ATG Editor Ivan Macquisten is pictured here chairing a debate at the Summer Olympia fair on how the West should adapt to the demands of the Asian market.
On the rostrum with him were Bonhams' deputy chairman and Global
Head of Asian Art, Colin Sheaf, IP specialist lawyer Ben Goodger,
of Edwards Wildman, Director of Hong Kong Fair Fine Art Asia, Andy
Hei and Kate Bryan, Head of Contemporary Art at The Fine Art
All have extensive experience working in Hong Kong and China and
gave some valuable insights into how to go about business there, as
well as what to expect in future. Fuller biographical details for
each appear at the bottom of this article.
The audience at the event on June 12 heard how China should not
be considered as a single nation with a single people, but as a
civilisation comprised of a large number of different groups.
Mainlanders, Hong Kong Chinese, Western-based Chinese and Taiwanese
all have different views and attitudes, advised the panel.
Key considerations also included 'Guanxi', the system of
building business relationships, what motivates buyers, how they
see the market and cultural differences evident in attitudes to
what the West may see as fakes, but the Chinese as tribute
Colin Sheaf noted that Guanxi can be a mixed blessing. "It's an
extremely tight relationship and if you're not within that circle,
it will give somebody else an advantage that you don't enjoy. It's
not a way of doing business that we understand in quite the same
way in the West."
Kate Bryan emphasised that the West often suffered under the
misconception that there was a lack of knowledge about Western art
and culture in China. "There is a great risk in not understanding
that there are quite a few collectors who are highly
knowledgeable," she told the audience. This can be especially
important when it comes to the vital question of face. "You can
unwittingly insult someone's intelligence, which can then become a
matter of saving face," she said.
Clarity of Contracts
On the sensitive matter of contracts and business deals, Ben
Goodger thought that simple buying and selling contracts were
generally fairly straightforward, but what is particularly
important is clarity of terms. "Keep it very, very clear," he
advised, and "discuss some 'what if' scenarios."
Contracts should always be written down rather than verbal, he
also said. It doesn't have to be a long contract, just clear with,
importantly, an accurate translation into Chinese.
As for enforcement of contracts, he confirmed it is a real
problem. The Chinese tend to avoid litigation because it risks
confrontation and loss of face. Mediation is key to resolving
disputes, he concluded.
Colin Sheaf, meanwhile, looked at jurisdiction. Enforcing
English law in China is difficult but can be done, he said,
although it can be very expensive to do so. In reality, Western
businesses need to be realistic, he advised. The best thing to do
is ensure a sound business relationship to start with rather than
trying to solve problems after a deal has gone wrong. "There have
to be fairly robust safeguards in place right from the beginning,"
he told the audience.
Andy Hei focused on trades between dealers and clients and
advised against taking deposits on deals "because Chinese customers
will then think they own the object and it can take months to
conclude the deal".
There were different shades of opinion in how Chinese tastes may
develop and whether or not the future would see a demand for
mainstream Western fine and decorative arts.
Chinese Contemporary art is greatly sought after, and there is
some evidence of demand for other Contemporary art, but it is not
clear whether this is for collecting or investment purposes.
As Colin Sheaf noted, however, there was still little demand in
the East for Chinese Export wares. With this in mind, it was
difficult to see how taste would spread to European furniture and
ceramics, for instance, in the short term.
Andy Hei, while agreeing with this, thought that as new
generations of collectors emerged, they might be more open to
acquiring a wider range of art and antiques.
The panellists also gave some insight into what the key
considerations are in developing business contacts in Hong Kong or
mainland China, or even setting up a business there.
Business in Hong Kong
What became clear is that all speakers considered doing business
in and from Hong Kong was the way ahead. Tax, bureaucracy, culture
and market sophistication make it a far more attractive option than
setting up in mainland China, it seems.
Ben Goodger gave some detail on the options for setting up a
business in mainland China and talked about the 'WOFE' or wholly
owned foreign enterprise. These limited liability vehicles allow
businesses to operate subsidiaries in China while protecting IP and
technology, and they can enjoy less stringent currency controls
than domestic firms.
Colin Sheaf explained that setting up mainland China operations
for auction houses such as Bonhams, Sotheby's and Christie's, was
'intimidating' because, apart from other considerations, any joint
venture could compromise an auction house's ability to guarantee
the lots that they offered.
Kate Bryan added that developing institutional links should be
at the centre of any business plan for galleries setting up in the
Far East. "In 2012 there will be more than 200 new museums opening
in mainland China," she revealed. "Developing relationships with
curators and those institutions will be essential if you intend to
be there for the long term."
In summary, building close relationships with clients,
developing knowledge of the culture and language, understanding the
issue of 'face' and being clear and respectful in all dealings are
the vital components of succeeding in business in Hong Kong and
Colin Sheaf, an authority
on Asian ceramics and Asian art and head of Asian art at Bonhams
and chairman of Bonhams Asia, directs teams in London, Hong Kong,
New York, Los Angeles and San Francisco. Having developed
Christie's business in Hong Kong during the 1980s, he played a
leading role in the great shipwreck sales of the 1980s and '90s. In
November 2011, he achieved the highest price during the London
Asian art auction series when he sold a Qianlong vase for £8m
hammer, as well as seeing Bonhams pass both Christie's and
Sotheby's for the total amount taken in the series for the first
Outside Bonhams, Colin has been most excited
by his involvement as one of the two trustees of the Percival David
Foundation, the greatest collection in private hands in the western
world of Imperial Chinese ceramics. (www.bonhams.com)
Andy Hei is the second
generation of the Hong Kong Chinese H.L. Hei family, dealers in
huanghuali and zitan furniture from the Ming and Qing dynasties for
over 50 years. He established his own classical Chinese furniture
gallery, Andy Hei Ltd, in Hollywood Road, Hong Kong, in 1999.
Andy's years of experience of participating
in several art fairs in London and New York led him to launch the
first annual Hong Kong International Asian Antiques and Arts
Fair in 2006. He has developed an active fairs programme
since then, culminating in Fine Art Asia, which runs each
A collector of Chinese paintings and works
of art, as well as Asian contemporary art, he writes a special
column for ATG, sharing his view on the Asian and Hong Kong art
Kate Bryan joined the Fine
Art Society in London's Bond Street as head of contemporary in
2011, having previously been gallery director of The Cat Street
Gallery in Hong Kong.
During her four years in Hong Kong, Kate was
responsible for bringing important international names to the HK
art world, including solo shows for Sir Peter Blake, Gavin Turk,
David Mach, Debbie Han and a collaboration between David Lynch and
the shoe designer Christian Louboutin. She was the Hong Kong
Contributing Editor for Asian Art News and World
Sculpture News, as well as a regular contributor of arts and
travel features for Kee Magazine, Sentinel
Magazine and The South China Morning Post.
Prior to moving to Asia, Kate worked at the
British Museum for five years. (www.faslondon.com)
Ben Goodger is a partner with international law
firm Edwards Wildman, which has 14 offices including London,
Boston, New York and Hong Kong. An intellectual property (IP)
practitioner, he has over 20 years experience in advising companies
on the strategic management, commercialisation and protection of
their valuable IP. Ben's clients include multinational
corporations, SMEs, lenders, and academic institutions. He spent
two years in Shanghai, where he managed his previous firm's China
business and Asia commercial IP groups, and has
internationally-recognised expertise in advising on strategies for
the protection, commercialisation and management of IP assets in
China and Asia. Intellectual Asset
Management magazine listed him in its IAM Strategy 250 -
The World's Leading IP Strategists in 2009, 2010 and 2011. (www.edwardswildman.com)