China Surpasses UK To Become #2 Global Art Market

This news provides a useful proxy for tracking changes in global disposable income and national wealth.

Vanessa Houlder and Peter Aspden report in the Financial Times:

"Britain has lost its position as the world’s second largest art market to China, in a sign of intensifying competition and a shift in the geographical distribution of wealth towards Asia, according to a new study.

The UK’s share of the global art market fell by 5 percentage points to 22 per cent in the four years to 2010, says the study by the European Fine Art Foundation, organiser of a big Dutch art fair. It gives fresh ammunition to critics who say extra costs imposed by a Brussels directive have put the European art trade at a disadvantage.

The “phenomenal growth” of the Chinese art market, which has nearly doubled in value since 2009 to take a 23 per cent share of the global market, has been the most important development in the international art market in recent years.

The UK continues to dominate European art trade with 59 per cent of the EU total. But although the UK market has recovered after a sharp contraction in 2009, its rate of recovery has been muted compared with that of China and the US.

Kevin Ching, chief executive of Sotheby’s Asia, said he was not surprised by the results of the study, describing the recent growth of Chinese art buyers as “phenomenal”. Chinese buyers bought 23 per cent of all lots purchased in Sotheby’s auctions worldwide last year, he said, compared with 14 per cent in 2009 and 7 per cent in 2008.

Demand was most intense for Chinese masterpieces such as great paintings and ceramics, which had dramatically driven up their prices, he added. A sharp growth in the number of auction houses in China operating at a lower level than the international houses reflected depth of interest.

“Go to any antique or flea market at the weekend in mainland China and it will be packed by thousands of people who are buying things that are old,” said Mr Ching.

But Anthony Browne, chairman of the British Art Market Federation representing the UK industry, said another reason that Britain was suffering was droit de suite, a Europe-wide levy on sales of the work of living artists that was introduced in 2006. No such resale levy, payable to the artist, was imposed in China, the US or Switzerland, the UK’s main global competitors.

The study calculated that there was an incentive to relocate works of art priced at more than €40,000 (£34,600) from the EU to a market such as the US, where the levy does not apply. A “transaction charge, more or less unique to the EU, seems likely only to add to the difficulties of a market that appears already to be in relative decline,” the study said.

Mr Browne urged the government to put pressure on the European Commission to stop it extending the levy next year to include the works of deceased artists. That would damage the lucrative market in 20th century art, which has underpinned the UK’s position in the international art market, he said.

“A huge extension of the resale levy when our position is already under pressure from global competitors makes no sense,” Mr Browne added.