Booty Up For Bid!
By Lenora Chu

A mysterious buyer bid on two Chinese antiques at a Sotheby’s auction in Hong Kong this week and took home an 18th century Qing dynasty vase and a bronze tiger sculpture for the bargain price of $4.67 million. Sound strange?

It is. The buyer would identify himself only as a representative of a company under China’s State Administration of Cultural Relics, but auction haunts identified the man as a member of the China Poly Group, a state-owned company in Beijing. So it turns out the Chinese government is trying to gather cultural relics back into its womb.

The government claims the Imperial vase and tiger sculpture were looted in 1860 from Yuan Ming Yuan—Beijing’s Old Summer Palace—by French and British troops during what was called the Second Opium War. And Beijing’s objections and local protests against the sale of the relics in Hong Kong have been loud.

Nevertheless, the items went to auction, and after exchanging hands in a number of countries over a span of almost 150 years, the items are once again in China’s possession.

Just two days earlier, China Poly Group bought two bronze sculptures—also claimed to be stolen from Yuan Ming Yuan—from Christie’s, Sotheby’s rival auction house. The purchased items were sculptures of the heads of an ox and a monkey from the same water clock that housed the tiger sculpture sold at Sotheby’s.

This turn of events may not bode well for the world’s two master auction houses—Sotheby’s and Christie’s—who have each devoted time and money to expanding their business on mainland China. A number of Chinese citizens have protested outside the doorts of the Hong Kong auction spots, claiming that the houses are adding insult to injury by selling looted Chinese treasures on Chinese soil.

And that’s the least of their problems. Since 1992, the U.S. Justice Department has noted that each house has raised and lowered commission rates to match each other’s moves, multiple times over the years and sometimes within just a few weeks. Further, Sotheby’s and Christie’s pulled in a strikingly similar $2.26 billion and $2.25 billion last year, respectively. Even more notably, they together control 95 percent of the world auction market. These facts alone make an arguable case for monopoly control and—collusion. And indeed, they have.

Earlier this year, the Justice Department accused Sotheby’s and Christie’s of colluding to rig the auction market by fixing their commission rates. Auction houses charge two commissions on sales—one from the buyer and one from the seller. A class-action suit as been filed against the auction houses, making anyone who bought or sold art at either Sotheby’s or Christie’s eligible to collect damages. Meanwhile, the damage to the auctioneers’ reputations is immeasurable.

All this tumult comes at a time when Chinese art enjoys unparalleled popularity. The past few years’ economic boom—prior to April, that is—gave interested parties all over the world more money to spend for fine collectibles.

The Hong Kong handover to China in 1997 also did its part in fueling the demand for Chinese art. Many in the art world were afraid that Chinese art residing in Hong Kong would then be subject to strict Chinese government policies seeking to keep cultural relics in the country. Any new restrictions on the Hong Kong art trade, of course, would make Chinese art a rarity on the world market, increasing the value of its caché.

But, ironically, a significant number of Chinese cultural relics had already left the country in the years prior to the handover.

Experts have said that ever since Britain agreed in 1984 to withdraw from Hong Kong, Chinese art has been surreptitiously trickling out of China. Some Hong Kong art dealers established dual citizenship, buying second homes overseas to store their art and antiques. Others shipped valuables to climate-controlled art warehouses around the world. And several museums have been lucky recipients of vast Chinese art collections on loan from private collectors in Hong Kong.

In the end, price-fixing snafus, tarnished reputations and the sale of looted relics simply add another dimension to the challenge Christie’s and Sotheby’s already face—how to maintain livelihood. We all know about the onslaught of online auctioneers which has already flooded the market for collectibles.

Ebay, the most famous example, boasted a market capitalization of $18.7 billion at May 2 market close, or 18 times Sotheby’s market cap of $1.03 billion. And this is after Sotheby’s ventured online in a partnership with Amazon.com. To date, privately-held Christie’s has eschewed any online ventures.

To Christie’s credit, the auction house cooperated with U.S. customs officials in March to stop the sale of a 10th-century marble sculpture that was said to have been stolen from an ancient Chinese tomb in 1994—the Five Dynasties tomb of Wang Chuzhi in northeastern China’s Hebei province. Then again, Christie’s was under pressure from the U.S. attorney’s office that time.

In any case, the year 2000 to date has been a rocky time for Christie’s and Sotheby’s, both making art history since the mid-18th century. Perhaps it’s time to move aside for a new era.