Launching the Company to Help Eliminate the Pain

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3. Launching the Company to Help Eliminate the Pain

Given the aforementioned market of challenges and pains, Sello de Agua Art（洋璽藝術) main value is to enter the market and promote in Taiwan and in China valuable visual contemporary art and successful artists coming from Latin America.

This will help increase the value of Taiwanese art collections, the enjoyment of collectors, and serve as new investment opportunities in the art sector. It will also open a growing market for Latin America art through an effective and trustful channel of promotion.

The type of artists that will be promoted by Sello de Agua Art（洋璽藝術) will be the key point in the value proposition and a solvent to collectors actual pains. Sello de Agua Art（洋璽藝術) will promote mature and emerging artists chosen with a high internal value and a developed external value. For Latin American artist the company will solve their lack of connections and knowledge about this growing art markets, helping them to expand their markets and enhancing their art careers.

Figure 4 Solution given by the company entering the market.

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emerging art markets in the East, such as Mainland China, Taiwan, Hong Kong, Korea and Singapore.

Chinese and Taiwanese art markets exemplifies this trend perfectly. Mainland China has become the fastest growing art market in the world and in 2013 became the second in worldwide share in value. Taiwan is the fifth contemporary art market worldwide concentrating more than 1% share in overall turnover of contemporary art in 2012.

Considering this figures, being launched in Taiwan art market will allow access to the fifth contemporary art market in the world and simultaneously makes reachable the access to Mainland China’s art market thanks to the near and convenient geographical location between Taiwan and Mainland China, in addition to cultural similarities and current strong connections between Taiwanese and Chinese consumers.

The shift to East is also accompanied by a wider international development in these markets thanks to the introduction of foreign art. In the case of Mainland China 2013 imports of foreign art accounted for US$ 1 billion, two times the exports of art, indicating Mainland China has become a relevant buyer of art. Comparatively, Taiwan imports of drawings have grown 12% annually from 2002 to date.7

7 A relevant prove of this shift to the East is the strong strategy in China developed in recent years by Sotheby’s, one of the oldest art auction houses in the world. Sotheby’s has implemented a regional marketing initiatives such as the publishing of Hong Kong sales catalogues in Chinese, the launching of a Chinese language website that includes e-catalogues for sales of Asian Art and Sotheby's major Impressionist and Contemporary sales, and the hosting of innovative private selling exhibitions. They have continued investing in staff with the requisite skills to service Asian clients at Sotheby's Hong Kong, New York, and London locations, as well as to support the growth of the Chinese art market. In Hong Kong Sotheby’s added a state-of-the-art gallery with over 15,000 square feet for selling and exhibition space. Sotheby's Beijing was established in 2012 to provide Sotheby’s a platform for art-related auctions and private selling exhibitions in the art capital of China. See Sotheby’s form 10-K, 2013.

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The second is that the sector In Taiwan and China is in a maturity and diversification stage pushed by foreign art as local dealers and international dealers are bringing art from the outside permanently or by participation in art fairs. This is a trend occurring in Taiwan and in China since the beginning of the XXI century. Thanks to it Taiwanese and Chinese art collectors and art lovers are becoming more sophisticated and knowledgeable, demanding larger amount and more valuable foreign art in their own country. Following this trend and demand behavior marks the right moment to enter the market offering valuable foreign art and new artists.

A third factor is as we have noted already, Latin American art is under-represented in Taiwan, even though has received special attention and is being collected in high-end art circles worldwide, a trend not occurring yet in Taiwan. In this sense, Taiwan art market is behind other art markets in the world, even Asian art markets such as Mainland China, Hong Kong, Korea and Singapore, were Latin American Art is already being promoted.

Coming into the Taiwanese market offering valuable Latin American art in this moment serves a need not yet served and will create a first mover advantage, being able to develop brand awareness with Taiwanese collectors (public and private), art institutions, and gain a special place in the Taiwanese market providing future leverage. It will also provide leverage with artist selection, being able to bring valuable artists much of which are not being promoted seriously and in a permanent basis in Taiwan and in Asia.

Figure 5 Reasons to launch the company

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are located in Japan (1.9 m), Mainland China (643,000), Australia (207,000), Hong Kong (114,000), South Korea (160,000), Taiwan (95k) and Thailand (73,000).8 In Taiwan the HNWI population has increased at a 13% annual compound rate since 2008 with HNWI are expected to increase to 120,000 by 2015, a 26% increase from 2012. In Mainland China this class grew by 14% in 2012 and is expected to continue growing.9

Finally, investments in passion items, is a big trend in wealthy Asia-Pacific individuals.

According to the consumer attitude of HNWI, luxury good consumption in this group is increasing year on year. In 2014 is expected that consumption in luxury goods in this group worldwide will increase in 36%. Inside the consumption of luxury goods, investments in passion items is a growing area of HNWI spending activity, were 44%

of HNWI are becoming more interested in collecting art.

In Mainland China, according to art economics, HNWI individuals are allocating 17%

of their total investments to passion items, as is art. In Taiwan this figure should be transferable according to similar behaviors between both communities. In this sense, the markets where the company will operate, are increasing its fondness to collect and make investment on passion items, such as art. Based on these circumstances and behaviors entering into the market gives relevant opportunities to grow and establish itself in an environment of expansion in the target class and in a type of product, such as art, being demanded with more fondness.

8 Bar, Julius. Wealth Report: Asia, June 2013.

9 Ibidem.

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5. The Market and Target Audience: Taiwan, China and Asia Pacific Art Markets

Sello de Agua Art（洋璽藝術) will operate to capture the art markets located in the Asia Pacific region from its main headquarters in Taipei. The company will focus to enter FIRST the Taiwan and China art markets, particularly penetrating Taipei, Tainan and Kaohsiung in Taiwan and Beijing, Shanghai and Hong Kong art markets in China, as these represent growing markets in terms of size and maturity, with relevant levels of demand for visual art and a consolidated art ecosystem where several dealers, artists, framers, auction houses, museums and art fairs and art initiatives exist.

In a second phase the company will focus to penetrate other markets as that of Korea and Singapore as they are important factors in the development of the art market in the region. Cities as Seoul and Singapore will be in the targeted markets of Sello de Agua Art（洋璽藝術) through partnerships and fair participation.

5.1. Taiwan total available market

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10 A big part of the information related to the Market in Taiwan comes from a market research made in Taipei. For building this analysis 30 galleries in Taipei (50%) were visited. We assisted to more than 10 openings and interviews with some artists and museum officials. The market research tries to include the opinion expressed by dealers, gallery

Figure 6 Taiwan and China art markets.

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According to its value, Taiwan’s market, in Asia, is only behind Mainland China. In 2012, according to arteconomics Taiwan art market accounted to 1% of the global market value for postwar and contemporary art traded through auctions.¹¹ Based on this data, in 2012 its size, depending on the estimates, could have reached between US$196 to US$285 million (M) (NT$5,800 M and NT$8,565 M).¹² These figures make it bigger in value than Singapore, South Korea or Japan art markets. The 1% share is above European markets as Sweden (0.5%) and Austria (0.5%) and is very similar to the share of Germany (1.1%) and Italy (1.1%).¹³

staff, gallery owners, as well as some collectors and artist agents. This market research also includes data from important reports as the TEFAF and art economics data, and data collected trough fairs and research as Art Taipei 2013, Art Revolution Taipei 2014 and Art Solo 2014. The report also considers information gathered through participation in art Taipei conferences, talks and events.

11 Taiwan fine art market is still unknown in the west mainly as a result of being shadowed by seemingly larger markets such as Mainland China, Hong Kong and Singapore, but its size is important.

12 This figures are estimated following this criteria. The postwar and contemporary art in the world had a total global value of US$6,167 million. Taiwan has 1%, meaning Taiwan accounts for around US61.7 million. Artprice in the other hand estimated that in 2012 the contemporary art in Taiwan market was equal to 45% of the Taiwanese market. This means the total market could reach US$137 millions. But this is just the size considering the auctions. If the sales through auctions in Taiwan behaves as the average in the world, and accounts to 48% of the total sales in Taiwan, then the total market considering the dealers, would be around US286 million. If this is not the case and the auctions accounts to figures similar as in Mainland China (70%) which is the market were the auction houses have the biggest participation and can be a good benchmark for Taiwan, then the total market in Taiwan would be around US$196 million.

13 Is true that in Asia (China and Taiwan) collectors tend to overbuy art through auction houses compared to European collectors, nevertheless, this figure give us a understanding were the Taiwanese markets stands in the world compared to other art markets.

Figure 7 Taiwan total available market

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5.2. Taiwan Contemporary Art Market

Source: Art price, 2011.

The contemporary art market in Taiwan represents around 45% of the total market, with an estimated value between US$88 M to US$128 M a year (NT$2,640 M –NT$3,840 M). This figure however in Taiwan can have important volatility because there has been years where the contemporary art market reached 65% of the market. According to Artprice, the contemporary art market in Taiwan was, in 2011/12, the fifth in the world with 1.36% of the world total turnover.¹⁴

14 This size is just behind China (38.8%), US (26.10%), UK (22.6%) and France (2.4%) and above art markets as Germany (0.86%), Italy (0.70%), Turkey (0.74%), United Arab Emirates (0.61%), and Singapore (0.70%).

Figure 8 Contemporary art, top ten countries by auction turnover market (2011/2012).

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Figure 9 Taiwan total serviceable market.

5.3. Taiwan Contemporary Foreign Art Market

Source: World Bank.

As we have noted, contemporary foreign art has been raising in Taiwan with bigger offers in the market. Nevertheless, in terms of market share and size, there are not clear figures. The only data available are value of imports of paintings coming to Taiwan.

According to this data, 2012 imports of paintings and drawings made by hand to Taiwan were equivalent to US$15 M (NT$390 M), with an average of US$17.9 M (NT$537 M) Figure 10 Taiwan value of imports of painting, NT$ million (2002-2012)

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annually of imports since 2008, with a peak in 2009 of US$32.3 M (NT$972 M).¹⁵ From these imports not all should be contemporary art. If we consider the percentage of contemporary art in the Taiwan art market, average imports should be in around US$8 M (NT$241 M), which remains a small market.¹⁶

Import figures, however do not include sculpture, which is an important mean in Taiwan and also is imported in relatively good amounts. Another factor to consider is that there could be an important quantity of art coming to Taiwan not being declared as art, coming to the country marked as “just for exhibition”. Usually in this case there is a low value declared in customs.

5.4. China Market

China art market over the last 10 years has been the strongest growing in the world, and the most important in the emerging markets, both in terms of size of the domestic sales and in the international significance of its buyers.¹⁷ According to McAndrew's (2013) its emergence on the global art scene, since 2005 has fundamentally altered the structure of the international art trade, and it has been the most important of all the newer art markets.

15 World International Trade System, (WITS), World Bank.

16 Another way to estimate it is if we consider the percentage of imports in Taiwan similar to that of Mainland China being 10% of the market. This would mean a market size for foreign art between US$18 M to US$28 M, with a size in contemporary art that would be between US$9 M (NT$270 M) to US$12 M (NT 360 M), a size comparable with the data on imports.

17McAndrew,Claire.TEFAF Art Market Report, 2013.The Global Art Market with a focus on China and Brazil.

Arteconomics. The European Fine Art Foundation, pp 97.

Figure 11 Taiwan total reachable market.

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Figure 12 China total available market.

The size in 2013 accounted to US$8.5 billion, coming from auction houses data, having a value, according to estimates, of US$12 billion annually, 26% of the total art market in the world, just behind the US art market. There are more than 6,000 dealers in China and the market is expected to continue growing into the future consolidating itself in the top 2 markets in the world.

In China, the modern and contemporary art market accounts to around 20%, reaching an estimate of around US$1.6 billion.¹⁸ This figure is also very volatile and can change significantly year on year depending on what happens in the supply and demand in the

18 Ibidem

Figure 13 China total serviceable market.

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contemporary art and in the Chinese art and antiques. Nevertheless, it’s size is in the top 3 in the world and estimates indicate will continue growing into the next years.

In China imports of art are estimated in around US$1.0 billion annually growing importantly in the last 10 years, as several important dealers from the West are opening art spaces and galleries in Beijing, Hong Kong and Shanghai. The growth in the general demand of art in China has attracted the increase in art fairs as is exemplified by the opening in 2010 of the Art Basel Hong Kong fair, which indicates that the big art actors in the contemporary art are coming to China.

Figure 14 China total reachable market

5.5. Consumer Behavior: Taiwanese and Chinese Consumption of Art

Most of the Taiwan art market promotes and sells mainly Taiwanese artists. The local artists promoted range from masters of XX century considered modern art, to mature and well-established artists, to mid career and emerging artists in the contemporary art.

Some local artists, both masters and contemporary artists, are known in foreign markets while some of them are only known in Taiwan.

Painting by different means (oil, acrylic, crayon, ink) is the most common type of art seen in Taiwan but there exists a big development and interest in sculpture.

Photography, mix media, video and installation are gaining popularity and importance but are still beneath painting and sculpture. Photography represents today around 5%

of the market.¹⁹

19 The size of the photography market represents the opinion of important art dealers in Taiwan.

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Figure 15 Collectors preferences: local art

In terms of the subjects, there is a big enjoyment of themes as human body, nature, animals and abstract subjects, as well as traditional Chinese themes as landscape, known as shanshui and calligraphy. Usually Taiwanese art collectors and art lovers prefer to collect a type of art that resembles the beautiful side of life rather than the sad or darker part of human existence.

In China the market is extremely concentrated in selling and promoting Chinese art and antiques, which represent almost 68% of all the market. From this field calligraphy and works in ink are also very important in the Chinese art market.

Nevertheless, China has been one of the leading forces in the development of contemporary artists coming from the Asia Pacific region, having a big increase in Chinese artists selling at very high prices, both internally and outside China. In this sense, the market, as happens in Taiwan, is made in a big percentage by emerging, mid career and consolidated local artists, which control the market, mainly in the case of the art market located in Beijing, where local artists have a strong influence in the market.

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In regards to the contemporary foreign artists, in Taiwan, the most common represented and collected are Asian artists, mainly contemporary Chinese and Japanese artists.

These artists range from emerging, middle career to consolidated, high-end artists and superstars, who, with no doubt control the market for foreign art in Taiwan. These artists are found working in paintings (oil, acrylic), new ink, and prints and in sculpture.

In the case of Chinese contemporary artists, the high end or “superstar” are sold in prints.²⁰ Other highly recognized artists are also promoted with original works.²¹ Chinese artists are so accepted, that some dealers are specialized in selling only them.²² They have gained a share of the Taiwanese market as Taiwanese dealers are well connected with Mainland Chinese dealers, art agents and artists.

In the case of Japanese artists, the majority is seen in the contemporary art and remains extremely popular in Taiwan. Some superstars can be seen in prints.²³ Korean artists are also gaining participation in the market.²⁴ Artists from Thailand, India or Hong

22 For example, works from artists as Yin Jun, Zheng Hong Zhang, Guo Fei, Li Chun Hai, Luo Jie, Yin Jun, He Sen, Qui Jie, Zhong Biao.

23 The Japanese artist Yayao Kusama, is the most seen Japanese artists with several art galleries in Taiwan promoting her work. Most of her prints are being re-sold in a secondary market. Another important Japanese artist seen in Taiwan is Takashi Murakami, who actually owned an art gallery in Taipei. Other artists in sculpture are Katsura Funakoshi, Shimazaki Tatsuya, Yotsumoto Takaaki, Yoshida Atsushi, and others can be seen in photography such as Yamamoto Masao.

24 As is of artists such as Je Baak and Kim Yeon, Kwon Ki and Kang Suk-Hyun.

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5.7. Contemporary Foreign Western Art in Taiwan and China

From the western arts, the most commonly promoted in galleries are from Europe and the US with a small percentage coming from Latin America, the Middle East or Africa.

Nevertheless, through art fairs more western artists are coming from diversified places, as some foreign galleries bring them. Most of the western artists seen in galleries are in painting, sculpture and photography, and vary from emerging to more mature artists, but western superstars are not seen. The type of artist will depend on the type of gallery.

在文檔中洋璽藝術創業計畫 - 政大學術集成 (頁 17-0)