Mao’s command to eradicate “the four olds” — old ideas, old culture, old customs and old habits — China has reversed its attitude toward antiques. Ming dynasty porcelain vases, 19th-century hardwood furniture and even early 20th-century calligraphy ink pots have become popular status symbols for an emerging middle-class eager to display its new wealth and cultural knowledge. [3]    The antiques market has become so hot, in fact, that it has given rise to a new category of Chinese must-see TV. In recent years, “Collection World” and a dozen other similar shows (with names like “Treasure Appraisal” and “Art Collector”) have been luring both serious collectors and armchair enthusiasts, offering information on collecting trends and appraisal techniques, encouraging a new wave of treasure hunting. [3]  The art and antiques market in China has been by far the strongest growing market worldwide over the last 10 years. This emergence on the global art scene from the mid-2000s has fundamentally altered the structure of the international art trade, and it has been the most important of all the newer art markets, both in terms of the size of its domestic sales and the impact of its buyers globally. [2]    These changes were prompted by the fact that the Chinese art and antiques market are so intricately interwoven.

Zhou Yajun, 38, a long-distance truck driver and collector from Hebei Province, near Beijing, said he watched weekly antiques shows such as “Collection World”, and began collecting antiques four years ago. His hobby quickly became all-consuming after he had spent the equivalent of $12,000 feeding his addiction, a hefty sum for a man who earns less than $18,000 a year.  Distinguishing real Chinese relics from their latter-day replicas can be a daunting task, especially since forgers have access to the same televised information that collectors do. “I used to go to the countryside to buy antiques,” Mr. Zhou said. “But lately I’ve found the peasants are buying fakes and making up a story to pass the pieces off as authentic.” [3]    The situation is not limited to China but has embraced the export market into the U.S. and Europe.  It would not be too difficult to declare one century at customs and another century on the price tag after reaching its final destination.  John Fairman, business owner of Seattle's Honeychurch Antiques, offers an even more alarming comment:  "Unfortunately, 95 percent of Chinese 'antiques' being offered on the market today are fake or significantly altered."

Excessive prices achieved during the boom years were seen as preventing the buyer base from broadening. Even some more established collectors stopped buying during 2010 and 2011(the pivotal years for the Chinese art market), staying out of the market until prices settled down and returned to more realistic values. With these collectors out of the market, it rapidly became dominated by speculative buyers, many of whom hoped to flip art or antiques quickly amidst the inexorable growth in auction prices. On the selling side, also keen to capitalize on the booming market, auction houses flooded the market with a volume of lots that were impossible to absorb with any longevity. Many collectors and dealers complained that there were simply too many works for sale of too low quality, estimates were too high, and that there appeared to be little systematic or scientific approach to authentication and valuation. [2] 

Chinese Art and Antiques have played an important role in the global art market for many years, with a strong base of both private and institutional collectors. However, China first emerged as an important marketplace for domestic sales in the early years of this century, when it began a path of rapid growth, fueled by a highly supplied auction sector and the pent-up demand of an expanding segment of wealthy Chinese collectors and investors. The period from 2008 through 2011 saw exceptional growth in sales in the dominant auction sector in mainland China, with aggregate values increasing by over 500%. This sort of bubble boom in sales, which was made all the more evident, as many other national art markets duly languished in the fallout from the global financial crisis, led to China surpassing the United States as the leading art and antiques market worldwide. [2]    After several years of superficial unstoppable growth, the market finally cooled over 2012.  As lower prices and decelerating volumes forced a sharp contraction in sales, the Chinese market slipped back to second place in the global ranks.  Keep in mind that these figures collected do not separate the authentic antiques from the copies. With sheer numbers, China could surpass any nation in just what it is able to produce for export.  Recovery began toward the end of 2013 with sales in all sectors showing year-on-year gains. However, the recovery was tempered by more cautious buying and a moderation in prices at auction, which biased experts are convinced has marked a new phase of maturity in the Chinese market. The wealth, supply, and economic dynamics all optimistically pointed to a solid outlook for long-term growth. This overly positive path was predicted to be filled with many short-term challenges as the Chinese market continues to address issues in its regulatory framework, infrastructure, and other problems. [2]

By the end of 2014 China was again recognized as the world’s largest antiques market, relegating America into second place once again.  The new super-rich Chinese elite had the money and the hunger to dominate the market – and they only seemed to be getting stronger. China has earned the reputation of the copy capital of the world for art and antiques so the supply will always be able to meet the demand if the buyers do not know the difference between authentic and copy or they do not care because the price is right.  Perhaps the most surprising aspect of the Chinese boom in antiques is its power to remain flexible. This buoyancy was not just restricted to large Asian auction houses – it seems that salerooms all across the UK were also breaking their own records with the prices achieved for Asian antiques. [5]   Previous to and during this time period the U.S. market became temporarily saturated with mid-to-lower end Asian antiques resulting in auction houses refusing to consign specific Chinese and Japanese items.

Another trend has appeared. There is a slow, gradual merger between the Western investors buying into the Chinese market, and the younger Chinese buying into the European art market. [5] The desirability of certain Chinese periods began changing. Where once the buzz was for the Ming Dynasty and pieces from the 15th or 16th century, it is now 18th and 19th century pieces which are the most highly sought after. [5]   If the definition of “highly sought after” is based on sales, it could also indicate that the popularity of those pieces is because they are legal to export or at least look like what is legal.  What customs worker could tell the difference between antiques from 1900 and 1800 or 1750?

LAWS Governing Chinese Antiques                                                                         

There are actually a great number of laws in China that prohibit the exportation of Chinese antiques. Anything made before 1949 is considered a "cultural relic" and without a government seal cannot be taken out of the country.

 

As of June 2009, it is illegal for anyone in the People's Republic of China and the Taiwan Republic of China to export a Chinese antique that dates earlier than the end of the Qing dynasty (1644 - 1912). [7]

This means that if a foreign buyer finds an antique dealer located in China who’s selling items dating before 1911, the seller is either breaking the law, or deceiving the buyer if the buyer wants it shipped to another country.

In China the penalties for smuggling "cultural relics" can be severe; lengthy imprisonment, and sometimes even execution. This is well documented. In Taiwan, anything 100 years or older cannot be legally exported.  President Bush signed an executive order just before he left office actually making it illegal to import an item that is more than 250 years old in to the U.S. from China. Legal antiques from China (those dating after 1911) will have a red wax inspection seal on them. This seal is called a "jianding", and if an item lacks this seal, it has not legally been removed from China. Note that this only applies to items being shipped from China directly, as Western dealers may have removed the seals after receiving the items themselves.

Some common semi-antique items from the early 20th c. can be legally exported from China, and bear a red wax inspection seal. They can also be found on genuine antique items sold at official government "Friendship Stores".

Tourists can also request inspection of items that they find locally, and if compliant, Chinese Customs will affix a seal to them.  All the seal means is that the piece was inspected by some Chinese government official and was found to be compliant with the antiquities exportation laws. [6]    The seal does not guarantee the item to be old, rare, or valuable. It is possible to obtain a seal for a brand-new reproduction. Also consider the fact that these seals are being placed on items by workers in China that are NOT authenticators or antiques specialists. Think of it more equivalent to U. S. airport security handling antiques.

As items enter the market on different paths, it is difficult to separate auction sales figures between buyers that resell within China and those purchasing locally for the purpose of export. In markets such as the US and United Kingdom, private sales through the gallery sector dominate the market, accounting for the majority of sales. [2]    In the West, the impact of auction houses on the overall Asian market is not nearly as significant because the network of galleries, experts, and consultants is very well established outside the auction sector. [2]

The importance of mainland China as a center for domestic sales of art may be a fairly new phenomenon, but Chinese Art and Antiques have played a significant role in the global art market for many years.  Important Chinese artworks* have been featured in major museum collections around the world, and there are several generations of key private collectors. (*Artworks is defined as porcelain, jade carving, furniture, textiles, metalware, carvings, etc.)

Prices and Sales

Since 2013, international galleries and auction houses have featured Chinese artworks, with 280 major auction houses outside mainland China. Total sales from these houses reached a substantial US$2.3 billion in 2013 (up 42% year-on-year in US dollars), with the Hong Kong auctions once again consolidating the position as the center for the market (with a 70% share of international sales). Christie's and Sotheby's dominate in the external market, accounting for a 68% share of value in 2013 (75% of which is from sales in Hong Kong). The entire global market for Chinese artworks therefore totaled US$8.5 billion in 2013, some 28% of the value of total sales of art and antiques auctioned around the world, with mainland China accounting for 70% of the total. [2]

Despite the fact that the highest-priced works tend to dominate media headlines, the majority of lots sold at auction in China, were at lower end prices. In 2013, 95% of all lots sold at auction in mainland China were priced at less than CN¥500,000 (around US$77,500), while works priced at over CN¥10 million (around US$1.5 million) made up less than 1% of transactions.  Since the contraction of the global market in 2009, the most persistent feature shared by art sales worldwide, is the high end selling higher and accounting for an increasing imbalanced share of the market, while the middle to lower segments struggle because of lower demand that is more often miscalculated or dismissed by the Chinese. [2] 

At the height of the Chinese boom in 2011, including both the mainland market and Hong Kong, 23 works sold for over CN¥100 million (around US$15.5 million). This dropped to just five in 2012, and only four in 2013, which indicates a trend toward more moderate pricing at the top end, which is contrary to the seemingly unstoppable price escalations at high-end auctions in New York, where in excess of 50 artworks sold above US$10 million in 2013. The differences are also evident when looking at average prices. Considering only sales of Chinese artworks, average prices at auction are lower in China in all sectors than they are in international markets. Hong Kong and the UK had the highest averages in 2013, but France and the US were also higher than mainland China across the board. [2]

A weakness in the Chinese antiques and artworks market, seemingly overlooked in the past, but recognized now is the limited supply of top-quality works coming to the auction market. It is interesting to note that while this sector of top-quality works sold is smaller in price and volume in mainland China, it is the largest sector in the external market for Chinese artworks, accounting for 72% of transactions and 47% of sales values. The highest price paid at auction worldwide in 2013 was over US$30 million for a Chinese artwork, a gilt-bronze figure of a seated Shakyamuni Buddha, sold at Sotheby's, Hong Kong. [2]

While sales improved after 2013, buyer confidence has been slow to return. Buyers have become more vigilant regarding provenance, along with a lower tolerance for what was perceived to be over-priced, low-quality works. Part of this caution undoubtedly relates to the persistence of fakes and forgeries appearing on the market. [2]    Many experts feel that the market became a victim of its own success, with the rapidly escalating prices in 2012 giving strong incentives to flood the market with whatever would sell, authentic or otherwise. Modern technologies and a high level of skill in reproductions have enabled works to be copied with far greater accuracy, making it more difficult, even for experts, to identify counterfeits. [2]    In 2012, Chinese government officials closed a private museum because they suspected that all or most of the 40,000 antiquities were fake. [4] 

The market for Chinese artworks sold outside of China performed strongly in 2013, and more auction houses than ever around the world are continuously selling artworks in this category. These houses have been eager to capitalize on the rising purchasing power of Chinese buyers, alongside meeting the demands of the more stable base of Western collectors in the sector. As more of the most highly valuable artworks are repatriated to China, Western collectors in the sector have paid escalating prices for a dwindling supply in international circulation, which also contributes to the boost in prices for the top end pieces sold in the external market. [2]

Auction watchers as well as market experts have been less and less surprised at high prices garnered through sales of certain Chinese fine art, furniture and antiquities. In some cases, particularly on the West Coast, where proximity to the Pacific Rim permits easier transportation, Chinese buyers have driven prices to multiples of hundreds of times auction estimates. Bay Area auctions especially have seen prices spike for certain furniture, some only as old as the late 20th century. Market experts were asking if this was another bubble in a market known for bubbles, or a continuing trend. [4]    “Continuing” and “trend” may be a good example of an oxymoron. Certainly, other recent examples in the market such as the current lack of interest in American hardwood furniture, the refusal of West Coast auction houses to consign any more Japanese Tansu chests, or the high prices and recent demand for sterling silver items demonstrate how cyclical popular demand can be. Obviously, buyers and sellers alike are not yet fully aware of the ramifications of the 2015 Chinese Stock Market meltdown.

Three years later the bubble can be identified, as markets for Chinese art and antiques become moderated from those one-time high prices. Fakes and frauds are still taking a toll as buyers become more aware that authentic high-quality artworks and antiques are a much less speculative investment. Awareness is always a good thing.

References

1. Chinese Style by Sunamita Lim, Copyright  2006  https://books.google.com/books?id=BNajgLQLMzcC&pg=PA49&lpg=PA49&dq=Antique+Chinese+Furniture+Market&source=bl&ots=RBsKbQxf4q&sig=gkN2cWgH-Cmsv8w7hNOSbHj-7dA&hl=en&sa=X&ved=0CEcQ6AEwBzgUahUKEwj_m8Dr1pfHAhUHLogKHfccAVs#v=onepage&q&f=false  pg49                          

2. Chinese Art Market Rebounds to $8.5 Billion in 2013, by Clare McAndrew, Wednesday, September 17, 2014 Artnet https://news.artnet.com/market/chinese-art-market-rebounds-to-85-billion-in-2013-83531
3.  Reactionaries? Make That ‘Collectors’ by Dan Levin. Feb. 3, 2010 The New York Times, Home & Garden
4.  Antiques & Collectibles: The hot U.S. market for antique Chinese furniture, by Joyce Newman 9:17 p.m. PDT March 21, 2014 Reno Gazette-Journal http://www.rgj.com/story/life/2014/03/22/antiques-collectibles-the-hot-us-market-for-antique-chinese-furniture/6715909/
5. Buoyant Chinese dominate the art world, by George Johnson. 2:33PM BST 30 Apr 2014 © Copyright of Telegraph Media Group Limited 2015.  http://www.telegraph.co.uk/sponsored/culture/barnebys-auctions/10798774/Buoyant-Chinese-dominate-the-art-world.html
6. Your Guide to Buying Chinese Antiques, http://www.ebay.com/gds/Your-Guide-to-Buying-Chinese-Antiques-/10000000177627925/g.html
7. Hearn, Maxwell K. "The Qing Dynasty (1644–1911): Painting". In Heilbrunn Timeline of Art History. New York: The Metropolitan Museum of Art, 2000–. http://www.metmuseum.org/toah/hd/qing_1/hd_qing_1.htm (October 2003) Note: Most Recent Chinese Dynasty - Qing Dynasty (1644 - 1912) The Qing dynasty, officially the Great Qing, also called the Empire of the Great Qing, or the Manchu dynasty, was the last ruling imperial dynasty of China. In 1644, the Manchus, a semi-nomadic people from northeast of the Great Wall, conquered the crumbling Ming state and established their own Qing (or Pure) dynasty, which lasted nearly 300 years. During the first half of this period, the Manchus extended their rule over a vast empire that grew to encompass new territories in Central Asia, Tibet, and Siberia. The Manchus also established their dominion over Chinese multi-cultural traditions as an important means of demonstrating their legitimacy as Confucian-style rulers and formed the territorial base for the modern Chinese state. It is succeeded by what we know today as the Republic of China.

 

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