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2018.10.09 Tue, by
China Art Market—Storm Warning!

Remember September 15, 2008? It was the day Lehman Brothers filed for bankruptcy. ShContemporary Art Fair had just opened and everyone was still buying, not quite realizing what had happened. Damien Hirst’s revolutionary direct-to-market sale at Sotheby’s in New York was taking place, with over USD200 million in sales by the conclusion of the two-day event on Tuesday, September 16th. Then things went horribly wrong.

Well, guess what?

The Stockmarket is wobbly, China growth is slowing, Beijing’s regulatory regime is tightening, there is a lot of hidden bad debt (who knows how much in State Owned Enterprises), there is a property bubble and a trade war with the United States. What does this mean for art? Well, local galleries in China have been suffering for months and months, betting everything on successful art fairs in Hong Kong, London, Paris, and Shanghai. (It seems art fairs are popping up in direct relation to rising levels of dealer desperation).

Hokusa Van Goch Cookie Monster Storm

Watch out – It’s behind you!! Hokkusai-Van Goch monster art storm

Property Bubble!

Housing prices are very high. Young couples in Shanghai and Beijing find it virtually impossible to buy any home, regardless of how small, distant or shabbily constructed. And it’s not like Berlin where renting is (still) ok. Owning property in China represents half your pension fund (the other half is your children and grandchildren).

Oil prices are also very high, so what?

Well, look at this headline from the Financial Times—

Screen Shot 2018-09-12 at 19.27.36

Partly it is seasonal and weather driven but partly it is simple demand and supply. It affects production costs of everything. Which is alright provided everything else is doing fine. But, what if they are not so fine?

Shares go up…but also down

…and particularly when there is instability, whether economic or political.  This headline is from The Economist:

Screen Shot 2018-09-12 at 19.28.43

Stocks in China aren’t doing so well right now. There are numerous reasons for this. Firstly, the local market is like a giant game of Jenga, whereby capital has been habitually cannibalised for new investments, with the towering market rising higher and higher, even as its foundations are being hollowed-out from below. So far, the centralised authoritarian approach to capitalism has worked in stabilising uncertainty–Chinese agencies have far greater ability to manage their economy and stock market than their liberal relatively deregulated western counterparts. But private companies don’t have the same insurance policy as State Owned Enterprises. With rumors that up to 30 per cent of the Shanghai stock market could be gone by the end of 2018,

is it time to pack the parachute?

Screen Shot 2018-09-27 at 22.59.59

Some collectors are already cashing in.

Collectors are super sensitive to all this. And they have had plenty of warning, ever since it became difficult in the past few years to pay for foreign purchases with cash stashed in local bank accounts (Bitcoin was sooo popular for a moment there). Mind you, that hasn’t stopped foreign art purchases being attractive, not at all! In fact, Chinese collectors are much more likely to spend USD 1 million on foreign artworks than local: they see it as both economically and politically less risky than buying local Chinese art (except traditional ink painting—which is more popular than ever—but hardly going to upset anyone). Now though there are rumors of local collectors selling artworks to get foreign currency. Expect to see more new record prices at auctions in Hong Kong, London, and New York. (read my Sotheby’s sales report here)

collector eyes a bargain

a collector eyes a bargain

DANGER! DANGER! HIGH VOLTAGE!

https://youtu.be/2a4gyJsY0mc?t=21s

The Fall art fair season has begun. Berlin, Beijing, Chicago, Amsterdam, Vienna and frieze London are already behind us. Next comes FIAC in Paris. And for China, Shanghai looms in November with almost every major contemporary art gallery going to West Bund and ART021. There will be scores of museum shows, many underwritten by Western galleries and even collectors. The complicated paperwork has already been completed, so there will probably be few nasty surprises (thankfully, but still, fingers crossed). All in all, an enormous amount of money is being spent by a lot of very influential galleries and collectors, and even local government, to make this a huge success. So it will be. No one will say otherwise. But the whole model of art fairs is being questioned. When important, influential gallerists begin to complain to journalists about Art Basel, dear Reader, something’s going on. Because this is happening more and more frequently and the complaints are about service quality and sales. Read that again: and sales.

Is this just evolution?

Art fairs and social media are converging to form digital gated communities. Really, NO ONE needs social media for art collectors. No, not even art collectors. Proprietary art magazines – Gagosian Quarterly, Hauser & Wirth’s Ursula, and Johann König’s multi-cover brochure – are a version of this too. From a marketing perspective, it makes sense. From a market perspective, it makes things a lot smaller and less interesting. All Eyes on Me may have worked for Tupac (at least until he was shot), but these are galleries hawking merchandise. With the one obvious exception of frieze, even art fairs cannot run magazines (and frieze only because it started out as a magazine). It seems that all the talk is no longer about Art but the Deal: which boutique did you buy from, which auction record you made, with which collectors did you take selfies with when you were you on holiday and not which artist studio you visited. Seriously, are we living in a J.G.Ballard novel? Yes. Now we’re just waiting for the bodies.

But the Millenials will save us ! …won’t they?

No, they won’t. And it’s not because Millenials are over-sensitive souls with the attention span as long as the half-life of a selfie. Rather, why should they? Is an art fair really the coolest, most fun, enriching, intellectual place to spend your youth??

And remember that Millenarianism is about radical change. If the Millenials do “save” the art market, it will probably look radically different to what it does now. And it may not include you.

Millenarianism definition Wikipedia

Mangosteen memes

Buckle up, it’s going to get choppy! And cheeky GIFs and cool memes won’t save us, only distract us while the plane hurtles into nothing.

Mangosteen typhoon – real art or just a lot of hot air? (image: 吐露講 )

Mangosteen typhoon—real art or just a lot of hot air? (image: 吐露講 )

* Screenshots of headlines and graph collage: thanks to the Financial Times for the pink ones and The Economist for the red one.