China experiments with duty-free art auction

By Yue Ruifang and Shi Shouhe

 

With more Chinese collectors eyeing overseas art and antique markets, a Beijing-based auction house will open China’s first free port auction later this month.

The auction by Huachen Auctions Co., Ltd. will be held on April 21 in the Xiangyu Bonded Logistics Park in Xiamen, southeast China’s Fujian Province, company sources said.

The company organized a preview in Beijing over the weekend. During the event, 360 lots to be auctioned were on display, including century-old antiques, original oil and pastel paintings, coins and stamps.

Gan Xuejun, chairman of the board and general manager of Huachen Auctions, said the free port auction is an experiment in introducing overseas artwork to the Chinese market.

According to Gan, artwork entering the Chinese market can incur duties of up to 12 percent of an item’s value. However, artwork traded at a free port auction will be exempt from such duties, as long as the items will eventually be taken abroad and do not enter China.

Gan said a free port auction will lower the transactions costs for Western artwork, thereby facilitating the development of the Chinese auction market.

Huachen Auctions is not the only player eyeing the vast potential of Western artwork, an area in which Chinese collectors are showing rising interest.

The world’s biggest art and antiques fair, the European Fine Art Fair (TEFAF), announced in March that it was in talks with leading auction house Sotheby’s to hold an event in China in 2014.

The China fair is planned as a collaboration between the TEFAF and Sotheby’s newly-forged joint venture with Beijing Gehua Cultural Development Group. In September last year, Sotheby’s joint venture with Gehua Group was founded to help the auction giant gain a foothold in China’s mainland and expand its business opportunities in art collection, trade and investment.

Ben Janssens, chairman of the Netherlands-based fair’s executive committee, said China is one of the most important art markets and it is the time for the TEFAF to further develop its presence in the country.

In the meantime, nearly 600 pieces of French oil painting, furniture and sculpture have been brought to the Tianzhu Free Trade Zone in Beijing by ENVY Fine Art Co., Ltd. Artwork. All of these items will enjoy tax advantages in storage and display at the free trade zone.

Wang Yang, president of ENVY Fine Art, said it is possible that the batch of artwork will be transacted on the local market via sales or auction.

Due to a supply surge created by the faltering economy in European countries and Chinese collectors’ craze for Western fine art amid an economic boom, Western artwork is becoming increasingly popular in China.

Art and antique sales in China rose to 13.7 billion U.S. dollars in 2012, making it the world’s second-largest market, according to a report published by the European Fine Art Foundation.

Experts say the free port auction could possibly open a door for Western artwork to enter the Chinese market at a faster pace.

 

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