In his monthly columns for ATG, Fine Art Asia fair director and dealer Andy Hei takes a look at the international market from a Far Eastern perspective, sheds light on how to do business with the Chinese in Hong Kong and explains why Hong Kong is a better first stop than mainland China.
The Asian Market
From my
gallery in Hollywood Road
in one of the territory's most historic districts, I have seen
quite a few ups and downs in the Asian antiques market.
However, during the last five years Hong Kong has entered a
whole new era in the buying and selling of Asian art and antiques -
new galleries, new fairs, new collectors, along with the increased
activity of the auction sales, all contributing to anchoring Hong
Kong at the centre for the art world in Asia.
Running a fine art and antiques business in Hong Kong has clear
advantages over those of setting up in China. As a free port, it is
easy to import and export artworks without restriction and there is
no sales tax on art in Hong Kong, whose geographically central
location makes it easily accessible to the many well-established
and well-heeled collectors and dealers from Japan, Taiwan and
South-East Asia.
The most significant development has been the rise of the new,
affluent collector from Asia, which has generated much
international coverage and is the talk of the town here as
well.
The growing number of cashed-up Chinese buyers has many a dealer
putting their faith in these newcomers, who are actively visiting
fairs and auctions looking for not only Chinese works of art, but
both Asian and Western pieces as well.
During my recent visit to the fairs in Maastricht and New York, it was
good to see many familiar faces. At Maastricht, not only the
well-known and established American collectors were present but
also some of my own mainland Chinese colleagues.
This is a positive trend as in the past many Chinese collectors
have only been interested in Chinese furniture, but they are
broadening their horizons and looking more closely at Western fine
art and antiques.
The Asian sales in New York went well, with solid buying and
some good figures achieved from Asian dealers and few items going
unsold. As a dealer, I was pleased to acquire two pieces, which
makes a change after quite a few years of returning with empty
suitcases from New York, so hopefully it is a good start to my
trading year back in Hollywood Road.
Hong Kong Business
First-time visitors to Hong Kong are always surprised at the
contrasts that the city presents. On one hand, it is buzzing,
cosmopolitan and sophisticated. Yet the traditional Cantonese
culture, customs and business habits are very evident and can, on
occasion, appear a little daunting. In business there are some
basic golden rules, and I always include the following tips in my
'helpful hints' for newcomers.
Be prepared to build relationships. The business climate in Hong
Kong, unlike that in mainland China, is wide open, with limited
government involvement and a free market. Hong Kong business
activities are competitive and honest. Making money is the main
goal, one that is openly understood. Personal contact - such as
face-to face selling with a courteous and polite approach - is
essential and although negotiations may at times seem slow, it is
generally part of the process of building the mutual respect and
friendship that underpins business in Hong Kong.
Always have a plentiful supply of business cards, with
traditional Chinese characters on one side and English on the
other. Offering your card is important; not to do so may suggest
you are not interested in making acquaintances or that your own
status is unimportant! A handshake is followed immediately by the
exchange of business cards, offered and received with both hands,
with the writing the right way up to read. Do make a show of
examining it - it is impolite to place it straight into your
pocket.
Maintaining, giving and losing 'face' is an Asian concept that
can be hard to immediately understand. However, it really all rests
on courtesy, politeness and respect. An international visitor will
automatically be respected and shown deference. In turn,
reciprocate with a similar level of deference and formality.
Experienced western dealers working with serious Asian collectors
know that personally accompanying the delivery of a sold piece is
'giving face' and confirmation that the relationship is as
important as the business transaction.
Enjoy your food! Dining out is a very important part of
Cantonese culture and any Chinese meal is a mixture of fun,
friendship and a customary way of getting to know one another.
Don't worry too much about the style of eating or the sometimes
adventurous and unknown menu items - appreciation is the key. Hong
Kong people are justifiably proud of their culinary traditions and
an invitation to a meal is a good signal for business.
Trading In China
In Hong Kong, we have a saying that translates from the Chinese
as "with time and patience the mulberry leaf becomes a silk gown",
which aptly sums up the rewards, but a "look before you leap"
approach should be taken when starting to sell fine art and
antiques in China.
Unlike the business-friendly climate of which Hong Kong is
justifiably proud, working your way through the myriad of mainland
China's regulatory, taxation and custom issues requires expert
advice, experience and time, and in some cases can still end in
tears!
The biggest hurdle faced by an international company wanting to
do business in China, whether by participating in a fair or setting
up an office or gallery, is to comply effectively with the
complicated and often opaque tax and customs regulations that
govern the import/export of artworks in China.
Imported artworks are in the same category as luxury goods in
China and can attract tariffs ranging anywhere from 17% to, in some
cases, 33% if sold at art fairs in the Chinese mainland. The
routine and risky tax evasion practice of declaring lower
valuations when importing artworks into China as a method to avoid
overpaying of duty to Customs has been widespread among Chinese
collectors and was recently publicly highlighted by the arrest of
two staff from a China-based art shipping firm.
While the taxes in China on artworks are the highest in the
world, which many dealers, including myself, consider could hinder
development of the Chinese art and antiques marketplace in the
Chinese mainland, interest from mainland collectors is still
growing.
Hong Kong, on the other hand, has no import or sales tax on
imported or exported works of art or antiques, and art fairs are
not subject to any form of tariffs. This is one of the main reasons
why Asian collectors are very visible and major buyers at the fairs
in Hong Kong.
From May 17-20, over 67,000 visitors attended the contemporary
art fair, ART HK,
with 266 Asian and international galleries represented, and this
week Christie's have reported strong sales from their May spring
auctions. The level of informed interest in the art and antiques
markets is continuing to grow and consolidating Hong Kong's
position as the key entry point into the Asian marketplace.
The rewards of working with the expanding base of collectors in
the East are significantly improving and my advice is to use Hong
Kong to get to know Asia.
Fine Art Asia (www.fineartasia.com) runs
from October 4-7 and is the only mixed fine art and antiques fair
in Hong Kong's calendar.
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