An Art Market Bubble Chinese Style Pt. 2 –

bronzes 300x188  An Art Market Bubble Chinese Style Pt. 2 – artmarketblog.comMy last post generated quite a lot of discussion and debate surrounding the current state and future potential of the Chinese art market ,which I hoped it would.  I used my last post to address some of the concerns I have regarding the way the China driven art market boom is progressing,  as well as some issues I have with the way the media report on the art market.  With this post I would like to introduce some compelling evidence in support of my opinion that the Chinese art market boom and the influence that Chinese buyers are having on the art world will have a negative impact on the global art market in the near future.

If you follow the progress of the art market you will be aware the auction houses have experienced serious problems when dealing with a number of Chinese buyers whose actions threaten to stifle the surge of Chinese buyers before it has really even begun. As reports of Chinese buyers failing to pay for antiques and fine art that they have purchased at auction continue to hit the headlines, auction houses have been forced to take action.  Several major auction houses have chosen to combat the issue of non-payment by asking clients who are bidding on certain high priced lots to provide a refundable deposit before the auction takes place.  This may seem like a simple and neat solution to the problem, but such a scheme is likely to cause conflict between the auction houses and Chinese buyers who are used to conducting business in a particular social and cultural environment – as I will explain later.

It is important to know that non-payment by Chinese buyers is not something that has only just started happening.  In fact, there are reports as far back as 2007 that express concerns over the number of instances of Chinese buyers failing to pay for art and antiques that they had purchased at auction.  Since 2009 there have been an increased number of reported instances of non-payment by Chinese buyers culminating in the recent clampdown by auction houses on delinquent buyers.   Excuses for non-payment or slow payment range from problems transferring money into Western currencies to issues with the “legal” status of objects.  Many instances of non-payment, however, appear to just be the result of plain old overzealous bidding.  The following is a list of alleged reasons that Chinese buyers have, or are likely to have given, for not paying for items:

1. Political statement: There have been instances where Chinese buyers have bid on items that were allegedly looted from Chinese sites then refused to pay as a political statement.  The most infamous case of politically motivated non-payment is that of dealer Cai Mingchao and the bronze animal heads (pictured) which Cai purchased at the Yves Saint Laurent/Pierre Berge sale in 2009 then failed to pay for citing evidence that the items had been illegally removed from China as his reasons for defaulting on payment.

2. Buyers remorse: With many Chinese buyers paying way over the odds for antiques and fine art, it is likely that at least some of them will go away from the auction regretting the amount that they spent.

3. Unable to pay: Once again, overzealous bidding from determined Chinese bidders who do not want to “lose face” by losing an auction is likely to produce instances of buyers bidding beyond their means.

4. Negotiation tactics: It it likely that some Chinese buyers will not see the final auction price as the end of the sale and will begin negotiating with the auction house over the price as well as terms of payment once the sale has ended.

5. Currency exchange: Apparently it takes considerable time to transfer money out of a Chinese account and to perform the necessary currency exchange when purchases have been made outside China.

It is true that the number of instances of slow payment and non-payment have been very small, however, the issue is not so much how many instances there have been, but what the ramifications have been for the industry and for the sentiment of Chinese buyers.  It is no secret that respect and honour are a big part of Chinese culture.  Not wanting to “lose face” on such a public stage, Chinese bidders are likely to feel strong opposition towards the implementation of enforced deposits by several auction houses.  To be asked to provide a deposit will potentially offend Chinese bidders who will see such a demand as disrespectful and offensive, because to be forced to pay a deposit suggests that the bidder is untrustworthy.  If you think that demanding a deposit will not have an effect on auction proceedings then you might like to consider the poor results of the recent Meiyintang Collection auction that was held at Sotheby’s in Hong Kong which an article from Bloomberg suggests could be the result of required deposits for “premium lots”.  Is this just the beginning of the downward spiral of the Chinese art market boom?

If you know of any other instances of non-payment by Chinese bidders or know of any other reasons that bidders are not paying then please leave a comment.

To be continued…………….


The 2 Qing bronze animal heads that Cai Mingchao purchased but refused to pay for in 2009

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

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  • Paul Lorenz

    Very interesting…it is a complex situations when art, culture and commerce (no matter what culture we are talking about) come together. I am looking forward to reading more.

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