On January 7, 2007, despite the chilly Taipei weather, an art auction in the Fubon Building on Tunhua South Road drew a bustling group of over 300 potential buyers.

A new auction company, Zhong Cheng Auctions--formed by the Caves Gallery in conjunction with a number of collectors--was holding its first auction. Stone Series--Ya'anshangli Number 1 by painter Zhou Chunya was the most sought-after work, selling for NT$13 million at the end of intense bidding, more than three times the predicted price of NT$4 million. A piece from Taiwanese master sculptor Ju Ming's "Taichi" series also went for NT$5 million.

Zhong Cheng had amassed a collection of 106 pieces of contemporary Chinese art for the sale, all from Taiwanese collectors; 65% were by Chinese artists from the PRC or elsewhere overseas, and the remainder came from Taiwanese artists of varying ages and experience. About 81% of the works were sold, pushing total sales above NT$140 million--an encouraging result.

Paintings crowd the wall for collectors to scrutinize. Many of the buyers already know the works well, and register their intention to bid. Later, the auctioneer displays each work and the serious business of buying begins. The highest bidder takes the prize.

Eastern boom

In the last two years, auction prices for contemporary Chinese art have risen to such fantastic levels that figures of over NT$100 million in the Taiwanese market no longer raise any eyebrows.

One of only two surviving local art auctioneers in Taiwan--Ching Shiun International Auctions--broke its spring auction record of NT$150 million with sales of NT$180 million at its autumn 2006 sale. The other survivor, Ravenel, had even better results: 2006 autumn auction figures reached NT$540 million, breaking all records for Taiwan. Clearly, Chinese collectors have some solid money behind them.

At the Ravenel auction, the most amazing sale was that of Zao Wou-ki's oil painting 5.12.1969. Starting at NT$47 million, it finally sold for NT$90.93 million to a telephone buyer, setting the highest price paid for a single artwork in Taiwan's art auction history--but it didn't break the world record for Zao's work. At Christie's 2006 Hong Kong auction, another of his paintings, Composition No. 8, sold for HK$24.76 million (about NT$99 million), creating a sensation in the art world.

While prices in Taiwan are constantly reaching new heights, a broader perspective reveals that the Asian art market in general has grown even more spectacularly. Christie's 2006 Hong Kong autumn auction, for example, was divided into a number of sections: Asian contemporary art, modern Chinese calligraphy and painting, porcelain, jade, jewelry and brandname watches. It took five days to complete, with sales totaling around HK$1.7 billion, of which the value of Asian contemporary art traded was around HK$42.97 million (NT$180 million). Sales figures at these levels have become almost commonplace in both Taiwan and Hong Kong.

In 2006, several hundred art auctions were held in China, with sales easily doubling the previous year's figures. Contemporary Chinese art is still in its infancy compared to the more traditional ink paintings, so what explains this turnaround?

According to Chinese media analysts, the market for oil paintings began to expand during the 1980s, and in 1994 auction companies first started showing interest. At the spring sale that year of the newly established China Guardian Auctions, 51 works went up for auction, but earned only RMB1.96 million. Disappointing results, due mainly to the small numbers of painters, collectors and buyers on the scene at the time.

After hitting rock bottom in 2003 because of the SARS scare, wave upon wave of investment rolled into China in the immediate aftermath. China also saw a corresponding expansion of cultural activity, with creative endeavors in film, architecture and fashion design becoming key aspects of the new prosperity. The market for oil paintings expanded dramatically and prices rose in tune with demand, with many of the larger auction houses setting up special sections for works in oil. Such a revolution in the usually traditional art market was unprecedented.

A further incentive to invest in oils was that, compared to ancient Chinese ink paintings, oils are more difficult to fake. Most painters of available works in oil are still alive, and the medium demands a more complex range of skills.

Paintings crowd the wall for collectors to scrutinize. Many of the buyers already know the works well, and register their intention to bid. Later, the auctioneer displays each work and the serious business of buying begins. The highest bidder takes the prize.

Age of prosperity

In the short three-year period between 2003 and 2006, the market for oil paintings in China experienced an enormous spurt of growth. The rapidity and robust nature of this expansion has exceeded all expectations, and has also had an influence on Taiwan, reigniting the contemporary art market which had been merely "smoldering" after earlier periods of prosperity dissipated.

From 1988 to 1996, the Taiwanese art market was enjoying its greatest prosperity. Private art galleries were established the length and breadth of Taiwan, with over 200 galleries operating at the peak. The fashionable district around the Apollo Building on Chunghsiao East Road Section 4 in Taipei, for example, boasted more than 40 galleries, and new art magazines were being launched. Other Asian countries like Hong Kong, Singapore and Korea had nothing like the flourishing art scene in Taiwan. In fact, in 1992, auction houses Sotheby's and Christie's both set up branches in Taiwan, providing impetus for further growth.

"Taiwan was where the big Western auction houses first tasted the Asian market. They considered Taiwan a virgin land waiting for development," says Liu Huan-hsien, president of East Gallery, and former director of the Art Galleries Association ROC. In 1992, when the association was established, it instituted a system for setting standards and prices for artworks so the market would have a reliable yardstick to follow. Because Taiwan's economy had been booming since the 1980s, there were a lot of very wealthy people around looking for good investments. Architects, doctors, lawyers and heads of high-tech companies were among the earlier collectors. The conditions were ripe for a prosperous art market to develop.

Unfortunately, the 1997 Asian financial crisis burst the bubble. Then in 1999, Taiwan was reeling from the September 21 earthquake, and the economy declined sharply. The art market was the first sector to bear the full brunt of these misfortunes: the number of exhibitions shrank, activities were canceled, and even some of the established galleries gave up attending the annual national Art Exposition.

In 2000, Sotheby's closed down its eight-year-old Taiwan operation and moved to Hong Kong, putting another nail in the coffin of the local art scene, especially as things were already so quiet.

However, Ravenel, a local company that entered the market in 1999, did not see the situation so negatively. With the departure of the big international auction houses, they recognized opportunities for the growth of local enterprises such as their own. After all, the art market is a big-money game for rich people to play. Even through the first years of the economic slowdown, annual sales for Ravenel had remained around NT$60 million, and in 2004, the company made over NT$100 million: profits were on the rise.

Well-known Taiwan enterprise Caves Gallery is involved in the auction market with their company, Zhong Cheng Auctions. Chairwoman Hung Li-ping displays the distemper painting Banks of the Seine, a work by Chen Hui-kun. Chen is over 100 years old and father of Tchen Yu-chiou, secretary-general of the National Cultural Association. Spires reaching skyward and sunshine glittering on the river are beautifully sculptured in the work's many-layered colors.

Expertise leads the way

Most people see what's happening on the surface, but an expert can understand the deeper implications. How is the success of these years to be explained? Was it merely a temporary upsurge in the market in response to rumor and hearsay, or was it indicative of better times on the way?

Says Hung Li-ping, chairwoman of Zhong Cheng Auctions and head of Caves Gallery, "In contrast to today's art market in China, which attracts huge interest from international dealers, the Taiwanese scene is more modest; but we've seen the worst, and galleries are back on track." By promoting the works of artists, galleries can communicate current themes in art to the public, and also bear the important responsibility of art education. Unlike at an auction, where buyers compete against each other for a bargain, gallery customers often have the freedom to negotiate a mutually agreed price. Auctions are places for collectors to buy each others' items, while galleries are where artists' works are first put up for sale. Taiwan's experienced collectors have been dealing in this market for over 30 years, and recent events have provided a good opportunity for them to "swap" their treasures with each other.

Ni Tsai-chin, dean of the College of Arts at Tunghai University, who researches Taiwan's art history, is less enthusiastic about the local market. "The current boom in Hong Kong and Taiwan is just a reflection of the Chinese economic miracle. Before 2000, the Taiwanese art market was very active, and there were lots of seminars and exhibitions. Now, however, things are relatively very quiet, and many galleries and artists are moving to China in search of new markets. A number of local galleries are also turning to Chinese artworks."

Ni examines the reasons why Chinese art is commanding top prices. He compares Xu Beihong's painting Slave and Lion, which sold for HK$53.88 million, with Chen Cheng-po's work Tanshui (1935), which brought HK$34.84 million. "Xu Beihong has an important place in the Chinese art world--he was chancellor of National Beiping College of Art, director of the Art Department at National Central University, and also director of the Chinese Art Association in the post-WWII period. His paintings sell for better prices simply because of his reputation; in fact, his work is no better than many others."

"Every work has its own artistic quality and creative background, and as time passes, in 100 years it will sink or survive by reason of its artistic value alone. For many outside the inner circle of the art world, Xu is more famous than Chen, but Chen's art will better stand the test of time," Ni argues.

Says Liu Huan-hsien, president of Tunchih Gallery, in agreement with Ni, "Auctions are a good indicator of the current value of a work, but the auction system can lead to buyers getting carried away by the psychological pressure of the bidding process, sometimes leading them on to pay too much. While some works will sell for over NT$10 million, attracting a lot of media attention, this situation is the exception rather than the rule."

Paintings crowd the wall for collectors to scrutinize. Many of the buyers already know the works well, and register their intention to bid. Later, the auctioneer displays each work and the serious business of buying begins. The highest bidder takes the prize.

Reinstating Taiwanese art

When people see buyers of famous paintings bidding enthusiastically at auctions, the idea often prevails that now is a good time to get into the art market. Is this really so? Collecting art is not difficult, as long as you have plenty of capital. But if you plan on getting into the higher end of the market, you need a good knowledge of what's available, and sound judgment.

Liu Huan-hsien, a dealer specializing in works by older, more established Taiwanese artists, cites an example. In 1988, when Chen Cheng-po's painting Chiayi Park was exhibited in his gallery, it was put up for sale at NT$1.8 million, with a reserve price of NT$1.35 million. A collector offered NT$1.3 million, but wasn't willing to pay the further NT$50,000 needed, so the painting didn't sell. Two years later, the painter's family auctioned the same work at Sotheby's in Hong Kong. Pierre T.M. Chen, president of Yageo Corporation, paid more than NT$8 million for it. Ten years later, it's worth more than NT$30 million. The person who made the initial offer in 1988 is now very much regretting his reluctance to offer more, and even Liu Huan-hsien himself regrets not buying the work when it was much cheaper.

Says Liu, "In 1995, a postcard-sized work from most of Taiwan's established artists would sell for an average of around NT$20,000, but works by Chen Cheng-po or Liao Chi-chun could command much higher prices." For example, the price of a work by Liao Chi-chun in 1992 was about NT$200,000, already higher than that commanded by other artists, and a few years later, the price had risen dramatically to NT$1 million. In the last two years, prices have even broken the US$1 million mark. People are continually amazed by the surging prices, and a number of collectors who sold too early are now kicking themselves. At present, Liu Huan-hsien is holding a number of Liao Chi-chun's works, waiting for a good price. He will be very cautious when he sells.

Chen Cheng-po and Liao Chi-chun are two of the most important figures in Taiwan's art history. One expert points out that in the last two years, galleries that deal in the works of Taiwan's major painters have begun to cooperate with local collectors to organize sales at the Hong Kong auctions. Aside from the auctions' commercial benefits, they have promoted the works of these artists into the global art scene, and helped the world become more aware of Taiwan itself, enhancing the market status of Taiwan's principal painters.

The "spring swallow of prosperity" finally returns to Taiwan's art market after its being in the doldrums for many years. Recent months have seen large numbers of buyers thronging auction rooms.

Longer lines catch bigger fish

Although prices for the works of major artists are breaking records, investing in art is in many ways like investing in stocks: it's very difficult to predict which will rise and set a new record, and which will not! The difference is that if you ignore the investment side of buying art, and just buy a nice painting that you appreciate, even if you don't make a profit you will still derive great pleasure from simply having it on the wall at home.

"According to overseas statistics, the average annual return on investment in art is about 14%. This is far higher than a fixed deposit in the bank. But the problem with paintings is that you have to buy the right one." Liu Huan-hsien believes that when Pierre T.M. Chen bought Tanshui, he had judged that it would increase in value, and was then patient enough to wait ten years for this to happen; in fact, its value increased by more than ten times. Chen's good judgment and patience paid him a handsome dividend.

Ching Shiun International Auctions has used Chen Cheng-po's painting A Scene in Chiayi Park (1938) on the cover of its autumn auction catalog, and many were attracted to the auction simply because of the picture. The work started at NT$7 million, eventually going for NT$10.5.

The painting is one of Chen's later works, completed after he returned from Shanghai to settle in Taiwan in 1933. Its style is expressive and unrestrained. Chen loved nature, so he often painted outdoors. Chiayi was his hometown, so the scenes and figures of the town often graced his paintings. Three of his works have Chiayi Park as their subject, and as a result, the people and sights of the town are now well known around the world.

Ching Shiun chairman Chen Pi-chen notes that the current owner of A Scene in Chiayi Park bought the work more than 30 years ago from Yeh Mao-hsiung, owner of Tientai Art and Stationery, who is from the same county as the painter. Because Chen Cheng-po was executed in Taiwan's February 28 Incident, his paintings were neglected until martial law came to an end, when they were able to reappear.

Paintings crowd the wall for collectors to scrutinize. Many of the buyers already know the works well, and register their intention to bid. Later, the auctioneer displays each work and the serious business of buying begins. The highest bidder takes the prize.

Rich people's passion

The global art website Artprice recently announced statistics listing the 100 contemporary artists whose works had commanded the highest prices in the 2006 spring and summer auctions of contemporary art. Twenty-four artists were from the USA, 39 from Europe, and surprisingly, China had the same number as the US. Among these, a work by Zhang Xiaogang is listed at nearly 2 million, putting him at number 11. Sadly, there are no Taiwanese painters on the list. "Because of China's economic development, Chinese artists will be the global stars of contemporary art in 2007," predicts the website.

As the major trend in the global market leans towards Chinese contemporary art, Taiwan has to follow this trend. Amongst the works in Ravenel's autumn auction catalog, for example, Chinese contemporary artists occupy half of the places.

At the Zhong Cheng auction, as the price of the "Stone" series painting from Chinese painter Zhou Chunya rose towards the NT$9 million mark, many were expressing unease. One of the buyers claimed privately: "We are being cheated--he doesn't deserve this price. The painting from the 'plunderer of flowers' [overseas Chinese painter Walasse Ting, who is famed as an excellent portrayer of flowers] is going for around NT$400,000, and it's better than Zhou's!"

Some, however, believe the price to be fair. The artist, Zhou Chunya, a former director of the Chinese Oil Painting Association, has painted only three works in the "red stones" part of series, and the style is said to represent perfectly the character of the painter. The work eventually sold for NT$13 million, not, in many people's opinion, an excessive price.

The market value of China's middle generation of painters is still largely unknown, but many can't grasp the high prices their works often bring. New collectors, when they see prices of works from either famous or unknown artists rising to fantastic levels, often just follow the auction crowds, using only their ears, and not their reason, to judge the potential value of the item on sale.

At Sotheby's Hong Kong autumn auction, Qi Baishi's excellent work Bi Zhuo Stealing Wine was expected to sell for between HK$800,000 and HK$1.2 million. But the works of Zhang Xiaogang, who is less than 50 years old, were predicted to bring from HK$8.8 million to HK$12 million, ten times more than the work of the great master Qi Baishi. Art critics shake their heads in disbelief. "Why can the work of a second-generation artist command higher prices than that of the master?"

On the other hand, a number of painters don't enjoy seeing prices for their works rising astronomically as the result of investment buying. Last year, at the Beijing Poly International Auction of contemporary Chinese art, new-generation painter Liu Xiaodong's huge oil painting New Immigrants of Sanxia sold for the enormous price of RMB22 million.

Liu was not very happy, as he can't believe his art is worth that sort of money. "Two or three years ago, my work was selling for RMB1-200,000. The Chinese art auction world seems to be going crazy."

At present, a discussion is taking place within the Chinese media: "Is contemporary Chinese art booming, or is the bust upon us?" Some predict that in 2008 the Chinese market will reach a peak. Because too many people are focusing on contemporary Chinese art, the boom will probably finish early, so collectors should be exercising caution; nobody wants to be the last buyer to pay a big price.

Major buyers from Taiwan

This warning should apply especially to Taiwan's collectors. One of the reasons for the strong demand for Chinese art has to do with the financial strength of buyers in Hong Kong and Taiwan. The purchasing power of Taiwanese collectors is having a strong influence on the art market in China, Taiwan and Hong Kong, and has a very important role in the sustainability of that market.

Artist magazine's January issue reports that it has been normal for Taiwanese buyers to occupy 25-33% of sales volume at Beijing and Hong Kong auctions. At Christie's Hong Kong autumn auction, for example, Chen Kang-hsin, president of Taiwanese cosmetics group Kelti, bought works of artists Zhang Yu, Zhu Dequn and Lin Fengmian, spending in total around NT$200 million.

Barry Lam, chairman of Quanta Computer, Inc., is known as a great admirer of artist Chang Ta-chien. People in the art world say Lam deeply identifies with Chang's work, and has become a master of its appreciation. At his corporate headquarters, Kuangya Hsuan, he displays his personal collection of over 1000 works of Chinese calligraphy and painting, among which may be found authentic pieces from Su Shi and Mi Fu, both of the Song Dynasty, and nearly 300 of Chang's works. The depth and range of Lam's collection are truly impressive.

Lu Jung-chih, a Taiwan art critic and exhibition organizer now living in Shanghai, noted in a recent media interview that growing numbers of collectors are paying increased attention to the new generation of contemporary artists, a trend she sees as encouraging. New artists, however, run the risk of their creative spirit being damaged if their work becomes the subject of over-investment too early in their careers. Some have tended to continually recreate a successful style of painting simply to continue their market success. Thus they stunt their own artistic development for financial benefit.

Taiwan under globalization

Taiwan's artistic community may not have the same spectacular good fortune as many of their Chinese counterparts have achieved mainly because of the "economic miracle" under way in China. Nevertheless, artists here in Taiwan have their personal style, and actively attend international exhibitions or visit China in order to extend their careers. For example, photographer Chen Chieh-jen, sculptor Huang Ming-che, who creates public art from huge pieces of steel, portrait artist Chiu Ya-tsai, and Cheng Tsai-tung, who has gone back to traditional ink painting instead of oils, have all sold works at auction for prices between about NT$200,000 and NT$400,000, well above current market prices.

"One of the results of globalization has been the rise of the Chinese market economy. Despite any political concerns, Taiwan should regard China as just another market, and it is normal to buy and sell in a market. At present, the best way to spread Taiwanese art worldwide is through Beijing." Ni Tsai-chin, dean of the College of Arts at Tunghai University, believes that Taiwanese always manage to punch above their weight. In this, he says, they are like the Jewish community in the US, who, although their numbers are not great, control significant portions of the American media, financial, and cultural sectors. With the flexibility and creativity of Taiwan's artists, surely they can become leading lights of their field in China. If a society possesses a love of art, a healthy number of art collectors, and solid business arrangements between artists, collectors and galleries, that is a sign of a rich society. The Chinese art market has been bubbling away merrily for a number of years now. The dawn of the good times may have finished, but we are now enjoying the full midday sunshine of the good times. We hope that this continuing boom can enrich the hearts of artists, and lead them to create even more wonderful works in the future.