Daily Archives: September 16, 2009

Higher Import Taxes Fail To Slow Porsche’s Growth In China

High-End Buyers Unfazed By Government’s Tax Increase, Pushing Luxury Brand To Higher Sales Figures

Porsche debuted its new Panamera at the Shanghai Auto Show this year, indicating its commitment to the Chinese auto market

Porsche debuted its new Panamera at the Shanghai Auto Show this year, indicating its commitment to the Chinese auto market

If Porsche’s top executives were concerned last year when the Chinese government imposed a higher tax on high-end imported European vehicles, they can now breathe a sigh of relief, as sales figures indicate that the tax hike did nothing to slow Porsche’s growth in the mainland — and actually may have had the opposite effect. Among China’s business elite and/or nouveau riche circles, conspicuous consumption has become a way of life, and as such owning a car for which you had to pay upwards of $35,000 in import taxes alone is a good way to flaunt your cash.

As the Globe and Mail points out today, China’s import tax seems to benefit all parties involved — from the car companies who are recording record profits in China, to the government offices collecting mountains of tax revenue, to the conspicuous consumers cruising around Beijing or Shanghai in their pricey sports cars:

Shortly after the Beijing Olympic games last summer, the Chinese government slapped a hefty luxury tax on imported European cars with high-horsepower engines. Klaus Berning, the Porsche executive vice-president of sales and marketing who attended the Frankfurt Auto Show, said the tax added $35,000 (U.S.) or more to the price of a Porsche.

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“Something’s Brewing” (Literally) In China

Popularity Of Coffee In the Chinese Market Leads To Rapid “Luxurification” Of The Standard American Coffee Shop

Chinese coffee chains like Ming Tien tend to promote their food and coffee in equal measures, but their comparatively high prices make it difficult for them to rival juggernauts like Starbucks

Chinese coffee chains like Ming Tien tend to promote their food and coffee in equal measures, but their comparatively high prices make it difficult to rival juggernauts like Starbucks

While any visitor to China’s biggest cities will quickly become accustomed to seeing familiar sights like Starbucks on virtually every corner, until recently coffee has remained something of a luxury in the world’s most populous  nation. Although tea has reigned supreme in China for thousands of years, after 30 years of internationalization the country has opened up to new beverages at a never-before-seen rate: whiskey has become the drink of choice for many of China’s business and political elite, Chinese collectors are snapping up prize bottles at fine wine auctions, China consumes more beer than any other country on earth, soft drink companies like Coca-Cola lean on their reliable China profits, and now coffee is quickly becoming less of a niche drink and more of a daily necessity for millions of Chinese.

Though coffee is less widely consumed in China than other beverages, Chinese coffee chains have multiplied in number in the last 20 years, with large mainland companies like Ming Tien Coffee Language and Taiwan’s UBC Coffee becoming somewhat ubiquitous even in smaller second- and third-tier cities that are less westernized than Beijing, Shanghai or Guangzhou. China International Business today looks into the sustainability of this growing interest in coffee in China, and how companies like Starbucks and other major foreign chains have capitalized on their “foreignness” to promote coffee as a sophisticated, “western” drink that stands in stark contrast to tea:

According to the April 2009 Euromonitor International Report, the total volume of coffee sold in China grew over 10% in 2008, a hefty figure compared to the world average of roughly 2%, and Starbucks — which opened their first Chinese mainland coffee shop in 1999 in Beijing — isn’t the only one leading the charge, far from it in fact.

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Chinese Art Collectors Buying In NYC, Expect Trend To Continue In HK Auctions

New York Auction Of Ancient Chinese Antiquities Draws Fevered Bidding, High Proportion of Mainland Chinese Collectors

The rising influence and enthusiasm of mainland Chinese art collectors is a subject we revisit very often, because the long-term implications of a strong domestic collector class could be huge for owners (or potential buyers) of Chinese art of all classes — from antiquities to contemporary Chinese art. At this week’s auction of Chinese antiquities from the Sackler collection, which brought in $3,285,875 — triple the low estimate — and was 97% sold by lot (99% sold by value), all of the elements that we feel will completely reshape the Chinese art world over time — mainland collectors and intense competition for scarce pieces from historical artists or rare antiquities — came to the forefront. This chart from Art Market Monitor speaks for itself:

Screen-shot-2009-09-14-at-9_24_12-PM

While the huge gap between the estimates and realized prices is noteworthy, as it indicates strong bidding, what I feel is most important about this chart (and, to be more specific, the results as a whole) is the overwhelming proportion of Asian buyers. While, as usual, this chart does not specify the buyers’ countries of origin, from other reports (and previous trends) we can be fairly confident that these buyers are primarily mainland Chinese. With 80% (or, at least, most of that 80%) being Chinese, and the highest bidder at the auction being a private buyer, these auctions give us a good sense of the possible future of Chinese arts auctions.

Up for auction in Hong Kong on October 6: Ai Weiwei's “A Gift from Beijing (set of three works)”

Up for auction in Hong Kong on October 6: Ai Weiwei's “A Gift from Beijing (set of three works)” -- Estimate: US$ 30,800-44,800 (HK$ 240,000-350,000)

With upcoming auctions like Sotheby’s Autumn auction in Hong Kong on October 6 expected to draw a similar high proportion of Chinese buyers, it appears the era of the Chinese art collector is ramping up. While they are still a relatively small group (based on population and compared to the number of western collectors), over the past few years Chinese buyers have indicated that they are often willing to spend whatever it takes to get a piece of art that means something to them — whether on a personal or patriotic level. A good example of this was yesterday’s sale of an imperial desk set, which belonged to the Qing Dynasty emperor Qianlong — who remains a popular figure in Chinese history. As Art Market Monitor reported today, this desk set brought in $1.4 million — over an estimate of only $30,000. I would have loved to be in that room when bidding was going on.

(Via Art Market Monitor)

(Via Art Market Monitor)

Another piece of good news in the Asian art world comes from Sotheby’s this week, as their vice chairman of Asian Art, Henry Howard-Sneyd, said ahead of today’s sales of Chinese and other Asian art, “We’re aiming as high as we can.” As Reuters notes, Sotheby’s is confident that the art market in Asia is in a good place right now, as evidenced by recent sales and trends that suggest a resistance to the global economic woes that are keeping many western art buyers indoors at the moment:

A rare mother-of pearl inlaid black lacquer wine table, dating to the Wanli Period (1573-1620) that once belonged to Mrs. Nelson Rockefeller, is expected to be among the top selling items in one of two Chinese works of art auctions on Wednesday. It could fetch up to $600,000.

Also included in the sale is a pale celadon jade carved brushpot, Bitong, dating to the 18th century that could sell for as much $400,000, and a large bronze figure of an 11-headed and multi-armed Avalokitesvara, one of the most important Buddhist deities, with an estimated price tag of $200,000.

“We see the price and interest in Asia art going higher and higher,” Howard-Sneyd added.

Forty lots of Chinese furniture from the collections of Dr Arthur M. Sackler, a psychiatrist, businessman and philanthropist, will also go under the hammer on Wednesday.