investing in Chinese art

As Chinese artist Ai Weiwei's exhibition is opening at the Royal Academy this month, a few tips about investing in contemporary Chinese art could be of interest to the more adventurous. I went to Shangai to find out more about the opportunities

1.       It is a new market and growing quickly so ready to enter. Chinese contemporary art only started in the 80’s. The ‘new media art’ includes video; installations, sound and anime.

Much traditional Chinese art was destroyed during Mao’s reign because it was considered bourgeois. It was burned on fires during the revolution. Contemporary Chinese art really started to emerge in the 1980’s when Mao died (1976) and less restrictions were in place.

One of the cutting art galleries in Shanghai is ShangArt but if you want to see the video installations, many are not available on the web because of poor internet connections and an inability to upload them so it means going to China to see them.

2.     Communication barrier creates a multitude of problems finding information and getting around even when helped by concierge.

It is commonly known that the Chinese authorities block services like Facebook and Google. Internet is very patchy across mainland China. So where it might work well in Pudong which is a financial district it may not work at all elsewhere.  Old fashioned methods work best. You have to go and see people. Get a map translated into English and walk to galleries or get the tube.  Google and googlemaps don’t work. Other map services are not translated into English outside Shanghai.

Taxi drivers have a habit of saying no to any request. 

3.       You will need to visit China to see and buy the art. A sense of adventure is needed.

In order to research what you like you will need to allocate a few days to an art search. To save time and adventures make sure you have a taxi primed by your concierge to stay with you all day and to return you to base. Taxis are cheap – equivalent of about £2 to our £10 journeys and they are on a meter. Plan your route and get the concierge to explain it to the driver. The metro doesn’t cover some areas. China is a vast country so you simply are not going to be able to walk everywhere or take the train. Many use scooters but this is a very uncoordinated affair with scooters on pavements, crossings and on the road.

4.       Why you need to dig deeper than the internet. Most art from well known Chinese names accessible in the West is already out of price range even for big collectors. You need to visit individual artists galleries.

50Moganshan Road is the art district in Shanghai. Pricing has increased substantially. Though prices by some artists with their own spaces might be £500 compared to £ 5000 in the UK, you will potentially need a few thousand pounds to do some art shopping and there is a real variability in quality. Shipping it back is another problem. Some artists who open at 50Moganshan are gone in a year or so. Galleries here who have stayed the distance have seen their art grow and are no longer charging in Yuan – they now price in dollars so Island6 for instance had seen prices for individual works increase from $6000 a few years ago to now $25-30,000 dollars. These are being snapped up by organisations like the Swire Group of Hotels in Hong Kong for their hotel properties. A top tip is August when the market is slow for art, so visiting individual artist galleries will see you able to offer less than marked up prices. Also Chinese generally who are not involved with the international market have a different perception about what is expensive.  

5.       Top tip for the future is sculpture installation art for gardens.

One of the most striking pieces I saw was by Zhang Chao at the Blue Roof Art Museum.  His sculpture installation piece was bamboo, cement and wire in a garden. When the viewer looks at the piece which feels like it has the energy of Stonehenge you hear a chime. You wonder how the piece makes the sound but it isn’t the construction – it has sound installation internally making the noise. Not only is this an example of the hidden artists because of the communication difficulties between China and the West but it is possibly a new area of development for places like the UK as we renovate our properties and seek more options on what to do next. It is also an undeveloped area of private art investment.

6.      This is of international interest. Germans may have more opportunity to buy because of work connections.

Gallerists in 50Moganshan reported high sales to Germans and although Chinese sales of traditional art were improving to the Chinese, they will only buy ‘what they like’ in the contemporary world – not for investment. The German market might have developed more because of the established business connections selling in machinery and cars to China.  The art districts though are not on the business beat so if you are serious you will need to plan regular trips with cash to buy.

The growth in prices is astronomical but for the investor a finger in the wind guestimate is probably x10 in a decade

7.      Chinese art purchaser Kao Yungi says in South China Morning Post, that you have to get to know the artists in order to buy effectively. He now operates YQK Deshan Art space in Beijing to bring the hidden artists into the wider world  – again nothing comes up on the internet searches. He details the changes in price. Artist Liu Xiaodeng “disobeying the rules” was bought for 200,000 HK$ ($26,000 or £17,000 approx) and sold for $66.2million HK$ (around $8million and £5million). Kao Yunqi says that art is worth generally around 10 x the price in ten years so there needs to be a longish term horizon.

8.       Patchy offerings and patchy galleries and artwork. You will need a good or experienced eye to buy or to buy only what you can live with and like.

Visiting 50Moganshan there were some very exciting galleries – many with art out of price range but there was also a lot of really low quality work that will not stand the test of time. As with all art and property investment you have to be able to live with your decision if it doesn’t go up in price. Make sure you want it on the wall or are prepared to suck up a bad investment.

9.       You will need CASH.

Western China which has the exceptional Blue Roof Art Museum, is not entrepreneurial. People work like public authority hours and there is no real motivation to sell art. Credit card machines rarely work.  Cash is king, but you will not be able to get it from ATMs.

10.   Chinese art is niche but trending so be prepared for a cartel from gallerists and auction houses. 

There is an investor's opportunity in buying Chinese art, but like property searching in the UK, it will take MONERGY – money and energy.