As it was isolated from the world for so long and because it still is, in many ways, there is a general lack of sophistication, in China.  Girls, in college, are often forbidden to wear makeup.  People spit on the sidewalks.  Home decoration consists of wooden chairs and couch and a shelving unit to hold the TV.  I am not saying these things in a snooty manner.  I know that rules of etiquette vary from place to place and from time to time.

As we commented, in another post, Fear, Envy and Greed: the Chinese Business Model , ever since some people have been able to accrue material wealth after China opened itself up to the world, everyone is looking for a get rich quick scheme.  Over the last decade, many made money in real estate.  Those looking for a cheaper buy-in to get rich quick turned to the stock market and stock prices quadrupled, then, crashed.  Others have turned to art because they heard that it “can make money”.   In the end, it has fostered a local market for art that lacks professionals, either dealers or collectors, and is preoccupied with money, not art [ see the English translation of our latest article for Beijing’s Collector and Investor magazine: The Good of Art ].

There has been a market for Chinese art, of various sorts, for hundreds of years, in the West, especially, in Britain.  That market was focused on older Chinese art, like traditional Chinese painting, bronze, jade, and ceramics from older Dynasties, like Ming and Qing, or older.  Modern Chinese art had it’s early beginnings, during the Qing Dynasty when, after Western art made its way into China, through Guangdong Province, in the 1600’s, it was passed on to the Qing emperor, in the 1700’s, and he hired a Frenchman and an Italian to bring Western art techniques into Chinese art.  The last Qing emperor, at the turn of the 20^th century when Impressionism was in vogue and modern art was just beginning, encouraged Chinese painters to fully embrace Western painting techniques, and artists, like Lin Feng Mian, Li Tie Fu, and Xu Bei Hong, went to the West to study art, and returned to China to create and to teach.

That renaissance in Chinese oil painting was short-lived, as students of Lin Feng Mian and his contemporaries, in turn, went abroad for further study and returned to a China, in control a Mao Zedong, who was suspicious of any Chinese nationals who had been abroad.  Thus, the art model became glorification of Mao and the State, much like socialist realism, in the Soviet Union.  Mao’s Cultural Revolution contributed to a further stifling of the development  of art, although there were artists who were able to persevere.  A continued resurgence began when Mao died, and Deng Xiao Ping determined to open up China to the world, again.  Since then, elements of other art movements, like expressionism, cubism, surrealism, and deconstruction, have entered contemporary Chinese art.  Yes, and because China is still communist and because dissident artists have been on the scene at least since the days of the Cultural Revolution, political art has been a fad.  Major international auction houses have been holding sales in contemporary Chinese art since the 1980’s, beginning in Hong Kong, which is part of Guangdong Province, where we are located.  Indeed the Art Schools of Guangdong kept the torch burning, even during those dark days.

A problem with the local market for local art is that, coming up from a poor agrarian nation, only several decades, ago, and a from feudal system before that, Chinese people have not caught on to the idea of home decoration.   Indeed, many artistic things were forbidden from commoner ownership, under the emperors, and after that, during much of the 1900’s, decorative items for the home were a luxury, few could afford.  Even today, I walk into homes of people who have money, and the floors and walls are bare.  Growing up in even a relatively poor family in the Pennsylvania Dutch area, we always had statues, rugs, and wall hangings, even though they were not expensive: they were part of making a house a home.

Over the last several decades, as some people, in China, have become quite rich, many other people have been looking for ways to get rich, too, especially in the past decade.  Those who have had sufficient cash have invested in a real estate market that is booming, as China races to replace its aging housing with modern skyscrapers.  In about the middle of the last decade, those who did not have the capital to play in real estate discovered a market with a cheaper buy-in: stocks.  About the same time, others were discovering the art market.  Both had radical run- ups and crashes, in the last several years.

Of course, a major reason, in my own observation of many investment markets, over the years, is that bubbles are caused when an abundance of armatures gets involved in a market.  That is what happened with the NASDAQ, in the late 1990’s.  It was every doorman and student playing stocks that caused the run-up and crash of the Chinese stock market, in the last several years.  And there are certainly an abundance of armatures, in every facet of the Chinese art market, as well as the greedy, the desperate, and the dishonest. 

Many collectors and dealers have gotten into art because they hear it can make money.  Having not grown up in a culture where art is part of education, and fine museums abound, Chinese buyers often have no well-developed eye for art.  A Beijing dealer, recently, put is as: Chinese buy with their ears, not with their eyes.  Many art dealers whom we have met have no real clue about art, and they either follow other people’s opinions about what to buy or they randomly select art that they think might be good. Even decent framing of paintings is uncommon, as dealers have no experience with proper framing, and, besides, it would just take away from profits.  The lack of art education cannot be underemphasized.  I have also seen dealer who think that they have discovered an artist with a really unique style, while I look at the same thing and know whose work from the past, it is a copy of.  Buyers, in the end, often follow what others have proclaimed as good art, even though they have no particular feeling about it, themselves.  Frequently, that becomes, simply, the blind leading the blind.

The same has happened in other segments of the business, like art magazines, art fairs, and art auctions.  As a result, those venues have suffered a decrease in quality, in some cases.  However, her, in Guangzhou, when one art fair was taken over by businessmen who had no experience in art, a second art fair emerged, as a result.  When I had my art inn, in the Delaware River Valley, in the 1990’s, many international magazines, in fashion, travel, and home decoration, either featured the inn or used it as a backdrop for photo shoots.  For photo shoots, we got paid handsomely, and for features we got the equivalent of hundreds of thousands of dollars of free advertisement.  In China, to get featured in a newspaper or magazine, an artist is expected to pay the writer, usually with a work of art.  Thus, most of the time when about you read a big spread about an artist, praising his genius, in a Chinese art magazine, you should not be impressed by what you read,  just think: wonder how much that cost him or of her.  I am happy to say that there is an art map publishing company, which has Guangzhou as one its cities, and which includes all art galleries who fit their qualifications at no charge, although galleries can also advertise for a fee, beyond the free listing.

As far as concerns where the art scene is in China, they say the power still lies in Beijing, as it did in the Emperor’s time.  That is because the guanxi system, China’s answer to the old boy network, has its roots in Beijing.  The government, after all, has the most power, and a high official as a benefactor-fan can do wonders for a career.  Whereas, during the Cultural Revolution, one had to be discovered by Mao, now, there are many more high and low party officials who can be art benefactors.  I have seen some artists whose statures, at least in my opinion, are pure guanxi and totally devoid of talent.  Shanghai, the city with the most Western culture of all major mainland cities is next.  It also had the famous Hangzhou Art School where much of contemporary Chinese art had its start, just outside the city.  Also towns not far from Shanghai are Suzhou, famous for its intricate hand-embroider pictures, and Yixing, the area from which teapot art comes.  They say that famous Chinese artists go to Beijing to sell their paintings and, then, to Shanghai to celebrate and play.  One result is that galleries, in those two cities, charge high prices for art, especially given the high cost of rent.  Beijing, among others, has tried to build art districts with the same blueprint the Chinese use to build highways and modern ghost towns: fast, but not too keen on the fine details.  As a result, those things tend to falter. 

As with everything, in China, there are a lot of fakes and cheats.  We have found that to be especially true in the teapot art market [see our recent draft of an article for Investor & Collector Magazine on that subject].  In the painting business the range is more from ineptness to back stabbing to just plain crazy, as in the case of a Hong Kong dealer who telephones and screams at one of the artists, whose works we feature, in our gallery, every time someone, who has bought a painting from him, buys one from us.  He also tells his clients that he has the exclusive right to sell that artist’s paintings, as if none of the rest of us, who own that artist’s paintings, is allowed to resell them. We see a lot of fakes, in teapots, and some in painting and sculpture, but we have developed a lot of knowledge and expertise, and we have built connections with family members of artists who are no longer alive.  In order to remove all doubt about authenticity of the art in which we actually trade, we buy only from the artists, themselves, or from other trustworthy dealers, and we can verify all of that by calling the artist, directly.  Indeed, we have developed personal relationships with all of our artists, and we exchange ideas with them about their art. 

Even today, about half or more of the auction market for contemporary Chinese art is outside of mainland China, but the Chinese, too, have been trying to develop an internal art auction and information market. Coming from the Dutch area, where local auctions in furniture, trash and treasure, abound, I see just how underdeveloped the auction market, in China, is.  I can even see it in the stock markets.  I remember a case from the late 1980’s, in the U.S., about art dealers who had been colluding in bidding in auctions.  That is nothing compared with what can happen in China.  Records of art auctions, we have found, are often inaccurate: we see records of sold items that we know are still sitting at the same dealer’s gallery as before the auction.  If one cannot believe records to begin with, how can one feel comfortable about reported prices of items that have actually sold?  Those realities and other loose practices, in the local auction markets, leave us with an unsettled feeling about the reliability of results that emanate from local auction markets. 

A major fad in buyers from the West has been in political art or similar satirical art.  However, on the one hand, if the political climate continues to change, those buyers will be able to buy that sort of thing in the daily newspaper, and, on the other hand, there is much more to Chinese art than that.  Artists tell us that Chinese buyers like paintings of women and that they seem to prefer more realistic genres than more abstract.  Chinese buyers also gravitate to very large paintings, and I was surprised that a common size is 80 cm by 100 cm, and larger, which is much larger than the average painting that I had dealt with, in the past.  Indeed, some artists have found creative ways to paint big, realistic paintings of women, like Zhang Da Zong’s Red Guard Girls and paintings of Chinese minority girls by other artists, like Li Jin Ming and Xu Zhao Qian.  In that way, paintings of women are made acceptable to Chinese wives and appealing to a broader audience.  Chinese buyers also seem to value art based on other simplistic principles.

The structure of the whole market, top to bottom, is out of whack.  Artists, impatient to make sales, often compete, directly, with dealers.  Others make contractual agreements  with dealers, only to skirt the agreements by secretly selling to other people and dating the paintings with earlier dates.  Others make contracts with dealers to buy all of their output during a certain time period, and they hurriedly knock out paintings to generate cash flow for themselves, forsaking quality.  Still others ruin their prices in the market by selling at reasonable artist-to-dealer prices, only to have dealers, desperate to generate cash flow, themselves, sell them at below market prices.  As long as this chaotic approach persists, there will be much price inefficiency, especially, away from the high end of the market, which has its own particular problems. In fact, after a bubble in Chinese art prices in 2007 and a subsequent correction, more nouveau riche Chinese buyers are entering the international auction markets and bidding up prices to astronomical levels, in high end old and new art.

In the end, market inefficiencies always create opportunities.  I have been collecting art of various forms since I was in grade school.  I have made businesses of interior design and art creation and sales for the last several decades.  I was involved in proprietary trading in inefficient markets, as a Wall Street executive, in the 1980’s, and I have been involved in trading in other inefficient markets or market inefficiencies, art being just one of them, since that time.  Contemporary Chinese art is, simply, my latest venture.

Fine traditions of Contemporary Chinese art have developed, over the last century, yet much of it remains undiscovered by both Western and local buyers.  The two seeming focal points of Western and local buyers that we discussed, above, actually fall into one of the broad categories that we see as a good segment for buying: social commentary about the real China of today and yesteryear.   For example, while China presents a picture of itself to the world as a modern nation of modern architecture and people, in reality, most of the nation lives in old rural and urban areas, in huts with tile roves, and many of the so-called Chinese minority peoples, like the Miao, the Yi, and the Zang, over fifty minorities, in total, still live and dress in the same way that they have for centuries.  Thus, we appreciate artists who capture scenes from daily life, in the real China.  We especially value scenes from the middle of the twentieth century, which give us a window into life, in China, when China was closed off to the world.  Those can be found, for example, in the works of Tan Xue Sheng and Xu Jian Bai, who were students of Lin Feng Mian, who moved on to teach at the Fine Art College, in Guangzhou, and to paint many thoughtful scenes from around China, during the second half of the twentieth century.  Of course, while we are not impressed by Chinese artists who simply have lifted ideas of Western artists, we do appreciate true creativity in Chinese art, and we enjoy seeing new interpretations of genres, other than pure realism.  

A longer term benefit of buying the right Chinese art, now, is that the Chinese Yuan is much undervalued, in terms of Western currencies.  Chinese artists, other than those who have become the darlings of a larger Western audience, think in terms of local buying power of Chinese money, so, their prices are already relatively inexpensive, but those prices will appreciate with appreciation of the Yuan.

Leona Craig Art is backed by decades of experience in art, home decoration, and investments in inefficient markets.   We have chosen to set up shop in Guangzhou, in Guangdong Province for a number of reasons.  First, it is near Hong Kong, which we consider the true center of the Chinese auction market.   Guangdong was the original conduit for Western art, among other things, into China and it remains a hotspot of international exchange, today.  There is also a rich tradition of contemporary Chinese oil painting and sculpture: some artists have been discovered by the West, while others remain relatively undiscovered.  Even the winner of this year’s national oil painting competition, held every five years, is from Guangdong, and other Guangdong artists have won prizes, in past competitions.  In the almost one decade that we have been involved in Chinese art, we have discovered a number of great artists, in various fields of art, and we continue to discover more.  Let our expertise, our relationships, and our on-the-ground location, in the heart of an area with some real connections to Chinese art, help guide you in selecting fine contemporary Chinese art that will appeal to your eye, fit in with your décor, and, in the long run, turn out to be a good investment, as well.