The Beijing Freeport of Culture is expected to bring both economic and cultural gains.
Swiss holding company Euroasia, in cooperation with the state-owned Beijing Gehua Cultural Development, is building an 83,000 square-metre tax-free storage facility near the Beijing Capital International Airport. The freeport will be ready for use in 2013.
After The New York Times briefly mentioned the Freeport, The Art Newspaper wrote a feature on the project and its aims for the Beijing art scene. Known as the Beijing Freeport of Culture, the projected economic gains are only part of the motivation for the venture. As Tony Reynard, Chairman of Euroasia’s other major Asian storage facility, the Singapore Freeport Pte, told The Art Newspaper,
Gehua’s plan is to promote Chinese art both nationally and internationally; [it] wants to create and organise a market that is loosely regulated. There is a huge domestic market in China but the freeport in Beijing will also be important for the international market as import tax will be greatly reduced or even scrapped at the facility.
The major draw of the freeport is the expected tax exemption it will offer its clients. It is likely that art works stored in the facility will not be subject to China’s high import taxes, which, between the custom duty, value added tax and consumption tax, add up to 34 percent in a typical year.
According to Wuhan News, the Freeport first broke ground in March 2012. It is scheduled to be at least partially functional by late 2013 and completed in 2015. Project organisers expect the tax-free provisions will also spur trade within the facility, with an estimated annual turnover of RMB50 billion (USD7.92 billion). In addition to storage, the Freeport will also contain exhibition and auction centres.
As reported in Bloomberg, Euroasia Investment SA was tapped by the Chinese government to build the USD100 million complex because of their previous work for the Singapore Freeport. The Beijing project will replicate their Singapore model, albeit on a scale three times larger.
The project is not limited to storage facilities. The Beijing Freeport of Culture will include other zones to promote a range of cultural industries, such as “luxury products, films and TV series, performance equipment leasing, artwork authentication and the manufacture of creative products”. The complex has a total area of 510,000 square-metres.
With the government’s renewed focus on China’s soft power initiatives, the Freeport is also seen as a way to spur cultural development. Li Danyang, General Manager of Beijing Gehua Cultural Development Group, believes the project will encourage collectors to return looted cultural and historical relics to China. According to Jing Daily, the Freeport will also change Chinese collectors’ long-term incentives.
Down the line, speculation remains that the Chinese government may ultimately hammer out tax compromises with major art collectors, to offer incentives in exchange for the donation of works to public arts institutions at some point. Until that point, the opening of the Beijing freeport would allow collectors to ‘repatriate’ overseas purchases and hold them, tax-free, in China while awaiting Beijing’s slow moves.
Is a freeport a fast-track to a more mature and sustainable art market dynamic? Or will the Freeport fall victim to some of the more murky problems that plague China’s art world? Leave us a comment with your thoughts below.
- The (potential) politics of art: China’s soft power push – August 2012 – underlying motives for the wave of investment in China’s art industries over the past half decade
- Foreign-owned Beijing 798 gallery expands into creative entrepreneur incubator – WSJ Scene Asia – April 2012 – private and foreign-owned groups are also playing a major role in the development of China’s cultural industries
- China to use “soft power” of arts for international influence – January 2010 – the marriage of art and state-owned enterprises goes way back
- Art in storage, at fairs and sales – is it getting harder to insure? – October 2009 – freeport facilities simplify a lot of the practical issues of art investment
- Unusual art investment model launched by China Merchants Bank – June 2009 – China leads the way for intriguing contemporary art purchasing plans
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