Sotheby’s has signed a 10-year joint-venture agreement to form the first international auction house in China, the company said.
Sotheby’s will be investing $1.2 million to take an 80 percent stake in the venture with state-owned Beijing Gehua Cultural Development Group, pending government approval, the New York-based company said today in an e-mailed news release.
Until now, international auction houses have not been allowed to hold sales inside China. The venture comes at a time when Beijing is moving to clean up the auction industry that is fraught with fakes, smuggling and non-payment among its more than 1,000 auction houses.
“China and its growing class of collectors has been the single most attractive growth market for the company,” Kevin Ching, the chief executive of Sotheby’s Asia, said in the release.
The joint venture, called Sotheby’s (Beijing) Auction Co. Ltd., plans to take advantage of the new Tianzhu Free Trade Zone in Beijing being developed by Gehua.
Sotheby’s may also hold sales outside the free-trade zone and is free to partner with other entities, according to a filing with the U.S. Securities and Exchange Commission.
Gehua has also partnered with Swiss logistics group Euroasia Investment SA to build a $100 million tax-free storage facility next to Beijing Capital International Airport to tap the booming Chinese art market.
Christie’s International has licensed its trademark to Beijing-based auction house Forever. The London-based auction house does not hold sales in China itself.
Last year, China overtook the U.S. to become the world’s largest art and antiques market, said a report published by the Netherlands-based European Fine Art Foundation.
Auctions in mainland China, Hong Kong, Macau and Taiwan raised 9.8 billion euros ($12 billion) in 2011, said the report.
In a separate development, China Guardian Auctions Co. Ltd., the country’s oldest auction house, will be holding its first sales in Hong Kong.
The company’s inaugural auction at the Mandarin Oriental Hong Kong on Oct. 7 will include more than 300 Chinese ink paintings and 40 pieces of classical furniture. The 1922 work “Album of Mountains and Rivers” by Qi Baishi is estimated at HK$16 million ($2 million) to HK$26 million.
Government-owned Guardian (founded 1993) and Poly International are China’s two biggest auction houses, according a report published by the European Art Foundation in March.
With demand from Chinese collectors contracting in 2012, both houses are keen to attract wealthy international clients. China Guardian opened an office in New York in December 2011 and has said it has plans to establish a similar presence in London.
(Frederik Balfour is a reporter-at-large for Muse, the arts and leisure section of Bloomberg News. Scott Reyburn writes about the art market for Muse. Opinions expressed are their own.)