Earlier this week China Merchants Bank launched a new ‘art banking’ service for China’s rich says the People’s Daily Online. The unusual model allows private banking clients to pay a deposit for an artwork and take it away to enjoy for one year after which they have the option to purchase it or return it for a full refund.
“The model is brand new in China, as art investment often involves great risk and wealthy people need time to understand Chinese contemporary art,” said Cai Can huang, deputy general manager of CMB’s private banking section.
Private clients with assets of more than ten million yuan will be targeted by the fund, who is working in collaboration with the China Contemporary Art Foundation which has amassed a collection of over 3000 Chinese contemporary works.
“We have worked with a group of Chinese and Western art experts to pick out seventy artworks including photos, oil paintings, wash paintings and sculptures, ranging from 10,000 to one million yuan,” said Su Yan, executive director of China Contemporary Art Foundation.
We are curious about this bizarre art investment model. It is one thing to loan art for free to wealthy clients: luring and cementing relationships with high net worth individuals who will be upsold other high-return products.
But surely it is another thing altogether to offer the reward of potential gains without any of the risks. As the wealth levels of the targeted clients are merely mass affluent rather than mega-rich, and are therefore unlikely to produce sufficient returns on other product sales, one can only assume that the lenders are pretty confident that there will be no (or minimal) gains after a year.
One is left musing… Does this say something about the outlook for the contemporary Chinese art market? Is there perhaps an issue with the quality of the artworks selected? Not the latter, we hope, as this initiative could, now that the market has been decimated by the withdrawal of speculative purchasers, play a much-needed part in stimulating engagement with art which in turn just might help spawn a serious local collector base in China.
Read more at CMB Launches Art Banking in China – Peoples Daily June 10 2009
- Outlook for Chinese art market – Larry Warsh podcast – May 2009
- Is there a new way to sell art? Vitamin experiments – New York Times – May 2009
- Sneak a peak at art collection and private residence of Pearl Lam – video – March 2009
- Mei Moses index founder plans Chinese version, optimistic about Chinese art – March 2009
- Domestic demand in freefall at Chinese art auctions – Nov 2008