Auction houses turn to Asia for growth

The British auction house Sotheby's will this week put a giant blue diamond weighing more than five carats up for sale in Hong Kong. It's yet another sign of the healthy state of affairs the big auction houses have enjoyed in Asia in defiance of the global economic crisis. Business in the region is doing so well, Sotheby's recently hoisted a Chinese flag outside its New York headquarters, while its smaller competitor Bonham's has opened a new office in Tokyo, as part of its deliberate policy of expanding its Asian presence.

Presenter: Corinne Podger
Speakers: Carson Chan, managing director Bonham's; Kevin Ching, Hong Kong managing director Sotheby's; Jonathan Stone, managing director Christie's Hong Kong

PODGER: It's two years since Bonham's staged its first big wine auction in Hong Kong in over a decade. The British auction house got sterling results; some bottles fetched more than double the reserve price. And throughout the economic downturn, Asian chequebooks have kept on waving at the big auctions. Bonhams is now shifting its focus to Asia, away from traditional auction hubs like New York, San Francisco, Paris and London. In February, despite the Japanese recession, the firm opened a new office in Tokyo - adding to existing operations in Hong Kong and Taipei. Asian managing director Carson Chan explains why.

CHAN: Along the way we recognised that this growth is going to continue into the next century, so we are strategically placing these offices, satellite offices, around Hong Kong.

PODGER: While Western economies continue to flounder, Asia's auction scene is as robust as ever. That's especially thanks to China, where mainland buyers are a major growth market for auction giant Sotheby's. Four years ago mainland Chinese accounted for just 15 percent of the firm's Asian profits; last year more they made up more than half. Hong Kong managing director Kevin Ching says the antiques market is particularly strong, as China's investors compete to acquire treasures from the grandest periods of imperial history.

CHING: As they gain financial and political importance in the world, the Chinese always want to look back and buy back some of their past imperial glory. And therefore anything associated with the imperial dynasties - for example the Ming and Qing dynasties - like personal armour, swords once owned by emperors, the imperial seals, imperial court paintings, imperial necklaces and jewellery, the mainland Chinese would just go crazy and pay big prices for those.

PODGER: The boost to the auction house purse this all represents hasn't been lost on Sotheby's, which recently hoisted a Chinese flag outside its headquarters in New York - joining the flags of its other core clientele - the US, Britain, France and Switzerland. Kevin Ching in Hong Kong says it was a light-hearted way of making a serious point.

CHING: As Chinese collectors play an increasingly significant role in our business, we just feel that it's important to show a gesture, to demonstrate our faith, our appreciation and our commitment to our Chinese clients.

PODGER: And in terms of hot property, while Asian antiques and art have been in heavy demand for several years, auctioneers say they're seeing a shift in what buyers want. More investors are interested in traditional luxury items - jewellery, watches, contemporary Western art - and wine. Jonathan Stone, the managing director of Christie's in Hong Kong, says sales of vintage wines in Asia have overtaken the US and Europe.

STONE: Over the last two years in particular, and last year significantly, we saw really strong growth for wine. I mean there is a very big appetite for wine, literally, appetite, in Asia, particularly in greater in China.

PODGER: Carson Chan at Bonham's says China will continue to drive the vintage wine market because - unlike many European and American collectors - Chinese buyers are keen to taste their new treasures.

CHAN: A lot of the Europeans or the Americans when they buy a fine vintage bottle of wine, they will buy it maybe 50 percent for collecting purposes, and 50 percent maybe thinking of investment. But in terms of mainland Chinese wine collector, the percentage is probably 60 to 70 percent of these buyers are buying these wines for consumption. They will actually pop it open and drink it.

PODGER: All the major international auctioneers agree that even if the US and European economies return to full strength, the glory days of London and New York are over. Jonathan Stone, the managing director of Christies in Hong Kong, says nowadays an Asian presence is vital for business.

STONE: It's really critical, I mean it's so important. It is the fastest growing market that we have. And the potential in this part of the world - in China in particular - is really significant.