China's auction houses now account for five of the world's top 10 by revenue
Until recently, few in the art world had even heard of China's auction houses. Today, they are among the world's biggest by revenue, posing a serious challenge to the likes of Sotheby's and Christie's.
Though still much smaller in size than their foreign rivals, China's auction houses now account for five of the world's top 10 by revenue, according to a recent report by the France-based industry association Conseil des Ventes.
Their rise has been fuelled by wealthy Chinese collectors' vast appetite for art and antiques and aided by regulations that have locked overseas competitors out of Mainland China.
It nevertheless represents an extraordinary turnaround for an industry that has for centuries been dominated by a handful of established European brands.
"From 1776, when we were founded, to about five years ago, our main competitor was Sotheby's. Well, today in Asia, the landscape has changed," explains Francois Curiel, president of Christie's Asia.
"For the first time in history, local auction houses are doing better than us in a local market."
The two biggest, Beijing Poly and China Guardian, rank only just behind Christie's and Sotheby's, having overtaken more established names such as Bonham's in just a few years.
Last year Poly booked sales of 12.1 billion yuan -- more than the combined revenues of Christie's and Sotheby's for the entire Asia region. China Guardian recorded revenues of 11.2 billion yuan, up from 1.8 billion yuan only three years ago.
Their success comes as China's new breed of art collectors have propelled Beijing, and to a lesser extent Shanghai, to the forefront of the art scene, with Chinese works of art regularly breaking records at auction.
Last year Qi Bachi and Zhang Daqian, two modern Chinese artists who specialise in ink paintings and calligraphy, overtook Pablo Picasso and Andy Warhol as the world's best-selling artists by auction revenue.
A Qi painting entitled Eagle Standing on Pine Tree sold for $57.2 million in May 2011, the highest price reached by any work of art at auction last year.
"China's new rich have very little way of spending their money. Art is one of them," said Wang Yannan, director and president of China Guardian, which was founded in 1993.
Beijing is now the world's biggest art market, with 27 percent of global auction revenues, according to data compiled by the specialist website Art Price.
But foreign auction houses are not allowed to set up shop in mainland China, putting them at a geographical disadvantage in targeting Chinese buyers, although both Christie's and Sotheby's have booming operations in Hong Kong.
"Five years ago, China business was four percent of our annual sales in Hong Kong. Now that figure has risen to between 40 and 50 percent," said Kevin Ching, chief executive of Sotheby's Asia.
"A lot of this can be attributed to the rise of China as a world economic and political power."
While Christie's and Sotheby's have to limit their presence in Beijing to a sales bureau and previews, several Chinese auction houses are expanding overseas.
Poly and Guardian have both opened offices abroad to source Chinese art, much of which is in Western collections.
They are courting sellers in Europe and the United States by offering them greater access to mainland Chinese buyers than the foreign auction houses operating out of Hong Kong.
"We are facing a lot of competition outside of China. Poly and Guardian have opened offices overseas to source as much as artwork as possible, and they picked up very quickly," said Curiel of Christie's Asia.
"Generally, Chinese buyers are looking for the best."
Both Chinese houses are also looking to gain a foothold in Hong Kong, attracted by the territory's tax-free status -- import tax on works of art reaches up to 25 percent in mainland China -- and its reputation for probity.
Chinese auction houses operate in a much less strictly regulated environment than their Western counterparts, and there are widespread reports of fake works of art being sold and of bills going unpaid by buyers.
And as Chinese buyers' tastes diversify, Poly and Guardian expect to cast their nets wider to Western art -- putting them even more directly in competition with the likes of Sotheby's and Christie's.
"We have had interest from Western buyers," said Guardian's Wang. "It's something we are looking at closely and would consider in the long term."