The market for contemporary Chinese art has seen unprecedented growth in the past five or six years. But the sale of Chinese contemporary art will likely come under increasing strain. Many contemporary artworks remain unsold as buyers and collectors sit on the sidelines. In 2008, Sotheby's fall auction in Hong Kong only proceeded with half its contemporary art lots.

Could this be good news? Many have argued a robust economy in previous years boost the value of Chinese contemporary art to an unnecessary level. Some say the Chinese contemporary art market needs a health check.

A: We talked a little earlier in the program about this bubble, especially in Chinese contemporary art because five years ago the prices just boomed and it was selling at such a higher rate than it hasn’t been selling before. Is there really this bubble out there?

K: You have remembered in the last five years, there are so many capitals. The thing is same with stocks. People make money and the stock is up. So people tend to have a lot of cash. But Chinese contemporary art has an international market. I still remember in 2005, I asked Christie and Sotheby. I said how come the sales come up so quickly, triple, the five times. They say they never in history to see so many buyers from different nationalities. You would be surprised that there will even be sales coming in from Russia, Belgium, Italy and France. So the contemporary art in fact is reaching the whole world audience. That’s the reason they push up the price so quickly.

A: Is there a way to define the bubble? Is there a way to spot it?

K: To the end of 2007 when I see the market is really getting so crazy, I do see from my gallery’s side or whenever you go for dinner, there are a lot of new comers who do not know the art. They just only concern about the investment. Which artist we should buy? How much return? So at that time I was a little bit worried. For those people, I just call them a short-term speculator who comes in to make the prices go further, but these people, they would never stay. They would go. So 2007 I’ve become very conservative at the year end, so I don’t really buy that much. 2008 I was just promoting upcoming artists, not doing much acquisition for my own collection. It’s true I do smell the bubble.

A: We talked about a little bit about what’s going on in the last couple of years. What do we see moving forward from here?

K: I think 2009 will be the most difficult year. The business transaction, the operating purchase will definitely come down a lot. So speculator has gone and the serious investor, I mean collector, want to know how the prices can come down. So I don’t think they will immediately step into, to buy. So I think, I guess in my way until the first quarter, after the spring sale auction, and then they see how the prices have dropped. So 2009 will be quite a quiet year, a calm year.

A: Is there a way that investors can avoid these bubbles?

K: When there’s no demand, it’s a good time to buy. So that’s what I said, when the price comes down, nobody watch it, and then it’s probably the best time, the price is low, you can pick up some good art work at a very good price. So I’ll say 2009, the first quarter after the 2010 is a good time to buy. But then you say the bubble, so when the market is getting crazy, everybody wants to buy some pieces of art work, 5 times, 6 times, I think you probably you need to really sell something. Unless is the collector, like me, I never will sell something, all the thing, because some pieces I know, I can never find it back. So as a collector, you say never mind, it doesn’t matter, no matter how the price goes up, I would like to keep it. So it’s like a stock market. And also, who can predict the lowest prices to buy and the highest to sell, it’s a joke. So just buy at a time when economy is bad, when economy is extremely good and then think about sell.

A: We talked about this bubble too in Chinese contemporary art skyrocketed so quickly, have you seen that happen in another type of art before?

K: Oh yes, you remember, in 1980 when Japanese economy is so good, and then they buy so much impressionism, and then at that time, before the 90th, before Japanese economy comes down, my goodness, everybody said wow, the impressionist prices go also 10 times, 20 times and 95 Japanese want to sell, the collectors, so the market is no good, there were some transaction, no big deal, but look at the last five years, with New York and London impressionism, I would say, if I look at the prices, double the highest prices in the 1980, that means, the real good artist, one bubble comes down, but the next bubble goes up. I would say the price is even higher. The bubble is even bigger.

A: Yes, it’s almost like you can look at other instances and other types of art and read a little bit what’s going to happen to the Chinese contemporary art by what has happened in the past.

K: I think so, because I think you just look at the 1960 when we talk about the period of American contemporary art, I still remember Andy Warhol --- 89 or 90, when I was in San Francisco, any gallery is selling 200,000 US dollars to 5 million, you can easily get one piece excellent year of work. But the last five years, you know, so many 0, so even the prices come down, but it never goes back to the 90th. The thing with Chinese contemporary, say one example, 2004 if I buy a Chinese contemporary, Zhang Xiaogang, nearly the top 4 artist, and then the piece might cause me half million HK dollar, and now, people say, the bubble no more, and the price drop, I would say with the same pieces, even the prices drop so much with the last auction, you still need to use 5 million to buy the one I bought in 2004, so I would say, there’s still a long way to go back to the original price.