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TEFAF report on the global art markets
Dr Clare McAndrew, the brain behind the founder of Arts Economics, has authored 'The Global Art Market in 2010: Crisis & Recovery' report according to which China has replaced the UK as the second largest global art & antiques auction market. This significant loss of market share can directly be correlated to the highly impressive growth of the local Chinese art market that barely logged in any numbers worth reporting just about five years ago. The new document courtesy TEFAF (The European Fine Art Foundation) pegs the auction sales in China at around 6 billion Euros in 2010, accounting for nearly 23 percent of the global art market. With a share of 34 percent, the US retained its top slot, whereas the UK with 22 percent slid to third position.

The first decade of the new millennium can be said to be a period of constant flux in the art marketplace. According to an estimate, it recorded a new peak in terms of business volumes and value in 2007. However, fortunes took a sudden twist. The next couple of years were filled with an atmosphere of panic and uncertainty marked by a steep decline in overall investor confidence and market value. The wealth erosion strongly affected buying sentiment globally. After a period of eye-popping boom and subsequent bust, the astounding peak and the stupefying fall, the market started clawing its way back in late 2009, albeit with radically different contours of investing/ collecting, underpinned to a great extent by perceptible fundamental shifts in the mindset of major market players and also its hierarchy of power.

The art market found its feet and sprung back to life in mid 2010, to show its intrinsic strength. This spirit of resilience and recovery was largely driven by China, the US and India, to an extent. The process was hastened by strong spending power of Chinese and Indian art buyers. On the other hand, growth in Europe remained sluggish. As a result, the distribution of wealth shifted eastwards evident in the number of HNIs (high net worth individuals) in Asia now almost equivalent to Europe, with a higher collective wealth. While the US and UK art markets were experiencing a period of gradual recovery, China continued to boom in 2010, establishing itself as the second largest market.

The TEFAF report elaborates: “New buyers and sellers from China and other emerging economies have helped to protect the art market from some of the downside risk it would have been subject to had it still been reliant primarily on the UK, US and other mature European markets. Looking forward, wealth and art buying remain highly concentrated in a very small fraction of China’s population, which is a strong indicator for the potential future growth in art sales. When the new middle classes come on stream at the end of this decade another boom in sales is likely and competition for share of this expanding market will intensify even more.”

A renowned cultural economist, Clare McAndrew specializes in the domain of fine & decorative art market. An astute analyst of art-market statistics, she first proved in categorical terms in 2007 that France’s century-long pre-eminent place in the world of art world had been taken over by China. Many experts simply presumed it was nothing more than a blip! But her subsequent report commissioned by TEFAF stated otherwise, underlining the dominance of China.

In the past decades or so, the US, the UK, Germany and France have been the largest art markets. By 2006 China had almost overtaken Germany and France, in terms of auction sales, according to data of Artprice. However, China bucked the trend. In fact, the most noteworthy aspect of her study was the rise and expansion of the Chinese art market. Art sales in both mainland China and Hong Kong scaled a record peak of €4.2 billion (€3.8 billion in 2008), boosting the country’s share of the art market to 14% that year.

In spite of the global wobbles, China has managed to hold the same strong position in art-market. Moreover its expanding share of the market is coming at the expense of western and European strongholds that serve as hubs of global auction houses like Sotheby’s and Christie’s. On the flipside, operating in China is not easy. One notable feature of the auction market there is the high number of buy-ins (lots that are not sold). A loophole in the 1996 Auction Law means that buyers have no recourse if they purchase a lot that turns out to be inauthentic. Another problem is the rather short lifespan of many Chinese auction houses. Not many of them are authorized, and many have their licenses revoked. In this backdrop, it remains to be seen whether China can continue and sustain its rise.