The $10 billion market for Chinese antiques is about to be transformed by the unexpected fallout from an auction at a saleroom in a suburb of London.
An 18th-century vase found in a house clearance, bid to an auction record for any Chinese artwork, has become the biggest example of slow payments from Chinese buyers. With no payment reported by Bainbridges for the 51.6 million pound ($83.2 million) Nov. 11 sale, other auction houses yesterday told Bloomberg that they are demanding deposits from would-be buyers.
The deposits will safeguard sellers, while deterring some bidders and potentially cooling prices at a time when the Asian market is growing faster than that in the U.S. and U.K.
"There must be a problem with payment, otherwise the auction houses wouldn't do this," the London-based dealer John Berwald said. "It's a difficult balance to strike between being stringent with the buyers and not making them discouraged."
China overtook the U.S. as the world's biggest auction market for fine art last year, according to research company Artprice. Chinese sales of antiques were alone valued at 6 billion euros ($8.6 billion) and grew 160 percent year-on-year, according to a European Fine Art Foundation report published last month. Further auctions and dealer transactions in the West have turned the trade in Chinese artifacts into a business worth more than $10 billion, according to Bloomberg calculations.
Buying at auctions of Asian art in Europe and the U.S. is now routinely dominated by bidders from China, which last year became the world's second-biggest economy. The country's growing number of millionaires is bidding to unprecedented levels to repatriate works of art, particularly when they have Imperial associations. Some bidders have been reluctant payers, said dealers.
In the London sale, auctioneer Peter Bainbridge broke his hammer after spending half an hour taking bids from an excited crowd of more than 40 Chinese collectors, dealers and agents that had traveled to Ruislip in the hope of buying an elaborately decorated vase that had once been owned by the Qianlong Emperor.
At the end, it came down to a duel between two young agents sitting on a gilded sofa at the front of the salesroom.
Bainbridge, director of the west London auction house, wouldn't comment when telephoned by Bloomberg News on April 7. He had said in February that payment hadn't been received and the vase was still in safe storage.
The issue of Chinese bidders failing to pay their auction bills was also raised in February 2009, when a pair of 18th- century bronze animal heads fetched 31.5 million euros at Christie's International's sale of the collection of the late fashion designer Yves Saint Laurent and his partner Pierre Berge.
The successful bidder was Chinese dealer Cai Mingchao, who later refused to pay for his purchases. The sale was subsequently canceled and the sculptures returned to Berge, said dealers. Christie's refused to comment.
Paris-based Asian-art expert Pierre Ansas was mindful of non-payment issues when he asked clients to leave a 200,000 euro deposit to bid on a Qianlong-dynasty Imperial scroll painting and seal offered at auctions in Toulouse, France, on March 26.
"It's not popular," said Ansas, prior to the auctions he catalogued. "I need to be responsible, though. I have a business to run. I would rather have sold the scroll for 8 million or 10 million euros to someone with money in the bank, rather than for a crazy price to someone I don't know."
The scroll, showing the army of the Qianlong emperor at a military review, sold for 22.1 million euros and the seal for 12.4 million euros to different Chinese buyers. Seven bidders from Asia had been prepared to leave 200,000 euro deposits to bid on the scroll. Buyers were contracted to pay a third of the bill within a week and the balance within three months. An agent representing the reputed buyer of the Bainbridge vase wasn't allowed to register, Ansas said.
Last week in Hong Kong, Chinese mainlanders wanting to buy an 18th-century Imperial vase and other designated "premium lots" at Sotheby's sale of the Meiyintang collection of ceramics balked after being asked for deposits of as much as $500,000, said dealers.
Thirty percent of the 77 lots in the ceramics sale were left unsold, including the vase valued at more than HK$180 million ($23 million). It later was sold in a private transaction for HK$200 million, Sotheby's (BID) said.
U.K. regional auctioneers also want to ensure the payment of high-value Chinese pieces.
"I'm thinking of taking a deposit on three or four lots," John Axford, head of Asian art at the Salisbury-based auctioneers Woolley & Wallis, said in an interview. "It's a safeguard. I have to be responsible to my vendors."
The Wiltshire auction house will be offering a Qianlong- dynasty Imperial white jade teapot and cover in its May 18 Asian sale, valued at 200,000 pounds to 300,000 pounds. It might be one of the deposit-protected lots, said Axford, who is talking with lawyers on the legality of the measure in the U.K. Buyers are typically given three months to pay at his sales, he said.
The Dorchester-based auction house Duke's holds a sale on May 19 and will be including an Imperial yellow jade plaque, which like the bronze animal heads was looted from Beijing's Summer Palace in 1860. The plaque is estimated to fetch more than 100,000 pounds.
"We are considering introducing a system of 'premium' lots," said Duke's director, Guy Schwinge. "We may ask bidders we don't know to pay a deposit."
"The auction houses are going to have to get tougher," said the London-based dealer Roger Keverne, who recently had to wait six months to be paid for a Chinese porcelain piece that fetched 150,000 pounds at auction. "With new money, you get waves of new buyers. Deposits are a good idea if the bidder hasn't got a track record. Otherwise we'll end up with a false market."