Dec. 2 (Bloomberg) -- Sotheby’s first commercial auction in mainland China raised $37 million and set a record for Chinese-French artist Zao Wou-Ki in Beijing yesterday.
The 1958 oil-on-canvas painting titled “Abstraction” by Zao sold to Zhang Xiaojun, a collector from Shanxi province in the room, for 89.68 million yuan ($14.7 million), smashing the previous auction record of $11 million set on Oct. 5 at Sotheby’s Hong Kong, according to the auction house.
“This shows that there are strong buyers on the mainland,” said Pascal de Sarthe, a Hong Kong-based dealer. “Five years ago, they wouldn’t have been buying at the top end.”
China is the fastest-growing source of clients for international auction houses as increasing affluence is driving demand for art and collectibles as alternative investments.
Sotheby’s had estimated the auction would raise about $20.2 million, excluding buyer’s premium, an 18 percent commission added to the hammer price.
The auction was held in conjunction with three private sales of western old masters, modern paintings, furniture and jewelry offered by the New York-based auction house, with an estimated combined value of $212 million.
“You get this explosion of wealth,” said David Norman, head of the impressionist and modern art department at Sotheby’s New York. “They seem not to really have fear or reticence to chase paintings to record prices.”
A Chinese buyer also set an auction record for a case of wine on Nov. 23 when he paid $474,000 for 12 bottles of Romanee-Conti 1978 at Sotheby’s in Hong Kong.
On Nov. 5, China’s richest man, Wang Jianlin, paid $28.2 million for a Picasso painting at Christie’s in New York.
While Chinese buyers account for about half of all international auction sales in Hong Kong, Sotheby’s and Christie’s have only begun selling inside China this year.
They are taking advantage of new regulations that allow them to sell art, wine and collectibles within virtual free-trade zones by treating imported works brought in temporarily as bonded goods, thereby allowing buyers to avoid paying customs duty of 6 percent and value added tax of 17 percent on art. Wine and jewelry are subject to consumption tax as well.
The most lucrative part of the Chinese art and antiques market valued at 10.6 billion euros ($14.4 billion) in 2012 by the European Fine Art Foundation is off-limits to foreign auction houses under a law to protect cultural relics.
Bidding for Zao’s work, sold by the Art Institute of Chicago, which acquired it in 1961, attracted fierce bidding from eight bidders in the room and on the telephone during a battle lasting almost five minutes. Its high pre-sale estimate, excluding fees, was 45 million yuan.
Beijing-born Zao moved to Paris in 1948 where he immersed himself in western painting techniques. By the mid-1950s he had developed his own distinctive style blending traditional Chinese and western elements to produce his abstract works, of which “Abstraction” is considered one of the finest examples, said de Sarthe.
Highlights of the items on offer in the private sales included a Rembrandt valued at 347 million yuan, a 48.5 million yuan Picasso oil painting and a bronze-cast Rodin for 10.23 million yuan. None of the three sold over the weekend.
Chinese buyers will have a second chance to purchase them when the unsold items will be offered as part of a much larger private sale in Hong Kong from Jan. 6 to Jan. 16.
Unlike auctions, private sales have fixed prices, do not charge buyers fees and results are not released. At least eight lots, including two paintings and several pieces of furniture, were sold.
Though the 141-lot auction was modest by international standards, the event was as much about marketing and gaining access to the growing ranks of high-net-worth Chinese, Kevin Ching, chief executive officer of Sotheby’s Asia said. Twenty-nine lots in the auction failed to sell.
Modern and contemporary Chinese works by Zeng Fanzhi, the most-expensive living Asian artist, Yue Minjun and Yang Feiyun, also sold in yesterday’s auction.
Sotheby’s received permission in September 2012 to establish a joint-venture auction house with state-owned Beijing Gehua Cultural Development Group. Sotheby’s holds an 80 percent stake in the entity, Sotheby’s Beijing (Auction) Company Ltd.
Christie’s held its first auction in China in September in Shanghai, where it sold $25 million worth of watches, wine, jewelry and art. It is the first foreign auction house to operate in China without a local partner.
Meanwhile, mainland Chinese auction houses have been expanding abroad. Beijing-based Poly International Auction Co. and China Guardian Auctions Co. began holding sales in Hong Kong last year, where the absence of import duties or trade restrictions has made the free port the world’s third-largest auction hub.
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