Economy & Trade

Investing in China’s Art Auction Market

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By Roy K. McCallChina art auction

China’s art and antiques market is the world’s largest, with 2013 sales exceeding US$8.5 billion, up 28.8 percent from 2012.The overseas market of Chinese art and antiques in 2013 was US$2.3 billion, representing an even larger increase from the year before of 42 percent.

China’s affluence is reaching beyond China and Chinese art. In November 2014 at a Sotheby’s (NYSE: BID) auction, Wang Zhongjun, chairman of the China’s film studio Huayi Brothers, bought Van Gogh’s 1890 painting Still Life, Vase with Daises and Poppies for a record US$62 million – more than double the US$28.2 million for a Picasso that Dalian Wanda paid at a Christie’s auction one year earlier.

Transparency into the Chinese art market is growing thanks to professional art news providers such as Artron.net, Hurun, YangGallery.com and others. Artron provides information in both Chinese and English on global auctions and art, not just about Chinese art or China’s market.  In addition, by mid-2015, artnet, with the China Association of Auctioneers is expected to release the third edition of its Global Chinese Art Auction Market Report. 

Related Link IconRELATED: Broad Strokes of Success for Auction Houses in China’s Fine Arts Market

Poly International Auction of China’s Poly Group, a $40 billion state-owned conglomerate, is China’s leading government controlled auction house and the world’s third largest.  But others are enhancing competition and transparency. Poly’s archrival China Guardian ( cguardian.com) publishes seasonally active auctions in paintings, calligraphy, porcelain and most recently, coins.  Guardian’s auctions have been mainly held at Beijing’s International Hotel on Jianguomennei, and have been extended occasionally to Hong Kong’s Island Shangri La or the JW Marriott in Pacific Place.

Art auctioneers compete aggressively. To win business the largest auctioneers might guarantee a minimum bid, and have been known to lose millions when actual bids do not clear the minimum.

Art investors have also been concerned about distinguishing fakes. Celebrity Zhang Daqian: (b. 1899 Sichuan – d. 1983 Taipei) was renowned as both a forger and a dealer. When he noticed that his buyers could not appreciate the difference, Zhang turned to forgery and produced outstanding works reminiscent of Ming master Shitao. In the late 1990’s skillfully forged paintings of Fan Zeng became so prolific in Tianjin’s Ancient Culture Street that police began confiscating them with Fan Zeng. In 2014, one group of fakers even issued a catalogue meant to guide investors in authentic art which itself was marketing fakes.

In 2006, China’s Ministry of Culture initiated an appraisal committee to provide art consultation services to the public.  China’s National Development and Reform Commission is also attempting to establish a credible and independent fine arts appraisal agency.

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Hong Kong Banks Shut Down US Accounts Rather Than Deal with FATCA

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By Benedict Lynn

Due to its geographical proximity to the mainland, modern and (until now) friendly banking system and transparent legal regime, Hong Kong has long served as a popular gateway into China for foreign businesses. Americans in particular have favored the former British colony, which retains its widespread use of the English language and Western business ideals, as a launching pad for their operations into mainland China.

However, since the Foreign Account Tax Compliance Act (FATCA) came into effect in early July, many Hong Kong based banks have been refusing to open new accounts for, and even shutting down the existing accounts of, American individuals and corporations.

Dezan Shira & Associates have been advising several of our American clients who have found themselves in this frustrating and potentially catastrophic situation. In this article, we examine the effects of FATCA on American businesses and taxpayers operating out of Hong Kong, as well as the implications for Hong Kong’s future as a means of penetrating the Chinese market.  Continue reading…

China Announces Official 2015 National Holiday Schedule

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China’s General Office of the State Council released the “Circular on the Arrangement of Certain Holidays in 2015 (guobanfamingdian [2014] No.28)” on December 16 and announced the official national holiday schedule for 2015 as follows:

New Year

  • January 1  – 3  (3 days in total)
  • January 4 (Sunday) is an official working day.

Spring Festival

  • February 18 - 24 (7 days in total)
  • February 28 (Saturday)  and February 15 (Sunday) are official working days.

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Investing in China’s Medical Device Industry, Part 2

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CB 2014 11_China Investment Roadmap- The Medical Device IndustryBy Zhou Qian, Kyle Freeman and Matthew Zito

Investing in China’s Medical Device Industry, Part 1

Licensing regime

Generally, any business entity engaged in medical device manufacturing or trading must obtain specific licenses in addition to the normal business licenses, the procedures and requirements of which are quite different depending on the classification into which the device falls. In addition, all the medical devices are required to be registered with the relevant authorities. Following the amended regulation State Council Order No.650, applicants are no longer required to obtain a medical device manufacturing license before medical devices registration provided that they are fully in compliance with good manufacturing practices requirements during product design and development.  That is to say, the R&D-based companies can apply for products registration without building up manufacturing facilities, which will save them a substantial amount of time and resources.

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China Compliance Issues For Foreign Investors

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CDE Op-Ed Commentary

As has been extensively reported in the media, the Chinese government has indicated it will be ‘cracking down’ on non-compliant foreign investors during 2015. In actual fact, this has always been the case – foreign investors are under the highest level of scrutiny by the Chinese authorities in everything from adherence to business scopes to payment of tax. They exist under a “Level One” platform of systematic checks by the Chinese tax bureau. At the opposite end – Level Four – are China’s State Owned Enterprises – with the minimum level of scrutiny. Continue reading…

Qianhai Development Zone Offers Incubators Free Rent & Low Taxes

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Qianhai 230x300

SHENZHEN – South China’s Qianhai Development Zone – or to give it its full title, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone – has opened a 15  square kilometer incubator hub for entrepreneurs from Hong Kong and overseas. The Zone itself has been billed as a Hong Kong-Shenzhen joint development, and to date has focused on attracting corporate financial services. Continue reading…

China Law Trends in 2015

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DSA 3

Dezan Shira & Associates Legal Christmas Cheer: (L-R) Chet Scheltema, Richard Cant, Chris Devonshire-Ellis

As we move into 2015 and a Chinese Government that has pointedly singled out “Rule of Law” as a key point for debate, what are the major challenges foreign companies are likely to face in China next year? We put this question to Dezan Shira & Associates US attorney Chet Scheltema, Australian lawyer Richard Cant and the firm’s Chairman, Chris Devonshire-Ellis. Their replies are summarized as follows:

Foreign Law Firm Operations

There are proposals to tighten restrictions on “legal consulting” at the same time as more opportunities for legal partnership between Chinese law firms and foreign law firms, indicating that for foreign lawyers operating in China, there will be a loosening on the one hand and tightening on the other hand. Dealing with China legal matters from purely overseas or from a Representative Law Office can be expected to become more problematic, while JV’s between foreign and Chinese law firms will start to become the norm. Continue reading…

Devonshire-Ellis: China-ASEAN Trade Routes Key for 2015 Development

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Chris Devonshire-Ellis has highlighted the various China-ASEAN trade routes as specific areas of high growth for 2015 at the Dezan Shira & Associates annual meetings currently taking place in Shanghai.

The firm, which specializes in foreign direct investment tax-law, compliance and strategic investment issues on behalf of global mid-cap manufacturers, has 12 China offices, as well as a significant presence in India, Singapore and Vietnam, and Alliance members in Indonesia, Malaysia, the Philippines and Thailand. Continue reading…

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