By Sze Man Young Translated by Elmo Wong
Hong Kong’s auction market has been flourishing in recent years, attracting both Chinese and international auction houses. The industry boom ended the monopoly by traditional established players, with the Hong Kong scene diversifying to open up new markets for jewellery auctions.
Jewellery auctions are thriving, thanks to interactive elements afforded by technological advances as well as more effective marketing and promotions. Auction houses are also adjusting to the times as the market develops further and buyers’ preferences evolve.
Last year, a 59.60-carat fancy vivid pink diamond was sold for HK$553.3 million (US$71.2 million) at Sotheby’s jewellery auction in Hong Kong. The staggering bid set a world auction record and grabbed headlines around the world, allowing Hong Kong to surpass New York to become the world’s second-largest auction hub after Geneva.
Sotheby’s Hong Kong raked in an impressive total of HK$860 million (US$110 million) in its 2017 Spring and Autumn Magnificent Jewels and Jadeite sale. A natural jadeite bead and diamond necklace fetched US$1.2 million, 23 times higher than its pre-sale estimate, in the Autumn auction held last October. “An unprecedented 43 bidders on both the telephone and in the room were competing to win the stunning piece. It was a memorable moment of the sale for me as the auctioneer,” said Quek Chin Yeow, deputy chairman of Sotheby’s Asia and chairman of International Jewellery, Asia.
The top 10 lots at the auction were all sold to Asian collectors. Indeed, collectors from mainland China are becoming a major force in global auctions. They are quite partial to diamonds, gemstones and jadeite, and have been showing greater interest in antique jewellery of late.
Quek said, “Chinese collectors increasingly appreciate various kinds of jewels. In the beginning, they only wanted pieces with big diamonds or jadeite. They gradually learned to appreciate unique designs and outstanding craftsmanship and started collecting antique jewellery five to six years ago. Abandoning the traditional notion that antique jewellery is second-hand jewellery, they have developed an appreciation of antiques and a better sense of art.”
Auction houses have gone digital too, investing in online platforms to provide an online bidding service. Sotheby’s sales through online bidding fetched US$155 million in 2016, a 20 percent increase year-on-year. Moreover, 51 percent of new buyers were from the online platform, indicating that going digital was an effective way to attract new clients. The auction house also proactively targets Chinese buyers by using the Weixin App, a popular online platform in China, to release product information and broadcast live auction reports.
China’s largest state-owned auction house and a subsidiary of China Poly Culture Group, Poly Auction expanded into Hong Kong in 2012 and was publicly listed in the city in 2014. Yu Wenhao, head of Poly Auction Hong Kong's Jewels and Prestige Collections Department, foresees keener competition among auction houses in Hong Kong, which would in turn create new opportunities.
“As an auction house with a Chinese background, we strive to promote our local culture and highlight this to the international market. We therefore sell a wide range of products including artworks, watches and clocks, jewellery and even fine handbags and Western wine. This is very challenging but results in global interaction,” Yu said. “As Chinese-funded auction houses become more active and go international, the established international auction houses will realise the requirements of a growing Chinese market and make adjustments to fit in.”
Stewart Young, director of Tiancheng International Auctioneer Ltd's Jewellery Department, pointed out that while auction results often grab attention, few people are aware of the challenges in organising a jewellery auction and the professionalism and expertise this requires. “Jewellery collectors are connoisseurs on the quality and prices of jewels, so auction houses have to be extremely accurate and careful when appraising a fair price for a piece of jewellery. For starters, we can refer to past auction records. Other factors like the piece’s origin – whether it is an antique, whether it has been owned by famous people – and even market trends should be taken into consideration. Only after careful estimation should the final price be set. Moreover, a responsible auction house must safeguard buyers’ interests by providing laboratory reports or certifications and imparting professional knowledge of the piece to the buyer upon completion of a deal,” he said.
Interestingly, the markets for jewellery auctions and jewellery retail are at opposite poles. Retail has performed unsatisfactorily due to a weak economy, while the auction market has recorded astounding prices. In addition, collectors often use auction results as reference in estimating the value of jewellery.
Hong Kong hub
Given its free trade policy and corporate infrastructure, Hong Kong is extremely conducive for business. It is also ideally located in the Greater China region and at the doorstep of Southeast Asia. These are but a few of the qualities that allowed the city to become the world’s second-largest auction market after Geneva.
Hong Kong also has an edge when it comes to jewellery auctions – world-renowned gemmological institutions have set up shop in the city, which also boasts the proper logistics, regulations and social order that make it attractive to international auction houses.
British auction house Phillips set up its Asia headquarters in Hong Kong in 2015. According to Terry Chu, head of Jewellery, Phillips Asia, it searches for beautiful, unique pieces of fine jewellery and common accessories for its jewellery auctions; all buyers, whether collectors or jewellery lovers, would therefore be able to find what they were looking for at a Phillips auction.
“An auction is not for a niche market. The public is welcome to participate, to experience and to explore,” noted Chu.
Auctions are also well-suited for the Chinese market as consumers become more discerning with their purchases and affluent mainland Chinese increasingly seek products with high investment value. The competitive atmosphere at auctions coupled with the convenience of interactive and online bidding likewise provide an absorbing experience for buyers.
As Hong Kong’s auction market matures, buyers become increasingly partial to high-quality fine jewellery. Apart from the five main gems – diamond, ruby, sapphire, emerald and fine jadeite – buyers are now investing in other coloured gemstones. Paraiba tourmaline and spinel, for instance, have done particularly well at auctions, with new records being set every season. “These gems did not feature much at previous auctions but their future investment value should not be overlooked,” remarked Tiancheng International’s Young.
Designer jewellery pieces have also been making their way into auctions in recent years as auction houses strive to make their offerings more attractive and diverse. This results in a win-win situation for auction houses and designers. “From the designers’ point of view, auctions provide a great platform to showcase their collections, thereby helping to promote their designs and build their reputation. For auction houses, one-of-a-kind designer jewellery pieces often draw attention and fetch high prices,” noted Yu of Poly Auction Hong Kong.
Besides providing quality offerings and services, Poly Auction Hong Kong breaks the mould with new initiatives such as highlighting jewellery by young Chinese designers. “Not many major auction houses are willing to pave young designers’ way to the global stage. We do this to promote art, not draw business. Our role is to provide a platform to promote these designs to the market,” said Yu.
Tiancheng International, meanwhile, showcases designer jewellery every season, with encouraging results. Aside from enjoying a marketing platform, designers are invited to create unique pieces for auctions in accordance with a theme. Designer jewellery pieces are always warmly received by buyers, making them a highlight in auctions every season.
Showcasing as well as nurturing the market are likewise major objectives of Poly Auction. According to Yu, the auction house has been working these last five years to set international standards for products such as natural jade or Fei Cui.
“Natural Fei Cui is favoured by Chinese buyers, but their actual knowledge of the gem can be rather vague. Foreign buyers also have limited understanding of jade. We are working with international gemmological institutions to set standards for Fei Cui such as calling finest-quality material ‘Imperial jade’ just like ‘Pigeon Blood’ for rubies, and setting parameters based on transparency, saturation, carving and other qualities. Informed buyers have high expectations of quality. Rare gemstones and jewellery with unique designs catch their attention and meet their expectations. Professional collectors, on the other hand, take into account factors such as price, return on investment and demand trends,” explained Yu.
Having developed rapidly in the last decade, Greater China’s auction market is now stable and ready for new challenges. On top of offering greater product diversity, auction houses are enhancing their intrinsic value, transforming auctions from commercial events into cultural and artistic experiences.
The Guardian Art Centre officially opened in Beijing late last year. It is a multifunctional venue for art exhibitions, auction previews, art storage, identification and conservation of historical and artistic work, and even offers accommodation.
According to Wang Ting, general manager, Jewelry Watches and Luxury Goods of China Guardian (HK) Auctions Co Ltd, the fierce competition in the global auction market may give rise to collaborations among international auction houses. Records are however expected to be broken in the prices of artworks and luxury goods in the next three years. “The highly transparent bidding in auctions is favoured by collectors and investors; this boosts their confidence in art investment,” she noted.
Wang pointed out that the number of well-informed collectors has been growing as technological advances allow for the rapid spread of information. More importantly, Asian collectors, particularly those from mainland China, have been very active in the Chinese art market over the last decade and have become a force to reckon with in the global auction market these last five years.
Given the tough competitive environment, auction-related events are no longer limited to previews or exclusive viewings but have become more diverse.
“As Beijing’s new landmark for art and culture, the Guardian Art Centre will hold different kinds of exhibitions and events merging academic and commercial values. The public will gain a deeper understanding and knowledge of artworks and rare gemstones by participating in the events and interacting with specialists and designers,” explained Wang. “We aim to cultivate the art and fine jewellery market of China through education and marketing.”
Acquiring fine jewellery for personal collections and for investment purposes is gaining steam. Competition is spurring auction houses to diversify both their offerings and their business as fast-growing Chinese-funded auction houses and well-established international players battle it out in the Greater China market.