A Tang dynasty camel, anyone?

Ceramic sculptures of the ruminant mammal may not have the popular currency of Chinese-made lighters or DVD players, but Chinese art – where Made in China is a good thing – has been traipsing its way to record prices, climbing on the purchasing power of a widening pool of collectors willing to pay millions for a 14^th century blue and white jar here and a Qianlong period armor there.

Ever responsive to emerging tastes and opportunities, many international auction houses are putting more attention and resources in their Asian operations, centering on Hong Kong.

But with the rising number of mainland buyers a tantalizing sign of a large new market, can China, specifically Beijing, be the next frontier for international art auctions?

Many say it is – citing growing sales within China. But there are questions about how international it can really be.

While China may be home to untold hordes of potential collectors, concerns about provenance issues as well as currency and export restrictions drive away many Western collectors from buying or selling in the mainland, diminishing access to both major pieces and clients.

Also, in the world’s most populous nation the world’s most prestigious art auction houses can show but not sell because of cultural protection laws. While no one contests China’s right to safeguard cultural treasures or its concerns about smuggled artifacts, some believe international auction firms could help China further toward becoming a more desirable destination for art auctions.

“The best auction is when you can bring the most unencumbered art to a single place, you can bring as many eager collectors as possible to that place, and then have them competing against each other,” explained Henry Howard-Sneyd, Sotheby’s managing director of Asia and Australia.

And competing they are. People in Asia are out shopping for art. Japan’s resurgent economy, Russia’s annual growth, and the wealth of potential collectors in China have animated the art world in the East.

Asian buyers splurged $235.4 million in Sotheby’s 2005 sales. In 2003, the number was $100 million.

Taking center stage is Chinese art. Driven by interest in China and the growth of Asian economies, the ranks of Chinese art collectors have swelled to include not only an increasing number of mainland Chinese and other Asians but also many Americans and Europeans.

At present the heart of Asia’s art market is Hong Kong. In 2005, Christie’s Hong Kong Asian art sales brought in over $190 million to set a precedent for an Asian art auction series. The excitement has continued in 2006: earlier this year Christie’s sold a Ming porcelain vase at its Hong Kong sale for US$10.2 million, a record price.

While Hong Kong now reigns as the center of art commerce in Asia, the lure of the new and rich makes mainland China a potential coming attraction.

The part of mainland collectors, while still relatively small, is pronounced. Hong Kong sales to mainland buyers have risen from zero to 20 percent at Christie’s; they make up 30 percent of Sotheby’s Asian art sales.

Both Christie’s and Sotheby’s have representative offices in China, with pieces toured through Beijing and Shanghai to entice mainland collectors to attend auctions in London, New York and primarily Hong Kong. According to Ken Yeh, deputy director of Christie’s Asia, Christie’s may add Hangzhou and other cities to its itinerary in the near future.

Springing to life in the early 1990s, the mainland Chinese art market has grown tremendously, and is now widely regarded as the strongest place in the world to sell Chinese paintings.

China’s 10 leading auction houses generated $1 billion in sales in 2005, a ten-fold increase from 2000. China’s leading art auction firm, China Guardian, raised RMB 697 million in its Beijing Autumn auctions in 2005, compared with RMB 480 million in 2004. Beijing auction rooms now draw larger crowds than those in London or New York-based Chinese art sales.

Though Mainland collectors have mainly dwelled in mid-level prices, China’s large and hungry buying public gives it the basic requirements for an auction market.

“Certainly in terms of the client base, the established demand for cultural artifacts, in terms of the buying power, particularly in the major cities, [mainland China is] certainly a viable venue,” said Colin Sheaf, head of Asian art at London-based auction house Bonhams, which is concentrating on building its brand in Asia in 2006.

Yet there are several factors that prevent Beijing from taking on a greater role in the international art auctioning scene.

Hong Kong’s mature financial and legal infrastructure, clear and unrestrictive export rules and reputation as a world class city make the 1997 China returnee everything an auctioneer could ask for – a destination attractive to all prospective participants.

“At the moment, we regard Hong Kong as the best place for our operations,” said Robin Woodhead, Sotheby’s chief executive of Europe and Asia. “We see it as a part of China, it’s a highly efficient center, and it attracts lots of buyers from all over the world, including mainland China.”

In contrast China does not have the same draw, both to sellers and buyers.

Tuyet Nguyet, editor of the trade magazine Arts of Asia, said many international collectors and even those in the mainland who hold major works have told her they prefer to consign their pieces to Hong Kong because of the vagaries of how the government will respond to provenance issues.

Consequently, Chinese auction firms – while strong sellers of Chinese paintings – have largely been unable to secure major ceramics and other antique objects.

Complex foreign exchange rules, stringent export restrictions, and even language barriers dissuade many American and European buyers – who make up a large portion of new Chinese art collectors and dominate the highest price level – from participating in a mainland auction. And for many in the West, both those in the international financial and collecting communities, Beijing is still a largely unfamiliar place.

Chinese authorities also have little experience in dealing with art-related legal uncertainties if complications arise, not something particularly comforting to collectors with hundreds of thousands of dollars at stake.

“Because the legal system in China is largely inexperienced and untried with regard to art-related issues, such as forgery, theft, cultural property issues, and the like, many foreigners are still hesitant to sell art in China,” said artist and Chinese art specialist Arnold Chang, who was formerly director of the Chinese painting department at Sotheby’s.

Some of these issues will likely be resolved by time, as China’s legal environment and art auction industry mature. But foreign participation could speed the process along, according to some in the international art field.

In addition to improving standards of scholarship, presentation and cataloging, international auction houses – with their wide spread connections and established reputations – would bring much greater access to objects, including non-Chinese art, which in turn would lure more buyers.

More important, Christie’s and Sotheby’s could boost market confidence by injecting greater credibility in a market where companies have only been operating for slightly more than a decade.

“[International auction houses] would offer a level of expertise, knowledge and experience and hopefully a level of confidence in the works of art being sold,” said London-based Chinese art dealer Roger Keverne in an email message.

But for now they can play no part. Since 2004 international auction companies have been allowed to set up auctioning operations in China. But cultural protection laws prevent firms from selling pre-1949 artwork – essentially all things an art auction house would want to sell in China – without an additional certificate from the Cultural Relics Bureau. So far only Chinese art auction companies have been granted permission.

It is not uncommon for China to open an industry only for foreign competition to be excluded or forced into partnerships by the requirement for licenses only issued to Chinese companies. Here, there is the added legacy of looting by foreign forces, making the handling of Chinese artifacts by international companies a potentially sensitive matter, though this has not been an issue in Hong Kong.

Yet while Beijing may not supplant Hong Kong as Asia’s art auction center, China remains a market of interest.

Looking to capture Chinese sales, last November Christie’s partnered with the Beijing-based Chinese auction firm Forever International Auction Co. Ltd., licensing its brand and providing expertise and assistance over the whole auction process.

The auction of modern and contemporary Chinese paintings produced US$12.1 million in sales, an outcome that Christie’s Yeh said the company was very pleased with. Christie’s intends to license its brand to Forever again.

Others are content to wait, especially as many collectors are willing to shop for Chinese art in the world’s established art centers.

Describing Beijing’s future potential as a “unique local market”, Sotheby’s Woodhead pinned the company’s plans on “whether or not we think there is additional business to be achieved in that area, in Beijing particularly, over the business we can do here in Hong Kong and now elsewhere.”