Many expats want in on the sizzling contemporary Chinese art market, but most recognize there's an art to investment, especially when investing in art.
However, finding a framework for the country's art scene could be easier than most foreigners think, and 4,000 yuan (US$542) can start your collection. Experts on contemporary Chinese art agree that the most important thing for beginner collectors is to make purchases that reap personal pleasure rather than fiscal returns.
"The best investments are made with the heart rather than the mind," says American Pat Regan, assistant director of Ethan Cohen Fine Arts, the first US gallery to specialize in the genre. "Maybe the artist you choose as an emerging artist didn't make it to the top 10 artists, or the price never skyrockets; you still have a great piece of art you can enjoy."
If making money is priority No 1, "you should buy stocks or bonds instead, because they have dividends and capital gains", says co-owner of Beijing-based Front Line Contemporary Patricia Lambert.
However, she still believes that contemporary Chinese artworks can make for great investments.
"When you make an investment, you should diversify. You have to have more-risky stuff and less-risky stuff," Lambert says.
And the research suggests art is a relatively safe option. According to the Mei/Moses Fine Art Index, which tracks art as an investment over time, prices of contemporary art outperformed the S&P 500 Total Return Index over the past decade.
"If you add fine art to an overall portfolio, you'll increase your returns and decrease your risks," Regan says, adding that: "Art isn't subject to market fluctuations."
Risks aside, nobody doubts it's a booming market with opportunities for returns. "You see record-breaking all the time in contemporary Chinese art at the auctions," Regan says.
The latest was the sale of Yue Minjun's painting A Giggling Yue Dressed as a Pope for 2.14 million pounds (US$4.5 million) at Sotheby's London auction in June.
In 2004, Sotheby's and Christie's, the world's two largest auction houses, auctioned US$22 million worth of Asian art, most of which came from the contemporary Chinese genre. In 2006, the figure rose to US$190 million, according to their records.
And according to Regan, 78 percent of the global art auction volume of the last 13 years dealt in Chinese paintings.
However, despite the rapidly increasing prices, industry research puts the value of contemporary Chinese art at 25 percent that of Western art - for now, at least.
Regan believes investors should feel all the more secure since the Chinese government opened the first State-owned auction house in 1992, because that gave it a stake in the success of the market.
More good news for collectors, according to Beijing-based Aye Gallery manager Yan Qing, is that galleries filter out most bad deals before they can be made.
"If you buy the work of a young artist from a gallery, the gallery has already decided that the artist is worthwhile; that's why they're working with them. It's like a guarantee of the artwork's value," she says.
And Lambert believes galleries know what they're doing.
"Galleries have usually looked at works for 10 or 20 years, so we have a trained eye for art," she says.
Starting the collection then becomes a matter of homework, something Art Scene Beijing manager Marion Berthomeau says many foreigners fail to do.
"Many people just want to invest quickly, without much consideration. Also, many people invest with their ears, not their eyes; I think it should be both," she says.
Regan recommends first perusing websites, such as artnet.com and artprice.com.
"You'll start to see a lot of the same names, and you'll start to develop an eye for it," Regan says.
He also recommends prospective collectors monitor auction houses, because they provide the only public records of sale prices, which galleries usually keep confidential.
Regan says that in addition to visiting galleries, collectors-to-be should talk directly to artists.
"The unique thing about China that's great for everybody is the artists are very accessible. You can walk around 798, and there are as many studios as galleries, and they're all approachable," he says. "Go talk with these artists; strike up a friendship. Maybe they'll sell you something for an affordable price."
Prints can start from 4,000 yuan (US$542) and original works begin from 30,000 yuan (US$4,060), depending on the size of the canvas.
Berthomeau says that while some art consultants could be helpful, buyers should be wary of them.
"Many 'art consultants' are not really well qualified. They just pretend to be. They are just looking for a fee, so they will often lead investors to places where they get big commissions, not necessarily the best art," she says.
Once investors have a feel for the market, they must determine their budget and decide to put their money on big names or up-and-comings.
"Hot items burn. If you can bear the heat, go for those that are top on the auction houses' lists. Chances are, those are speculative items, and the risk is definitely higher," says Richard Yiu, general manager of Art Beatus Galleries in Hong Kong and Vancouver, Canada.
According to Berthomeau, investors concerned about a market bubble should shy away from these names.
"Many people have been speculating with the artists' works and prices have jumped. These artists have become brand names," she says, adding that, "their prices have been so inflated".
While headlines have been heralding the recent string of record-setting auction sales of the genre's big names, there are still plenty of options for collectors with a budget starting from several thousand yuan.
"Galleries in China are willing to work with almost any budget," Regan says. "There's always more in the gallery than what you see on the wall. Talk to them, and tell them: 'This is my first purchase, but it won't be my last'."
Most galleries will then work with collectors-to-be in hopes of winning their future business, he explains.
And those seeking big names on a small budget could consider museum-quality lithographic prints.
"People say: 'It's a print; it's not the real thing'. But prints are showing up at auctions and in the galleries," Regan says.
And most art experts agree that they would nearly always accrue in value if the originals do.
"Say someone wants a work by Liu Ye - his paintings have been selling for $1million, so they might as well get a print," Lambert says.
But collectors of prints must be particularly cautious, experts agree. "Some prints are just for show; the quality isn't so good. They'll only last for a few years," says Redstar Gallery manager Elva Ye.
According to Lambert, big-name artists usually release a limited number of prints created by reputable institutions according to high standards and usually marked with an edition number.
Those seeking original pieces rather than prints should seek work by artists "with good potential, who do interesting art", Lambert says.
She believes many foreigners make the mistake of buying work that is "too decorative and Chinese for the sake of buying Chinese art".
According to her, collectors should seek originality and remember that much of the today's high-priced art from the genre was all but shunned throughout most of the last decade.
But whatever an art collector buys, one thing is for sure: As an investment, it should at least look better than a share certificate on the wall.
(China Daily November 30, 2007)
