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Christie’s Brings Picasso, Patek Philippe to China Debut

Patek Philippe
An 18 carat white gold Patek Philippe wristwatch. The one-of-a-kind prototype, made in 2007, is estimated between $100,000 and $150,000. Source: 2013 Christie's Images Ltd. via Bloomberg

Christie’s International will hold its first auction in mainland China tomorrow, featuring Patek Philippe watches, a Picasso and bottles of Chateau Latour in the newly created Shanghai Free Trade Zone.

The sale, the first of its kind for a foreign auction house in China, doesn’t include porcelains, paintings or ceramics, as foreign companies are barred from dealing in cultural relics.

As a result, the inaugural sale carries a modest $16 million pre-sale estimate, a fraction of the $418 million Christie’s raised in Hong Kong in May, where cultural relics accounted for the lion’s share of sales.

“We are happy to operate here without the freedom to sell those cultural relics,” Christie’s chief executive Steven Murphy told journalists in Shanghai. “The fact that it is not open now is not preventing us from moving ahead, because there is a great deal of art to sell and people to be in touch with.”

Christie’s is also holding private sales of modern European art, works by Andy Warhol and jewelry, as well as staging art forums in a three-day extravaganza that’s as much about building relationships and branding as it is about selling.

French billionaire Francois Pinault, chairman and chief executive of Christie’s owner Kering, attended the igniting today of a gunpowder work by artist Cai Guo-Qiang that will be auctioned tomorrow to raise funds for the Quanzhou Museum of Contemporary Art. Pinault donated two bronze animal heads worth about $40 million to China in April.

Mixed Bag

Tomorrow’s Christie’s evening sale contains just 42 lots, combining wine, jewelry, contemporary Chinese art, contemporary western art and watches, which normally exist as distinct categories in London, New York or Hong Kong.

“They have to sell something, so they put together a loose group of things,” said James Hennessy, a Hong Kong-based dealer. “They have to get in there and start doing something on the promise and hope they will be able to sell Chinese antiques eventually.”

By operating inside the zone, Christie’s can import without having to pay value-added tax, luxury tax and customs.

Objects purchased inside the free trade zone and taken to other parts of China will be treated as imports and subject to the same taxes and customs levies.

Sotheby’s will be staging its first mainland auction in Beijing in December, selling 20th century Chinese art and contemporary Asian art as well as holding selling exhibitions of Western impressionist and modern art.

Cultural Relics

Despite what Sotheby’s Asia chief executive officer Kevin Ching calls the “grossly unfair” cultural relics ban it’s essential to enter the market, he says.

He notes that Chinese participation in the New York-based auction house’s Hong Kong sales has risen from about 5 percent in 2004 to about 40 percent now.

“With that surge in volume of business from China I decided it was time to go into China and not wait for the law to change,” he said.

In September 2012 Sotheby’s announced it was investing $1.2 million to take an 80 percent stake in a joint-venture auction company with state-owned Beijing Gehua Cultural Development Group.

Ching expects buyers to include Chinese with homes abroad who will export their purchases and speculators who will store them in the free trade zone before reselling them at auction.

As Sotheby’s and Christie’s make their initial forays into China, mainland Chinese auction houses have been expanding abroad.

Beijing-based Poly International Auction Co. and China Guardian Auctions Co. both began holding sales in Hong Kong last year, where the absence of import duties or trade restrictions has made the free port one of the world’s most important auction hubs.

“A lot of the big players want to come to Hong Kong because it’s a more level playing field, the market here is more transparent, and the bidders in the room are more diverse,” says Hennessy. “The mainland has a long way to go to catch up to Hong Kong.”

(Frederik Balfour is a reporter-at-large for Muse, the arts and leisure section of Bloomberg News. Opinions expressed are his own.)

Muse highlights include Martin Gayford on art and Manuela Hoelterhoff on opera.

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