--- Catherine Kwai, Vice President of the Shanghai-Hong Kong Cultural Exchange Fund Association and Examiner of Hong Kong Arts Development Council

Ten years ago, it was barely a glitch on the industry radar. Chinese contemporary art --- little known and even fewer purchased. In the last few years, that all changed and prices for Chinese contemporary art skyrocketed. Now as the world faces an economic crisis, will the flame on the fire be put out? Or is this your chance to consider an alternative way to invest your money?

With the 2009 spring auction season approaching, the Chinese art market is expected to experience its biggest challenge as the global financial crisis continues to sweep the world off its feet.

It’s spent the last 5 years in the limelight, but the slump at the major auction houses in the second half of 2008 is casting a shadow on the New Year. Transaction volume in China's art auction market in the second half of 2008 was estimated to reach less than half than the previous year. Trying to minimize the impact of the economic turmoil, many consignors in China have worked together with auction houses to lower prices.

Shao Bo, Vice Director, Minsheng Art Center
“To a certain degree, contemporary art is being affected by the financial crisis. For some general or less notable painters, their works’ prices are experiencing a slump.”

Although crisis may rein in China's turbulent art market, some believe the global financial crisis has also brought investment opportunities as the prices of some contemporary artworks are dropping to lower levels.

How will the Chinese art market develop in 2009? Can China's contemporary art market survive and possibly even thrive during the present global financial crisis?

Joining us to discuss the topic today is Catherine Kwai --- the Vice President of the Shanghai-Hong Kong Cultural Exchange Fund Association and Examiner of Hong Kong Arts Development Council.

On top of being an avid art collector herself for more than 15 years, Ms. Kwai is the Vice President of the Shanghai-Hong Kong Cultural Exchange Fund Association and Examiner of Hong Kong Arts Development Council. She is the founder and director of the Kwai Fung Culture and Communications Company, the Kwai Fung Hin Art Gallery and Kwai Fung Art Consultants. Ms. Kwai has also been the curator of a number of influential art exhibitions in Hong Kong and Greater China.

2009 Market oulook

A: Ms. Catherine Kwai, thanks for joining us.

K: Nice meeting you, Amy.

A: Nice meeting you as well. Let’s talk about right now the art market, given the financial crisis the world is facing. What is the feeling right now in the art industry?

K: I think art market is quite similar like the stock market, coz definitely is affected. When we talk about the art --- painting, sculpture or whatever, people buy with spare cash. So at the moment now, nobody knows how the recession will affect and how the economy will turn how worse it is, so everybody is wait-and-see.

A: We are heading into the 2009 spring auction season. What is the kind of feeling in the build-up towards the season?

K: I think when we review back the autumn sales, which is talking about October and December of 2008, the total sales has definitely come down and the price has a big adjustment. With the spring, I think most of the auction houses, they are more cautious. So they will collect less quantity of work and then select better works to make sure the off sale is getting less. But I still predict the total sale will come down another 30% to 40%.

A: Who is affected the most, the auction house, the collectors, the buyers or the artists themselves? Who is really feeling the crunch at this point?

K: I would say, who was affected most, for sure, the speculator. So last 5 years, since 2004 to 2008, I assume maybe the 40% of the business, we call the bubble is from speculator. For sure, they are affected coz they are looking for the short-term profit. And now they see the price is ouch and the sale is coming down, maybe they worry whether there is investment.

A: You talked about the prices going down, is this a good time for collectors to jump on board and start looking at either the different pieces or pieces that they may not have been able to afford previously?

K: Definitely, coz I do witness how 2004 to 2008, these last five years, the extremely hot market. The prices really jump ten times or twenty times, even some fifty times. So at this moment now, I think for the very serious collectors, they are very happy. Ok, then you can say I can pick up some works with much cheaper price. Serious collector I mean who has knowledge and who knows what they want. So mostly they are not looking at the recent work creation. They are looking at those with historical period.

A: How long do you have to keep a piece of work to make it be a good investment? Is there really any written rule or does the market change so quickly in terms of art that there is no steady fast time limit?

K: That is a difficult question. I started collect in 1986. When you put money into art, the most important thing is looking, I say you spend this money, you buy precious first. You enjoy because you appreciate it as ascetic side. But if I keep for five years, I don’t need this money, five years, seven years, you would be so surprised. The price comes up. So I would say at least five years. Especially now, the financial market, the economy is not so good, we should look at least five years. But if, for example, in 2004, you stepped in 2003, and then 2005, 2 years, you have big profit already. So it really depends on when and how.

A: And why to buy first. Is it for enjoyment or for investment?

K: I still advise the first thing is for enjoyment fist.

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