The international art auction world has long been dominated by Sotheby's and Christie's hich have more than 500 years of history between them. But recent Hong Kong auctions have heralded the emergence of two new rivals – from China.
Poly International Auction, the world's third-largest auction house by sales, held its first international auction in Hong Kong over the weekend. The Beijing-based subsidiary of a Chinese defense company said its two-day sale raised HKD$520 million ($67 million). The top bids includes a 20th Century painting of two tibetan women by Chinese painter Zhang Daqian, which fetched HK$48.3 million.
Last month, China Guardian, the world's fourth largest auction house, also held its first sale outside the mainland, in Hong Kong. Headed by Wang Yannan, daughter of former Chinese leader Zhao Ziyang, Guardian achieved $59 million in sales, 2.5 times higher than the pre-sale estimate, according to ArtTactic, an art market research company.
Between them, Poly and Guardian have only 26 years of history – a lot of it during a bull market for Chinese art which according to some estimates recently catapulted China into first place as the world's largest art market.
Poly's weekend sale saw modern Chinese jewelry and art, ceramics and antiques auctioned in Hong Kong, in a move to bring the global trade in Chinese art back where Poly thinks it belongs: in a Chinese auction house.
Zhao Xu, Poly's executive director, has little doubt about its ability to compete with foreign rivals that have been selling Chinese art for decades.
"Overseas Chinese still prefer a big Chinese auction house run by Chinese people to help them sell their art works," says Mr. Zhao, explaining that "Chinese people know better" about Chinese art.
While the Chinese houses are confident about their future, Kevin Ching, chief executive of Sotheby's Asia, which had its best year in Asia last year with $1 billion in sales, says some of them may need time to do things "the Hong Kong way". He adds that while some Chinese houses meet international auction standards, in his view, others do not have the same level of "transparency".
Ms Wang of Guardian, which has gained a reputation as the most professional of China's big auction houses, says that there remains a gap between how business is done in the west and on the mainland.
"Auctions catch the eye of people, but auctions are just a small part of a larger picture," she says, referring to differences between Chinese and western business practices in general.
While the Chinese houses have burst on to world stage, they are not immune to the Chinese economy. Feeling the economic slowdown on the mainland, wealthy Chinese people have responded by buying less art. This year's Hurun Rich List, which chronicles China's wealth, found that the richest 1,000 mainlanders saw their wealth fall 9 percent from last year.
(Read More: China's Ultra-Rich See Shrinking Personal Fortunes)
Art auctions have fallen even more, partly because of a mainland government crackdown on tax avoidance. ArtTactic says total Chinese auction sales from the big four houses – Sotheby's and Christie's in Hong Kong, Poly and Guardian on the mainland – fell 32 percent from $2.2 billion in autumn last year to $1.5 billion this spring. The overall result was 43 percent lower than the peak of the Chinese art market in spring 2011, ArtTactic said.
The internationalization of the Chinese art trade is also not one way. While Chinese houses are venturing overseas, Sotheby's has set up a joint venture on the mainland, in which it holds 80 per cent of the equity, with the Beijing state-owned Gehua Art Company.
Chinese law prevents foreign auction houses from selling antique Chinese paintings, ceramics or other "cultural relics" on the mainland. But Sotheby's is hoping to establish a foothold with auctions of jewelry, watches, wine and western art, sold in a free-trade zone.
In the medium term, experts believe that there should be enough business to go around: mainlanders have few alternative locations to park their money. Mainland financial markets are shallow, the property market is tight, interest rates are low and some may not want to admit where they got all that cash in the first place.
Additional reporting by Yan Zhang