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Why Beijing rules big art auctions and Shanghai lags far behind

IN early June, a calligraphy piece from the Northern Song Dynasty (960-1127) sold for 436.8 million yuan (US$64.25 million) at the Poly Auction in Beijing, setting a stunning record for ancient Chinese artworks.

One after another, records have been toppled and new ones set at art auctions over the past few months at Guardian, Poly and Council auction houses in Beijing.

The global economic downturn seems to have had no effect on the market for ancient Chinese art, especially painting and calligraphy. It's booming.

But all the auctions were in Beijing. Here in Shanghai, surprisingly, there is no big auction scene.

Eighteen years ago it was in Shanghai that Duo Yun Xuan, China's first auction house, opened.

The contrast is striking - and embarrassing.

What's wrong with the art market in Shanghai? The question perplexes many people but industry insiders have some interesting ideas.

"The past glory of Shanghai in art auctions has slipped away," laments Ji Chongjian, owner of the Chongyuan Auction House in Shanghai, previously in charge of the city's Jing Hua Auction House renowned for its works with clear provenance.

"Perhaps the total sales from all the auctions in Shanghai in one year cannot equal the sales from one auction in Beijing," Ji says.

No one questions that there's a lot of money sloshing around Shanghai and neighboring Zhejiang Province and that there are affluent collectors in the city and neighboring areas.

Big collectors

Shanghai has 116,000 multi-millionaires and 7,000 billionaires, according to the 2009 Hurun Report, and many of them like to spend on ancient art, rare porcelain and jade pieces.

So do many rich people in Beijing, which tops the rich list (Shanghai is No. 2) with 143,000 multi-millionaires and 8,800 billionaires.

There's a saying that may describe the situation: Shanghai is one who "wakes quite early but gets up rather late."

"The spirit of an auction enterprise is critical to success," says Dong Guoqiang, owner of Council Auction House in Beijing.

Council sold 1.085 billion yuan in art during its June auction. "Once the leader has an ambition and vision, he can inspire his team and receive more support from others," he says, adding that physical stamina and passion for the art business are prerequisites for running an auction house.

"You have to consider every small detail," he says. "I only sleep several hours a night in days before an auction. Otherwise, how could one manage such a big project?"

Success also requires trust from clients who entrust precious collections to an auction house, and trust from buyers who rely on the house for quality art and integrity in management.

"I never go to the auction in Shanghai," reveals one art collector who declined to be quoted by name. "Each time I arrive in Beijing for an auction, all my accommodation has been perfectly arranged by the auction house, and the general manager will invite me to dinner.

"People of our status don't really care about a free dinner, but it feels good that someone treats you with regard. I'm pleased to chat with a professional team who may give me some useful suggestions.

"But I have never received the same treatment in Shanghai," he is quick to add.

The hospitality of Beijing art people is widely known, but being a gracious host is clearly not the only factor in the success of the art auction business in Beijing.

"Beijing is the capital of China," says Ji of Shanghai's Chongyuan Auction House.

"Chinese paintings and calligraphy are very popular, as many people use them as gifts in exchange for benefit. Although the purpose is clear, one cannot do this by giving piles of cash. This would be vulgar and offensive," he explains.

"But art is different. Just imagine the effect if you take out an ancient Chinese scroll and present it as special gift to someone you wish to favor."

Ji adds that the big auction houses in Beijing, including Guardian and Poly, all have good connections with the government.

The potential demand in Beijing, quick transactions and solid background of auction houses all contribute to the strength of the auction scene in Beijing. It's all part of a cycle that makes healthy market.

"Even the Shanghai collectors are flying to Beijing to buy art," Ji says with regret. "It's a shame for us."

To improve Shanghai's dismal auction situation, Ji and his team are developing a strategy to make the city more appalling.

"I won't duplicate the Beijing mode of doing business in Shanghai," he says. "I'm thinking about something that fits the atmosphere of Shanghai."

Ji's first step is to renovate an old villa on Yuyuan Road into a private auction site.

"Unlike the regular spring and autumn auctions, every weekend there will be auctions in our villa," he says. "I want to spread the concept that art is no longer high above sky."

He plans to target medium-range buyers and sellers and give them a platform to circulate their art.

But for high-end clients, Ji is establishing the Nobility Art Society, a very exclusive private club that has around 80 members.

"Most of them are important collectors," he adds. "Transactions for these clients will be discreet."

It's much too early to predict whether Ji and others like him will be able to save the Shanghai auction market through various strategies, though it couldn't compete with Beijing.

At least they could fill some empty space in the auction market.

"I hope I bet right," says Ji, "and Shanghai won't be a loser for the next decade."


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