Lack of transparency remains a major stumbling block for many Chinese auction houses, says Wang Tao of the School of African and Oriental Studies in London (SOAS). He has been tracking auction house sales on the Chinese mainland for the past three years with a team of researchers. The project has revealed a number of significant issues. “It’s not easy to get a true picture. The figures from the mainland are unreliable,” he warns. “In many cases, hammer prices are published as sales, even if an item is unsold, or not paid for. In some firms, this could represent 50% of the sale total.”
Funded by Creative Connexions—a now defunct programme led by a London university consortium and funded via the Higher Education Innovation Fund—the SOAS research project set out to investigate the current state of the Chinese art auction market, advise on its future development, discuss policies and legislation, and look at creating closer links with the international market. Wang and his team focused on 200 auction houses and conducted over 70 interviews with key senior stakeholders across China, Hong Kong, Taiwan and the UK.
Another dilemma, he says, is that auctions are used to establishing a market value for a work of art, leading to an artist’s dealer bidding up the work to the level that they want it to reach in the absence of legitimate buyers. “I would not put my faith in any figures relating to record sales,” he adds. Other sticking points include the lack of authenticity guarantees, which has resulted in a “high number of fakes”, says Wang, who is now advising the government on a general regulatory framework that will address this issue.
He stresses nonetheless that the Chinese government has toughened its stance on verifying whether objects that come to auction have been illicitly excavated. Paradoxically, the government is also over zealous in some areas, issuing licences, for instance, that allow auction houses to only trade in certain media such as ceramics or paintings.
Another academic has also exposed what she believes to be the endemic malpractice among some mainland Chinese auction houses. In a research paper entitled “Performing Bribery in China: Guanxi-practice, Corruption with a Human Face” (Journal of Contemporary China, January 2011), Ling Li of the US-Asia Law Institute in New York discusses how Chinese auctioneers “facilitate” corruption.
“In a poorly monitored auction industry, pieces of art constitute a wise choice of bribe favoured by some for their money-laundering function. The usual practice is that the would-be bribed puts a piece of little value up for auction and then the briber buys off the piece in the auction at the agreed price,” says Li. Part of her thesis is based on the publication Celadon, a quasi-autobiographical, bestselling novel by Hu Gang, a former auctioneer. Hu was detained in 2003 for bribing three judges in exchange for commissions to conduct auctions of property seized by the courts. He was then released with immunity for testifying against them, says Li.
So is it a case of too much, too soon for the Chinese auction houses that have grown in line with the country’s stratospheric economic rise? “There is a lot of ‘hot money’ around, extra liquidity, which needs to be invested somehow,” explains Wang.
SOAS has subsequently arranged a one-week seminar in London this July in partnership with the China Association of Auctioneers. Twenty directors of Chinese auction houses will head to the UK as part of a collaborative programme with the aim of introducing professional guidelines and possibly regulation. “We plan to help with their figures, discuss genuine sales, concentrate on management issues and establish initiatives such as an online database,” says Wang. Representatives from Sotheby’s, Christie’s and Bonhams will be on hand to discuss the intricacies of their businesses.