Category Archives: Investment

Interview: Can China’s Luxury Brands Compete At Home And Abroad?

NPR Interview With Nicholas Lardy Of The Peterson Institute for International Economics Discusses How To Make “‘Made In China’ Mean Luxury”

High-end fashion brands like Shanghai Tang are part of the first wave of Chinese luxury brands from the mainland and Hong Kong

High-end fashion brands like Shanghai Tang are part of the first wave of Chinese luxury brands from the mainland and Hong Kong

We’ve written before about domestic Chinese luxury brands, and the way these brands are working to appeal to luxury consumers in that country by resonating on a cultural level rather than simply promoting their exclusive price-points. In the next few years, as Western luxury brands lose a little of their initial luster in top-tier markets, although they’ll probably maintain their draw in second- or third-tier markets, many analysts think there will be a great opportunity for Chinese luxury brands to squeeze into the luxury market.

In an interview with NPR today, Nicholas Lardy, “a senior fellow at the Peterson Institute for International Economics, a non-profit, non-partisan group based in Washington, D.C,” discusses how China’s burgeoning middle class (which, at more than 200 million potential customers and growing, has the potential to revolutionize buying trends) — rather than the small proportion of “ultra-rich” — will be the customers who will lead to the ascendance of Chinese luxury brands.

SIMON: Now, some of us remember when the term made in Japan was synonymous with inexpensive, dare I say, cheap goods. And of course in our lifetime that’s changed entirely. Made in Japan now means quality, particularly in the car industry. Is China trying to expand in the manufacture of high-quality items itself?

Mr. LARDY: It’s not only trying, I think it’s succeeding and it’s succeeding much earlier than Japan did for the simple reason that they’ve allowed foreign firms to play a much bigger role. We buy computers that say Dell or Toshiba and so forth – they’re all made in China. They’re made by foreign companies operating in China, assembling all the parts and components there.

Continue reading

Hong Kong Apartment Is World’s Most Expensive

Five-Bedroom Luxury Duplex In City’s Mid-Levels Area Sells for US $57 Million

The world's most expensive apartment was recently sold in this building for 57 million US dollars

The world's most expensive apartment was recently sold in this building for 57 million US dollars

We’ve written before about the Hong Kong real estate market’s relatively fast rebound in the face of the global economic downturn, with exclusive properties like The Masterpiece attracting the attention of well-heeled mainlanders and Hong Kong residents alike. This week, an apartment in Hong Kong’s Mid-Levels area sold for a record-breaking HK$439 million,  or around US$57 million, and analysts expect a continued flow of money into the city’s luxury real estate markets as cash-rich individuals look to take advantage of the Hong Kong government’s recently lowered interest rates and the city’s appeal as an investment  haven.

Today, the AFP writes on the recently sold duplex, noting that the massive flood of mainland money coming into the market is exciting developers but worrying some economists who think this year’s 40% leap in the luxury property sector portends that a property bubble could be forming:

“You may see some more record-breaking prices in the luxury segment,” said Buggle Lau, chief analyst for Midland Realty.

“We have all the ingredients for a bubble coming up… With low interest rates and ample liquidity people are inclined to put their money into real estate.”

Demand from mainland Chinese investors looking to diversify their new-found wealth and snap up trophy property assets was also likely to buoy the market, said Savills’ head of research Simon Smith.

“There is quite a lot of momentum out there. If you look ahead there’s a chronic undersupply of residential units for luxury and the mass market,” he added.

Bugatti Opens First Showroom Outside France In Beijing

Luxury Carmaker Builds Showroom On Jinbao Street In Response To Growing Chinese Demand

Bugatti's choice to open a showroom in Beijing shows the company's intention to expand in the China market

Bugatti's choice to open a showroom in Beijing shows the company's intention to expand in the China market

China’s growing automotive demand has been great for automakers of all stripes, from up-and-coming budget domestic brands to the world’s most expensive and exclusive marks. Already this year, companies like Japan’s Mitsuoka Motor Co have announced their intentions to build showrooms in China, Porsche debuted its Panamera Turbo at the Shanghai Auto Show, Ferrari created a China-only version of its 599 GTB Fiorano, and Rolls Royce received 20 orders for its $250,000 Ghost after presenting the automobile in Hong Kong.

Now Bugatti, the high performance French automaker, has opened its first-ever showroom outside of France, located on Beijing’s swanky Jinbao Street. From Alibaba News:

“The opening of the show room, the first one in the world, shows Bugatti’s confidence in China‘s luxury carmarket, “said Mr Kuo-chung, President of Bugatti China. 

Kuo-chung said backed by sustained economic boom, China now has a significant number of billionaires, pointing to the annual Hurun Report which said China now has more known dollar billionaires than any other country bar the United States.

Chinese Art Critic Li Xianting: Collecting Chinese Contemporary Art Is A Kind Of “Cultural Creation”

“Godfather Of Chinese Contemporary Art” Advocates Collections Develop To Ensure Art Can Be Seen In China

"The Godfather of Chinese contemporary art," Li Xianting (Photo: ArtZine China)

"The Godfather of Chinese contemporary art," Li Xianting (Photo: ArtZine China)

At recent events like the Global Collecting Forum and the Songzhuang Art Festival’s Conference of Collectors of Chinese Contemporary Art, a major topic of discussion among Chinese scholars and art critics has been the need for Chinese collectors of contemporary art (and Chinese museums and galleries) to acquire more top-quality pieces while educating the public on the history, subject matter, figures and current state of Chinese contemporary art.

At the Songzhuang Festival, Chinese art critic Li Xianting — who has been called the “Godfather of Chinese Contemporary Art” — gave a speech in which he said collecting Chinese contemporary art is a form of “cultural creation” which requires the urgent attention of Chinese collectors. Since the breakout of Chinese contemporary art in the late 1970s and its development over the years, the majority of major works of art have been acquired by Western collectors, and although that is changing gradually as Chinese buyers amass their own collections, Li still sees disequilibrium in the global marketplace. By building collections of Chinese contemporary art now, and continuing to patronize Chinese artists in the same way the Medici family did in Renaissance-era Italy, Li feels that Chinese art can reach the Chinese people themselves by building a new form of aesthetic education while stemming the flow of artwork out of the country.

Artxun (Chinese) posted the entirety of Li’s speech today. Translation of excerpts by ChinaLuxCultureBiz team:

Collection is a kind of cultural creation, and in collecting contemporary art one must face value standards, but value standards in a progressing era are of a very uncertain ideological form, and collectors — through their behavior — have to confirm whether they’re actually qualified to become the builders of value standards in the era in which we live. Every major collector who made an important contribution to art history, such as the Renaissance-era Medici family or the Guggenheims, Ludwig II…the famous American and Italian Guggenheim museums, and Germany’s Ludwig Museum — named after these collectors — because of these people and places collecting artwork, some of these works of art have become critical elements of art history.

Continue reading

Global Collecting Forum Held In Beijing

Forum Provides Opportunity For Western, Chinese Collectors, Curators And Artists Come Together To Discuss Future Of Art Collecting In China

Western and Chinese experts discussed a wide range of important issues in art collecting at the Global Collecting Forum in Beijing (Photo: CRI)

Western and Chinese experts discussed a wide range of important issues in art collecting at the Global Collecting Forum in Beijing (Photo: CRI)

Although the last few years have seen the rapid rise of the New Chinese Collector of contemporary Chinese art, the relatively late arrival of Chinese collectors means that the vast majority of major works of contemporary Chinese art remain in the collections of Western art collectors (such as the former Swiss diplomat-turned-prolific collector Uli Sigg, who owns around 2,000 pieces) or Western art museums and galleries. Although buying trends are changing, as more Chinese collectors and curators start to bolster their collections and diversify the artwork they acquire, one of the unique challenges that art lovers in China must face is the dearth of contemporary Chinese artwork available for view in their local museums and galleries.

With these issues — the underdevelopment of Chinese art museums and the growing interest in private art collection in China — in mind, this weekend the Global Collecting Forum was held at Beijing’s Reignwood Theater. The forum brought together a number of prominent Western and Chinese art collectors, museum curators, gallery owners and artists, whose work was shown at an exhibition which included pieces by prominent Chinese artists like Cai Guoqiang, Xu Bing, Liu Xiaodong and Wang Guangyi. According to Cultural China:

[Chinese writer-filmmaker Sun Shuyun], who was a guest at last year’s ISD forum, has met some of the world’s best-known art collectors and museum directors there. But she was somehow left with the impression that many of these “leaders of art collecting actually knew very little about Chinese art.”

The situation is expected to improve as this year’s forum brings over 30 leading art experts from Europe, the United States and Russia to meet with their Asian counterparts in the Chinese capital. Those set to show up include Baroness Kennedy QC, a trustee of the British Museum; Alexandra Monroe, senior curator at the Guggenheim Museum; and Derek Gillman, director of the US-based Barnes Foundation, a top collector of Post-Impressionist paintings.

Continue reading

Chinese Acquisition Of Scottish Cashmere Producer Todd & Duncan “Sewn Up”

Ningxia Zhongyin Becomes First Chinese Firm To Take Over A UK Cashmere Company, Eyeing Growth Of Domestic Market In China

Ningxia Zhongyin is one of the world's top producers of cashmere fibers -- with its acquisition of Todd & Duncan, it has greatly increased its global footprint

Ningxia Zhongyin is one of the world's top producers of cashmere fibers -- with its acquisition of Todd & Duncan, it has greatly increased its global footprint

Cashmere, a major contributor to the economy in China’s mid-western Ningxia Hui Autonomous Region, has quickly become big business in China, as more companies in Ningxia attempt to move beyond producing raw cashmere and into the much higher profit-margin sector of finished product exports. Of the major cashmere producers in Ningxia, in the last few years the Ningxia Lingwu Zhongyin Cashmere Company has emerged as the most ambitious, with executives making it clear that the company wants to not only capture the lucrative Chinese domestic market but also the even more lucrative overseas market.

To secure both groups of customers, the company has set out to acquire marquee foreign brands, which have the brand history and pedigree to appeal to Chinese luxury consumers. Last year, Zhongyin made its first moves to try to acquire the Scottish firm Dawson International, a deal that ultimately fell through but showed Zhongyin’s intentions to break into the Scottish cashmere market. From China.org:

In 2008, the Ningxia-based Lingwu Zhongyin Cashmere Company entered into negotiations to take over 120-year old Dawson International, widely regarded as the world’s number one cashmere business. Although the takeover talks were called off on June 4, the bid was an indicator of the ambition of Ningxia’s emerging cashmere giants.

Continue reading

Chinese Buying Drives Sotheby’s Hong Kong Sale To $170 Million

Bidders From Mainland China Dominate As Expectations Are Surpassed In Landmark Autumn Auction

Chinese contemporary artist Liu Ye's "Portrait of L" sold in Hong Kong for $209,000 over its high estimate

Chinese contemporary artist Liu Ye's "Portrait of L" sold in Hong Kong for $209,000 over its high estimate

Over the last week, we’ve followed the Sotheby’s autumn auction in Hong Kong, which included sales of everything from fine wine to antiquities to contemporary Chinese and Asian art, noting that sales were well above estimates and sell-through rates were promising. Today, in a wrap-up of the sales, Le-Min Lim of Bloomberg illustrates how this series of auctions, led by Chinese rather than American buyers, represents a major shift in auction buying trends:

The total beat both the presale estimate of HK$950 million and last year’s auction, which raised HK$1.1 billion ($141.7 million at that time), half its forecast, three weeks after Lehman Brothers Holdings Inc.’s September 2008 failure.

“The bidding was intense,” auctioneer Henry Howard-Sneyd said in an interview after the auction. The mood in the saleroom was “electric” when Emperor Qianlong’s throne came on the block yesterday, he said: “This shows when the right item comes along, the money is there — especially from China.”

Chinese collectors have come out in force over the last year, recognizing quality lots and quickly developing a sophisticated eye for collection-worthy wines and paintings. In terms of antiquities, an area in which Chinese collectors have more experience, however, they seemingly can’t be beat:

The strength of Chinese bidding at the antiques sale defies a decade-old trend of Western dominance at the priciest end of the market. As recently as June, Sotheby’s rival, Christie’s International, said Americans were its top clients in this category, followed by the Chinese and Hong Kongers. Of the 2,400 lots offered this week, 88 percent found buyers.

The Chinese also bought the priciest wines and oil paintings by masters and contemporary art. Over the weekend, a Chinese buyer paid a record $94,000 for a 6-liter bottle of Chateau Petrus 1982; another spent HK$7.3 million for a 1984 oil-and-color on paper by Li Keran at the auction of classical Chinese paintings; while a third spent HK$36.5 million on a mid- 1950s oil-on-board painting, “Lotus et Poissons Rouges” (“Lotus and Red Fish”) by deceased Chinese master Sanyu.

While this article claims contemporary art underperformed, I think the sell-through at the contemporary Asian art auction speaks for itself. If lumping together all of the pieces at the contemporary auction — which included Chinese, Japanese and Korean artists in one large sale — I would say the final tally is brought down significantly by the Japanese and Korean artists, who sell, on the whole, for significantly less than quality Chinese contemporary artists.

In terms of the Chinese artists up for grabs in the contemporary sale, selling rates were excellent, with 5 of the 6 Zeng Fanzhi paintings up for auction going for well above than their high estimates, Yue Minjun’s “Hats Series – Two Lovers” selling for $372,000 over its high estimate, and works by top Chinese artists like Liu Ye, Wang Guangyi, and Huang Yongping destroying pre-sale estimates.