Le-Min Lim, Bloomberg – June 26
Few people gave Zhao Xin a second look when he strolled into the biggest antique show in China’s coal city of Taiyuan, Shanxi, wearing straw-trimmed canvas shoes, black polyester-mix clothes, and a tobacco-stained grin.
That changed when he went to a booth run by Hong Kong dealer Raymond Chak. Pointing at Chinese gilt-bronze Buddha statues, he said, “Show me this, that, and that.” Ten minutes later, Zhao had bought about eight antiques for nearly 1.5 million yuan ($220,000). In the next hour, he spent at least another 2 million yuan on paintings, ceramics and other artworks at other booths, as bystanders looked on.
Zhao is one of the world’s biggest buyers of Chinese antiques, say art dealers like Shanghai-based Lu Feifei. He also belongs to a group of tycoons in China’s top coal-producing province of Shanxi, many of whom earned their wealth selling the fuel, and in recent years began paying top dollar for Chinese relics at auctions and galleries from Hong Kong to New York.
Reached on his mobile phone, Zhao simply said he was retired and wouldn’t say how he earned his money.
To court buyers in Shanxi — which has a reputation for being a cultural capital of sorts — about 50 of the world’s top names in Chinese antique sale flew from Hong Kong, London and the U.S. into Taiyuan to sell millions of dollars worth of ceramics, jade and snuff bottles. The city has an average per capita income of 15,230 yuan last year, and operates two flights a week to Hong Kong. Taiyuan is an hour by flight from Beijing.
“In Shanxi, it’s hard to tell who the rich guys are,” said Ronald Chak, a nephew of Raymond who helps run one of Hong Kong antique dealership Chak’s Co. Ltd., which organized the Taiyuan fair. “You’d think some were ordinary folks and then you see them step into their Mercedes 500.”
“According to estimates from Artron, total global auction sales of both fine and decorative Chinese art in 2007 summed to approximately 2.3 billion euros,” said the European Fine Art Foundation (TEFAF) in a report published in March this year. About $500 million of items are auctioned by Christie’s International and Sotheby’s, based on company figures and estimates. The others are sold in galleries or in person.
Like diamonds, the portability of antiques make them more attractive than property or bulkier assets for buyers who have to relocate in a rush and frequently, said Stephen Vickers, chief executive of Hong Kong-based FTI International Risk Ltd. Owners could then convert them back into cash once they have settled in a new location.
While Westerners still dominate the most-expensive segment of this market at auction, they are increasingly being challenged by buyers from mainland China, according to John Berwald, of New York-based dealership Berwald Oriental Art.
Christie’s says Americans are its biggest clients in this category of art, followed by mainland Chinese and Hong Kongers. While Shanxi buyers are new to the international art-trading scene compared with their Beijing and Shanghai peers, they are gaining a name as some of China’s fiercest bidders.
“They are a force to reckon with, no doubt about it,” said Kevin Ching, chief executive of Sotheby’s Asia, who attended the Taiyuan fair. On paper, Shanxi buyers formally accounted for just $4 million of Sotheby’s Chinese antiques at its Hong Kong auctions, though the actual figure is much larger because many bid through agents in the city, he said, declining to give specifics.
There are about 51,000 people in China who have 100 million yuan or more, according to Hurun’s latest China rich list, released in April. Of these, 1,050 are in Shanxi. The actual number of rich individuals in the province is probably more than twice the number on the list, said Rupert Hoogewerf, publisher of Hurun Report, which compiles China’s rich list.
“There’s a lot of hidden wealth in Shanxi,” he said.
Zhao owns the best private collection of ceramics kept by Qing Dynasty Emperor Daoguang (reign: 1820-1850) and dealers consider him a very important antiques buyer, according to Lu.
At the fair, Zhao asked about a red-beaded bracelet Raymond Chak wore; Chak immediately rolled it off his hand and handed it over. Zhao wound the new purchase on his wrist and carried on his shopping spree.
“Come to the antiques fair now,” he said into his mobile phone. “Today is their last day and a perfect opportunity to rip off RaymondChak.”
His posse laughed, Chak wiped his forehead and chuckled dryly.
“Zhao might not know which piece makes the best investment, but his aesthetics sense in antiques is probably better than even the dealers,” said Chak in an interview as Zhao shopped.
At first glance, there seems little about this northern province of 34 million people that hints at its wealth. Unlike coastal Shanghai or Guangdong, whose trade with the outside world created a class of traders and entrepreneurs, Shanxi is landlocked. In 2006, the per-capita income of its urban residents was 10,794 yuan, below the national average.
Still, Shanxi produces about 80 percent of China’s coal, the nation’s main source of fuel; it accounts for the biggest share of the province’s economy. As prices more than quintupled between 2002 and 2008, a class of new rich, dubbed “Coal Bosses” emerged in Shanxi.
Shanxi’s new rich have a reputation in China for brashness and ostentatious spending. In Taiyuan, taxi drivers recount stories of coal barons buying entire apartment blocks or Louis Vuitton bags by the dozens.
A coal baron of Xiaoyi City once bought 15 Hummers in one go, says state-run Jingji Cankao Bao. They also travel in groups to Beijing and Shanghai to buy property, state media say.
Even though coal’s value has nearly halved since its peak in August as growth slowed, many Shanxi tycoons are still putting their money in antiques, where the rarest items are fetching record prices as property prices tanked, said dealer Lu.
In May, property prices in 70 Chinese cities had their sixth straight month of decline, according to the Statistical Bureau.
At Christie’s Hong Kong sale last month, a pair of Qing Dynasty imperial gilt-bronze bells fetched HK$45.5 million, the priciest at auction.
“Antiques make better investments than most,” said Nie Zhihui, a collector who says he made his fortune selling coal to steel companies in the region. Nie, 40, wearing a buzz cut and black T-shirt, declined to say how much he’s worth.
In Taiyuan, nylon flags advertising the fair flapped in the filmy air, which reduced visibility to about 300 meters. In alleys, vendors touted pyramid stacks of watermelons by the road; street-side stores flashed neon signs advertising noodles and medicine. In some empty lots, the rubble of demolished structures is covered by blue-and-red tarp sheets.
The widest road in Taiyuan, a city of 3.4 million people, is a thoroughfare, six lanes each way, built soon after the 1949 Communist Party came to power in China, called Yingze Jie, which means Road to Welcome Mao Zedong. Mao never came to Taiyuan.
At the antiques fair, some haggled in the open as dozens gathered to watch the commotion, while others negotiated behind partitions; when it came time to pay, one buyer reached into his bowling bag and pulled out bundles of red 100-yuan notes, the biggest denomination of the Chinese currency, another said he would wire-transfer the money. After paying, some just tucked the purchases in their bags and left.
The organizer, Chak’s Co., didn’t answer requests seeking attendance and sales figures.
Most of the booths reported strong sales. Hui Zengjiu, a Beijing-based dealer specializing in antique Buddha beads and enamels, said he had recouped the 50,000 yuan he paid for his 3 meter-by-3 meter booth. The booth of Priestley & Ferraro, with a store on London’s King Street, was seen selling some ceramics.
“A lot of China’s finest treasures are in the hands of Shanxi collectors,” said Ching.
None has found its way in the form of loans or donations to the Shanxi Museum, about 3 kilometers southwest of the World Trade Hotel, where the antiques fair is held.
Chen Fenxia, a Shanxi Museum spokeswoman, said she’s heard of art buying by the province’s tycoons.
Asked if Shanxi Museum, which gets its annual funding of 10 million yuan from the government, would accept loans or donations by tycoons, she said, “I imagine they bought the antiques only as investments.”
At the fair, Zhao turned and told an accompanying friend, Feng Buwu, “Find something you like and buy it. Be quick.”
Antiques dealers must be thinking the same.