DIPFundation will help shaping China to be a powerful national in Art -2
Great demand from billions of people
According to the Wall Street Journal, artwork collection has become the most popular investment against stock, loan bond and other luxury products (e.g. wine, classic cars and diamonds). By end of November, 2018, based on estimation of total ROI for various investment methods, there is 5.1% and 2.2% losses for investment on Standard and Poor’s Composite Index and gold respectively. There is a 1.9% gain on cash investment or equivalent. Meanwhile, an art consulting company reported that the average profit made on artwork investment is about 10.6% by end of November.
If you are looking for main driving force for cash flow within art market, the answer is simple: Chinese museums, given by the vice-president of Blackstone, world top artwork collector Thomason Hill.
As there is a great demand from Chinese museums, it boosted the artwork price and stimulated the interest from various investors all over the world. It is discovered that there is great interest on Blue Chips artworks, which is considered as the foundation for realizing diversification of investments. (Blue Chips stand for traditional, large scale industrial stocks with stable long term growth and financial stocks. The word ‘Blue Chips’ comes from Casinos. In western casinos, there are chips with three colors, of which the blue chips have the highest value. In stock market, the stocks from companies which have good and stable performance, and relatively high cash bonus are called ‘Blue Chips’.
According to statistics from China’s Museum Association, in the beginning of 1949, there are only 25 museums in China. They are all demolished during Culture Revolution. By 2019, there are approximately 7000 museums which are officially registered.
Although this number is only 1/5 of what US currently has, but the magnitude of growth is high. Similarly, there are hundreds of nuclear plants being built every single year in China. In the contrast, within 10 years before the financial crisis in 2008, there are only 20–40 museums established in US. The phenomena of art becoming a strategic industry is not a coincident. This is an indication of economical, political and culture resource movements from Europe to Asia.
Therefore, under sophisticated Chinese political system, art and culture investments has become a popular way to obtain influence, attract tourists and improve soft power of the cities. In China, this system help local governments to have positive competition in many areas such as budgets, services and gaining reputations.
Beijing is certainly one of the largest international cities with great power in policy making. Being an important role in artwork ranking is just a matter of time. In the past 10 years, only 9% of sale of artwork comes from China. By 2018, it has gained 2nd largest art market in the world, exceeding UK and right after US. In 2018, a further boost in artwork market was seen and after two years’ decline on global transection, the total sale has reached 6.37 billion US dollars, with 12% increase. The tuning point was around 2009, which is 10 years ago. After financial crisis, the total amount of transection on artwork has doubled in China.
At same year, the State Council has announced that the Art industry will be the strategic industry in China.
Many Chinese investors, corporations and public bodies have realized that art is an investment method that can make both profit and influence.
Previously, majority of Chinese tycoons are in favor of Chinese antique and Ink paintings. However this has gradually changed: more and more people get involved in artwork collection associated with impressionism, modern western art and even contemporary art. Their preferences can even influence the artworks distributed in the market around the globe.
In 2013, property company Wanda Corp. purchased the Claude et Paloma by Pablo Picasso in the price of 2.82 million US dollars in Christie’s, New York, which hits the artists’ community. This was the highest price made for western artwork by Chinese collectors by that time.
In 2015, another billionaire Yiqian Liu (picture above) bought ‘Reclining Nude’ in the price of 170 million US dollars, which is one of the most famous works by Amedeo Modigliani. It is currently located in his new museum in Shanghai. At that time, its auction price is just below ‘Version O’ by Pablo Picasso, which is sold in 180 million US dollars.
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