A few weeks ago we announced the creation of a free port in Beijing. Christie’s, aving already a privileged access to a large portion of the port of Singapore since 2010, Sotheby’s thought of having to keep up: the agreement with the Chinese new Freeport is easily done. The space will be opened in 2013 next to the Beijing Capital International Airport, with 83,000 square meters of space untaxed, designed to store and trade in luxury goods.
The relationship between Sotheby’s and the state-owned Beijing Gehua Art Company is a ten-year agreement that will allow the auction house to solidify its presence in the Chinese territory and exploit the potential of its market, not remaining confined only to Hong Kong. Allocated $ 1.2 million for the acquisition of 80% of the company, the announcement triggered the optimism on the stock market: Sotheby’s shares shot up to $ 35.74 (compared to an average which stands at the threshold of 30).
In addition to tax benefits, the real news is that Sotheby’s auction will officiate in the Chinese mainland, something prohibited to foreign companies: it will be, by regulation, the only auction house to hold sales in China within the freeport. The alternative for a foreign home is to enter into a partnership with a national signature, as Christie’s did with Forever.
With this move, Sotheby’s will expand its Chinese clients, avoiding them to incur import taxes. Also, if a Chinese collector will buy abroad, will have the opportunity to keep his work in the warehouses of Free port without any tax liability until they decide on the fate of the work purchased.
The China Poly and China Guardian Auction, third and fourth place in annual sales, beat today the historic Christie’s and Sotheby’s in Asia. But with the development of strategies put in place by the two Western companies to penetrate the Chinese territory, the two local giants will not have an easy life at home.