As the world’s major auction houses strategize ways to attract an increasingly important Chinese customer base, digital services are becoming a significant platform in which to engage buyers.
Sotheby’s first-half revenue results report released Tuesday stated that its $406.6 million in earnings in 2013 highlighted two of the most important trends that the auction house expects to drive strong growth in the future: the rapidly rising importance of Chinese buyers, and the growing role of digital platforms in facilitating customer engagement.
According to Sotheby’s, Chinese buyers are an integral part of the global company’s future business strategy. The report states that 22 percent of the auction house’s first-time buyers were from Asia, with Chinese buyers featuring prominently among them. On the company’s conference call, CEO Bill Ruprecht stated that Sotheby’s saw in the first half “greater penetration with mainland Chinese clients than in recent prior periods.” Ruprecht downplayed the impact of China’s current economic slowdown, stating, “In spite of the broad media bias toward China bearishness, we feel pretty good about our opportunities there, certainly over the medium and the long term.”
Connected to this long-term planning for China, according to Ruprecht, is Sotheby’s need to stay “relevant” there, especially to China’s younger affluent. Sotheby’s is “playing a generational game for relevance,” he said. This is necessary for Chinese clients from mainland China, Hong Kong, and Greater China, as well as for those “from all over the world.” The concept of global relevance among Chinese customers is likely one reason why Chinese art plays a prominent role not only in Sotheby’s Hong Kong auctions, but also in other international auction hubs such as London.
This bid for relevance has caused major auction houses to move quickly into the digital sphere in China. Ruprecht noted the global implications of Sotheby’s digital developments, stating that the company has been able to remain globalized through “an enhanced digital platform that serves clients at any time, any place and on any device.”
Meanwhile, international auction house Christie’s and Chinese domestic auction giant Poly International have also embraced digital platforms, seeing them as an important way to connect with Asian clients. Both have held online auctions in Asia. According to an article on CRI English, many experts believe the practice will become popular in China:
Art critic Zhu Xiaojun says that compared to traditional auctions, online auctions surpass the limitations of time and space. It enables people far away from the art to get to know and buy items more conveniently.
Zhu Xiaojun believes that online art auctions will be a future trend.
“It will become a trend in the art market because the Chinese economy now appreciates the transformation to e-commerce and e-branding; I believe its presence in the art market is inevitable.”
When it comes to online auctions, major international leaders such as Sotheby’s and Christie’s will likely have an advantage due to the fact that these names are most trusted when it comes to issues of authenticity, as Chinese auction houses are known to have problems with fakes. According to the article, many Chinese collectors are wary of buying online due to inauthentic goods:
Li Dexin, a professional collector of inscriptions, has online bidding experience that spans almost ten years. About 30% of his collections are from online bids, with values ranging from hundreds of yuan to tens of thousands of yuan.
Li Dexin says that he is conservative regarding online bidding for artworks due to the current Auction Law of China, which states that if the auction broker and consignor declare that they cannot assure the genuineness or quality of the item prior to the auction, they shall not be liable for assurance against defects.
These big-ticket auction items such as art, wine, and antiques will join China’s burgeoning luxury e-commerce market, on which official brand e-stores also have the advantage over smaller sellers of guaranteeing authenticity. China’s wealthy are likely to become more avid collectors in the future: they are not only driven by investments in hard assets, as can be seen by the scramble to purchase real estate, but they are also becoming more focused on cultural experiences. The major question that remains is not if they’ll buy more in the future, but how: either through traditional channels or by being plugged into a truly global online network.