5. The Market and Target Audience: Taiwan, China and Asia Pacific Art
6.2. Players in the Market
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Table 9 Art Sector in Taiwan Porter Five Forces
Taiwan
Risk of entry Weak
Barriers to entry Local Artists
Low in low prices
High in higher prices Foreign artists
High to very high Local Dealers
Medium to very high Foreign dealers
Very High
Rivalry High
Market highly concentrated in a radius of few km Power of suppliers Low for emerging artists
Low for foreign artists
High for consolidated artists
Power of consumers Medium to high for emerging collectors and art lovers
High for consolidated collectors Substitutes Medium to high
Jewelry, Antiques, Property, Stocks.
6.2. Players in the Market
Figure 20 Dealers in the market
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Ravenel, which is the biggest Taiwanese auction house and ranked the 8 in the world.436.4. Local Galleries
In Taiwan there are no Alpha “multinational” galleries with a consolidated international brand, for example Gagosian, White Cube or Saatchi, as so happens in other Asian art markets such as Hong Kong. In this sense the market is not as noticed and has no direct international competition in the dealers segment. The market is mainly for the local
41 In the art market, the primary market is composed of works been sold by the artist, where part of the sale goes to the artist. In the secondary market, on the contrary, the works are not sold anymore by the artists, so no money involved goes to the artist. Historically auctions houses belonged to the secondary market, but now are also participating in the primary market, offering works owned by the artist. In Taiwan there is not a clear figure of the share of the market accounted from dealers and from auction houses. Nevertheless, auction houses represent an important channel, and should be larger than the world average (52%:48%).
42 Alpha galleries are known as branded galleries, with huge global brand awareness, are trendsetters with top prices (even for unknown artists), are key players in secondary market, participate in the most known art fairs in the world as Art Basel, TEFAF, Frieze, and organize exhibitions in the best museums, their exhibitions are reviewed in mainstream media as the New York Times or ART news. Examples of these types are Gagosian Gallery, White Cube or Mai 36.
Beta galleries are known as mainstream galleries, they have national wide brand awareness, can be trendsetter (if successful artists transfer to Alpha Galleries), participate in good fairs as Art Basel but with small booths, exhibitions reviews occasionally in national newspapers.
Gamma are known as High street galleries, they have little brand awareness, no trendsetter, participation at satellite art fairs, exhibitions reviews at regional newspapers.
Delta they have no brand awareness, no trendsetter, participate at local art fairs, usually artists pay to be shown, no partnership with museums.
43 In 2012 Ravenel turnover was US21.9 million, with 1.93% of the global turnover for auction houses in the world, higher than the percentage of the entire Taiwanese market indicating her place in Taiwan market is relevant. Ravenel sales reached a total of US$63 million in 2012, representing probably around 30%-40% of the Taiwanese market, depending on the estimates.
Ravenel promotes mainly Taiwanese artists, overseas Chinese artists and artists from Mainland China. The main works are among Taiwanese XX Century masters in oil or ink, consolidated Taiwanese postwar artists as Ju Ming, as well as contemporary artists in different means. Young artist are fewer but can also be seen in their catalogs. Foreigner’s artists are just a few. The main customer base is Taiwanese and Asian collectors.
Ravenel Each year celebrates 2 main auctions seasons, spring and autumn, as well as some special auctions. Their main activities are printing the catalogs as well as marketing strategy as special dinners for clients and special events for them, VIP venues and paying professional staff. Asian collectors are fond to buy through auctions houses because they believe represents a better mechanisms to value the works, so this channel is relatively important. Other important auction houses, mainly Chinese has also offices in Taipei, as is the case of Poly International and Guardian, which makes the competition for art collectors even stronger. Auction houses are targeting not only consolidates collectors but also emerging collectors, individuals with high income in their late 30´s or 40´s which are starting to be interested in art to gain status or because they are highly educated.
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dealers and some foreign dealers but without an extremely rivalry arising from international brands dealers.
The strongest dealers in Taiwan should be considered locally owned Beta Galleries, with a strong investment and financial position, brand awareness. They mainly promote mainstream Taiwanese artists, Mainland China high-end artists and
Chinese expat artists, mainly living in Europe. They have developed connections between curators, museum officials, and the art circle. These galleries are the fiercest competitors in the market as they concentrate a big amount of the art sold in Taiwan.
As is almost in all art markets, this is a small group of galleries compared to the total, representing around 10% of the total dealers with a dominant position but not exaggeratedly dominant. Usually the owners and directors of these Beta galleries are well known and respected in the art circles.44 A good example of a strong Beta gallery is Eslite Gallery, which has been the only Taiwanese gallery that has participated in Art Basel in the last 40 years.45
44 As is the case of Nou gallery whose owner, Mr. Ching Chuang Huang, has more than 30 years in the business and is a well-known art dealer in Taiwan. In recent years his strategy has focused on bringing various foreign artists to the market.
45 Eslite Gallery has a strong brand awareness because is part of a very important business group in the entertainment, cultural and real state. Eslite art Gallery has been a trendsetter in the market promoting local artists. The strong financial
Figure 21 Galleries positioning in Taiwan and China
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but in the secondary market, reselling some of their works.
Some vanity galleries also exist, renting their space to artists, as the Photo Gallery 1839, which has a small salon working as a vanity gallery plus an exhibition hall for invited artists. Other examples are the Fuji Gallery in Renai. Private dealers are also in the market but are not readily visible.
In the case of the location of the galleries, the market is highly concentrated around Taipei City, which accounts for almost 75% of the art galleries established in Taiwan.
There are also art dealers in the cities of Taichung, Tainan, Kaohsiung and Hualien with almost 13%, 9% and just around 3% respectively.47
In terms of value is much probable to speculate that Taipei even concentrates a higher percentage based that the strongest Gamma art galleries, selling the most expensive local artists are located there.
6.5. Dealers focused in Latin America artists
In Taiwan there is not a single dealer focused only on Latin American art. Nevertheless, some dealers promoting Latin American art in Asia are already inside the market and performing relatively well. For them Taiwanese collectors are very reachable as they
position of this Gallery has helped her to position itself as a platform forTaiwanese successful artists and to promote art that in other circumstances would be difficult to come to Taiwan. Other examples of Beta galleries in Taiwan are Soka Art Center, Kalos Gallery, Liang Gallery, Imavision Gallery, and Nou Gallery and Lin Lin gallery.Soka Art Center also has art galleries in Mainland China, being in this sense international. Lin Lin, Kalos, Insian and Liang gallery, all enjoy large showroom in street level, being located in high end Neighborhoods as Da An and Neihu, and in commercial streets as Ren Ai and Dunghua Bei Lu.
46 Examples in the contemporary art are Imavision, Aki Gallery, Grand Siecle Gallery, Caves Gallery, Lipen Gallery, New Door Art Gallery, Bluerider Art and Red Gold Fine Art.
47 Own calculations using information of galleries listed in Taiwan Gallery Week.
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have developed connections in important art circles in art centers as Shanghai, Hong Kong and Seoul.
The Gallery Bandi Trazos is the most outstanding as it boasts offices in Shanghai and Seoul and is the organizer of the Latin America Pavilion in the Shanghai Art fair for the past 10 years. Bandi Trazos represents emerging and some Latin American superstars such as Botero or Carlos Cruz Diez. Two Spaniards and one Korean dealer manage the company, with offices as well in Toronto and Montevideo. Bandi Trazos has represented around 80 artists and 30 exclusive artists from Cuba, Venezuela, Colombia, Uruguay, and Korea. The company offers added services to coordinate cultural events, as well exhibitions in museums, art fairs as well as private Galleries, particularly in Mainland China and Korea.
Bandi Trazos also runs a organization named “Latin American Artists in Asia” offering representation for a broader range of emerging artists as well as complementary services such as shipping, translation, transportation and print services for artistic works.
This company controls today a big part of what is going on in Asia for Latin American artists and it seems there is no other company more established or well connected so far. Year after year more and more Latin American artists are trying to be represented in Asian markets, mainly in Mainland China. Bandi Trazos is a company that is taking advantage of these conditions.
Another example of art dealers in Asia promoting Latin America art is ART 180 degrees, a Colombian base gallery that represents mainly Colombian artists in Singapore. This gallery focuses on artists considered prominent and talented emerging artists, as well as established artists already recognized in Latin America but without a reputation in Asia.
To date ART 180 degrees represents 10 artists mainly in the emerging field. Their last opening occurred in October 2013 and included a Brazilian artist. The opening was held in the Brazilian embassy in Singapore. The company runs art gatherings and works with other Asian galleries.
Another important dealer is, as noted before, the Mexican gallery, Puerta Roja, which operates from Hong Kong, and is in charge of promoting Mexican and Spanish artists
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6.6. Entry Barriers for Dealers in the Available Market
In terms of their time in the market a large amount of galleries were opened after 1987 when the martial law was abolished in Taiwan and the economic miracle of the island was accomplished.
Still today new galleries are entering to the market, some with important investments.48 This has been true mainly after the year 2000 thanks to the rapid increase in the interest in the contemporary art. In the last 5 years new galleries, local and foreign, have appeared in the Taiwan market with results varying from one to other.49 Nevertheless, for galleries and dealers the barriers to enter the market will depend on the segment that the dealer wants to be involved in.
For Beta galleries working with consolidated artists the barriers are high. This segment requires higher investment in space, promotion and marketing, as some consolidated artists do not work by the commission model so they need to acquire the works. These dealers business model involves dealing with high-end collectors so their professionalization need to be higher involving more costs in their staff, marketing, services, research, and persuasion of artists.
After visiting Beta galleries in Taipei we could deduce their investment are high based in the works of art they promote. Big corporations in other fields, such as construction companies, own some of these galleries in Taipei, as per our research, IT companies,
48 Examples of new galleries with high investments are MOT Art and Liang Gallery.
49 One good example is the gallery own by famous Japanese artist, Takashi Murakami, or local dealers as Bluerider Art, established just few years ago.
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financial services and media companies. In some cases their owners are consolidated dealers and experienced collectors as well.
For Gamma and Delta type galleries with less consolidated artists and investment, the barriers to enter in terms of investment and costs of operation can be considered medium. Few people can manage these galleries and salaries in Taiwan are still relatively low compared to other places in Asia. The rent for thus size and type of spaces are also cheaper compared to other places in Asia as Hong Kong or Shanghai.
But apart from the investment and operation costs, the most relevant barrier to enter the market for the dealers is the access to the collectors. This capacity to have relations is a primary barrier as most of collectors and gallery owners are friends, relatives, are business partners in other sectors or were peers in another moment in their professional life. Chinese business is build by a strong net of relations and social interaction, which also is true for the art sector. Art sector behaves in this sense, as galleries and collectors are connected by interests beyond the sale, as strengthening personal, family or business relations, as well as other interest as for example helping artist, social acceptance, or paying favors. This is a high barrier for companies without strong connections and business networks.
Time and expertise in the market is another barrier. The most consolidated galleries were founded more than 30 years ago. New galleries in the market are still consolidating their place in this sector but the older dealers have a special place in the market, as their connections and reputation is stronger.
These high entry barriers imply that the risk of new entrants is low which means that the profits for the already established dealers should be secured and high. For smaller dealers the risk of new competitors can be higher diminishing their profits. As is expected, the lower prices found was in the smaller galleries working in the segment of emerging artists.
6.7. Entry Barriers for Foreign Dealers
For foreigner dealers the entry barriers and the barriers to stay in the market are extremely high. The most notable are the investment required to enter the market and the lack of connections with collectors. The initial investment and financial position in
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As we noticed, in Chinese business practices, sometimes sales are made by interests beyond the sale itself, which is obviously difficult a foreign dealer can meet this criteria.
With a foreign dealer there are neither other interest involved nor a relation that involves past generations, or a common ground as family interactions, a long friendship or business partnerships. 51
With no doubt this entry barrier is the most critical as there are important examples of foreign galleries coming to Taipei that resembles this fact. The case for the Mumbai base Sakshi Gallery, one of the strongest galleries in Mumbai, India, and the Japanese gallery, Kai Kai Kiki, owned by superstar Japanese artist Takashi Murakami, exemplifies this fact. Both came in 2009 and closed after 3 years.52
Both galleries had a strong financial position in their countries and a high value pool of artists, but neither could became successful in Taiwan. The main reason was their inability to interest and contact local collectors to have a good amount of sales. In the long run they could not create value locally, more that they did from their headquarters in Mumbai and Tokyo, or by participating in art fairs, were Taiwanese collectors were also reached.
A third barrier is to compete with the deep preferences in local collectors to collect local artists. The sentiment of buying local “heroes” is strong among Taiwanese collectors.
50 Phillip Staib, the only foreign dealer in Taiwan, had also a strong financial position coming into to the market. He had successful business in other fields giving him the ability to invest in art after building a good personal fortune.
51 The director in Taipei of the Phillip Staib Gallery expressed French owner has built his connections after living more than 20 years in Asia (Thailand, China). His Chinese wife has helped to tackle cultural issues, but more importantly has made him enter the network of Chinese business practices and being part of a bigger net beyond the art sector, a family and business net. He as we mentioned, has galleries in Beijing, Shanghai and Taipei.
52 Sakshi came to Taiwan with a strong financial position and a good offer of valuable Indian artists. Murakami came in 2009 and opened a space in Taipei offering also valuable Japanese artists. Sakshi closed after just 2-3 years. Murakami announced in 2012 his intention to re-structure his strategy in Taiwan closing his space and just participating in Art Taipei every November.
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The development of local art, as seen through the art in ink movement, also implies a large pool of local artists for collectors to curate which results in some tapering of interest from the curators on foreign artists and their corresponding works.
This high entry barriers is a characteristic not only in place in Taiwan but also in other relevant Asian markets.53 But these high barriers also mean higher profits. Via market research we can conclude that some artists sold by foreign dealers, not extremely well known artists in the international art world, enjoy medium to high prices.
6.8. Business Model of Art in Taiwan
It is true that art dealers in Taiwan are differentiated according to their position (Beta, Gamma, Vanity), but is also true that in terms of business models the differentiation is not as obvious as there is not a clear business model differentiation.
According to the business model in place there are several characteristics in Taiwan.
The first is that a lot of dealers work with similar approaches to the market, which means there is not a clear business model differentiation. This is not different from other art markets where in Europe this is also a norm.
In their main value proposition galleries concentrate merely in the organization of regular exhibitions, which are open to the public, with exhibited for sale. There are no other services or value included in their offerings.
Nevertheless, there is some differentiation based on the positioning in the market and strategy. Taiwanese galleries can be selling in the primary market as well as in the secondary market by reselling works of famous and master artists. This attitude in the value proposition should be considerer relevant and different from what happens in other places, as Europe, where usually, just the Alpha or Beta galleries participate in the secondary market. In Taipei different dealers, without considered as Beta, can be in the primary and in the secondary market.
53 According to information gathered during the 2013 Art Forum, “Asian Value”, some foreigner dealers established in Asia (Hong Kong), with the aim to promote foreign artists, commented the difficulty of attracting Asian collectors to foreign art. In some cases we could feel some frustration. These high entry barriers has modified the strategy for some of the foreign
53 According to information gathered during the 2013 Art Forum, “Asian Value”, some foreigner dealers established in Asia (Hong Kong), with the aim to promote foreign artists, commented the difficulty of attracting Asian collectors to foreign art. In some cases we could feel some frustration. These high entry barriers has modified the strategy for some of the foreign