China's booming art market suffers reality check

 

Since then, the market has grown.

In 2009, because of the amounts that were being spent, the "era of 100 million yuan" had arrived.

"The craze of the market has a close connection with the prosperity of our country," said Yu Ding, dean of Art Administration Department of Central Academy of Fine Art (CAFA).

With more disposable money at hand, people seek an investment opportunity, Yu added.

"Considering what's happening in the stock markets, an excessive amount of money is coming into auctions to bargain hunt, " said Gong Jisui, a professor with CAFA.

The volatility found in property and stock markets no longer promises returns, Gong said.

Hundreds of auction houses have opened over the past decade trying to attract the millionaire class. As a result goliaths like Beijing Poly International Auction Co Ltd and China Guardian Auctions Co Ltd have emerged.

Also, Sotheby's and Christie's have entered the market since 2012.

In October last year, Sotheby's hosted an inaugural auction in Beijing. Christie's hosted its first auction in Shanghai in September, selling $25 million worth of art, jewelry, watches and wine. Sunday's auction was much bigger.

Forgery

But the market has problems.

Analysts have questioned China's art market because of ubiquitous fakes, alleged price rigging and nonpayment.

Fakes are common in art auctions.

Art dealer Lu Jiemin said Chinese law allowed auction houses to have clauses in contracts which exempts them from any obligation if a lot turns out to be a fake.

Therefore, the market has been largely driven by the lure of huge and swift profits.

Wei Pengju, Dean of Cultural Creative Department of Beijing-based Central University of Financial and Economics said the art market is dominated by giant financial organizations.

These may squeeze small investors and individuals who actually care about art, Wei said. "Buyers should be people who are really into it, not those who buy then sell for a good price."

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