At Leona Craig we specialize in both investment and art. The art that we are currently specializing in is the art of China, and we love Yixing teapots because of their uniqueness and quailty. As experts in art investment, we have noticed that many artists and sellers of those teapots have raised their prices to unreasonable levels, which has been made possible by the favor they have garnered with the right people, which, in China, means people of money and power. With experience in investment, arbitrage, and art, we have seen price bubbles, in many markets, over the years. I was a merger arbitrageur during U.S. stock market crashes of 1987 and 2001, and, beginning in the spring of 2007, we advised clients to avoid the Chinese stock market because we believed that there was a price bubble. We have been dealing in many areas of art for the past three decades, so our view of art markets is broad, and we can see how teapot art should fit within the broader art landscape. In fact, it is our belief, after thoughtful analysis, that prices of many contemporary teapots and artists are overdone at present, and we would like to give you the benefit of our experience, in general investment markets and from inside the Chinese teapot market.
As we have pointed out in our recent research reports about the teapot and general art markets, which can be found on the In Country Analysis part of our website, teapot art, at this juncture, in the development of art markets, within China, has been embraced by buyers and collectors more than other art forms, like oil paintings and general sculpture, because it has been promoted as a truly Chinese art form. As we always point out, in investment analysis of art, a major part of art prices is induced by marketing by dealers and critics, much like stock prices are hyped by their promotion by stock brokers. In that regard, people are told by those marketeers, who are seen as the congiscenti, that certain art is good and valuable and that other art is not. Indeed, I am sometimes surprised by what the critics promote as creative, innovative, and valuable. Moreover, teapot art enjoys the benefit of several other unique marketing factors: teapots are made, only in one place, in China, Yixing, and they are easily displayed and sold in the many tea shops, around China.
If Chinese teapot art is a uniquely Chinese art form, there are two other factors, uniquely Chinese (and not), that are pervasive, in everything, in China, today. First, there is the elite government class, who have both the power of persuasion and money. Then, there is the new rich class, who have money to burn, and often spend it, unwisely, just to be able to brag to friends about how much they paid for something, and the higher the price, the better. Combine those ingredients with, not only, the unique position of Chinese teapots, in the broader Chinese art market, but, also, the unique marketing power of the artists of Yixing, and the result is bubble prices, in some sectors of the teapot market, and a coattail effect for pricing by other teapot artists and by some teapot sellers. The result of the convergence of these factors is that we see teapots, priced by famous contemporary artists at over US$10,000, which has resulted in pricing by some not-so-famous artists and by dealers in the US$1,000's.
Understand that we do not object to prices of art for thousands, hundreds of thousands, or even millions of dollars, out of hand. However, another part of prices, which comes from basic economic theory, is scarcity. In that regard, Picasso's paintings, for example, have been able to garner high prices because he created only so much art, and he is dead, so there will be no more. However, that is doubly not the case, in much of the contemporary Chinese teapot art market. First of all, they are not dead, so they are still cranking out works. Second, many teapots are produced in great multiplicity, so there is not uniqueness or even scarcity, in the limit to the number of copies of a particular teapot made by an artist.
Investment analysis is comparative. For example, in analyzing stock prices, we usually use P/E comparisons, ranking the P/E of a stock against others, in its industry and in general (you can read our recent article about PE arbitrage on Articles Base). In economics, we talk about scarcity, opportunities, and choices (you can download our lectures on basic econ in the Red Hill Capital portion of our website). Art is, after all, a general investment class, so art prices should be comparable, even across art forms. Consider, then, the Chinese art from different areas, sculpture, teapots, and oil paintings in the price range of $5,000 to $10,000. Consider the cast brass and chrome sculpture, titled "Tropical Fish", by Hong Fei Xu (Xu Hong Fei) who is a world famous sculptor, measuring almost 4 feet high by over one foot in diameter and weighing over 40 pounds offered at $10,000. Next, a sweeping landscape oil painting by a well-regarded South China artist, Mu Yang Shen, titled "Wild Horses", which shows around 50 horses, measuring over six feet by six feet, priced at $7,000, in our gallery. Compare those to the half-liter "lotus leaves and frog" theme teapot by Tang Liu Qin, offered to us, as dealers, at $5,000 from the artist.
In truth, we do like Tang's teapot, and, even though the lotus and frog theme has been around for centuries, and we even have several, in our gallery, we do think that this particular one with the frog peaking out from between the lotus leaves is a creative rendition of the theme. On the other hand, we even have another older, one-of-a-kind folk art teapot with lotus leaves and a water dragon who is also peaking out from under the leaves at several places, and the idea of animals peaking through other parts of a teapot has also been around for centuries. However, when we called her and were quoted that price for a small ceramic artwork that is not even one-of-a-kind, we though that the price was outrageous. For our money, we will stick with things like the sculpture and painting, above, both of which are very reasonably priced, comparatively, with the rest of the art markets.
It is, in fact, in the teapot art market where we see the most overpriced art. For example, we recently went to Xian and saw a tea service that we really liked, but the price seemed a bit high, and when we returned to Guangzhou, we found the artist, and now we offer the same set for one third the price, including shipping to the U.S. We have another teapot, in our gallery, of which the particular artist has made only two copies. We saw the other one at a wholesale dealer in Guangzhou's Fang Cun Teapot Market for seven times the price that we paid for ours, which we got directly from the artist.
It is at least those sorts of things that are contributing to bubble prices of many teapots, but there is one more factor. Because of the mispricing of the Yuan against major foreign currencies, most Chinese believe that foreigners are rich and can afford to pay ten times the original price of things, in Yuan, because they will think that the prices are not unreasonable. It was that same mispricing of the Yuan, which fueled the Chinese export phenomenon, over the last few decades and, after all, one of the reasons that we believe that Chinese art, in general, is such a great investment is that the mispricing of the Yuan makes it an even better investment for foreign buyers. As a result, we must, not only sort out high prices by teapot artists who have lost sight of price reality, but also be careful of those sellers who up the price because we are foreign buyers. Indeed, when we go to the teapot markets (and, frankly, almost everywhere else), my protégé, Ayu, acts as the vanguard, entering shops without me, and getting price quotes, and, then, I walk in, thereafter, so that we can, at least, factor out the foreigner-price-effect. Then, we have a better starting point to see if the dealer is honest and reasonable or greedy, even in Chinese-Chinese prices.
As a result of this additional "foreigner factor", we see teapot artists, dealers, and sellers, both in China and on the web, who charge excessive prices for teapots, in all price ranges. For example, we saw a foreigner, in a gift shop on Shamian Island where the most expensive foreigner hotel, in Guangzhou, is located. He asked the price of a teapot, which we knew was a fake copy of one by a well-known artist, and the shopkeeper told him is was Y1,000, which is around the price of an original by the artist who first created it. When the shopkeeper asked me, in Chinese, what I thought of his stuff, I just told him I thought that he was dishonest. We were recently at the shop of an artist and saw an unusual teapot that he told us was his original design, and we were ready to include it, in our gallery. Then, he sent us his price list, and the prices of all of his teapots, not just the unusual one, were sky-high (and he is nowhere near famous) because he knows that I am a foreigner and that we are selling teapots to Western buyers. Of course, he also told us that he was the originator of other designs that we happen to know have been around for several hundred years, and he is only in his forties, so we know, for certain, that was not true. In the end, we found the same design by another artist who also claims that he is the originator of the design. Whatever the truth really is, the second artist gave us a reasonable price that was one-quarter the price from the first, and we can detect no difference in either quality or execution. We also see very plainly-designed teapots that are priced in the hundreds of dollars range, which you could pick up, in China, for a few hundred Yuan ($30 to $50), at most.
One final pitfall that all of us must deal with, here, in China, and even more so, as a buyer at a distance is fakes. Since teapot art became popular and prices began their upward climb, in the 1980's, many people have begun producing fakes of teapots by more famous artists. The signatures on teapots are usually done by using a stamp to make an impression of their signature on as many as three separate places: under the lid, on the bottom of the teapot, and under the handle at the bottom. Thus, it is easy to take a piece of clay, and make your own stamp that is a perfect copy. Even now, we have several teapots that we are trying to authenticate (don't worry: we neither paid high prices for them, nor are we currently offering them for sale). To truly know that a teapot came from the artist whose signature appears on it, you should, at least, get an authentication certificate with it, signed by the artist. Of course, even those can be faked, and, if you are a foreign buyer, you would not even be able to read the Chinese script on those certificates, so they might be instructions for a blender or anything else.
Trust is an important factor, in all of life, but people really need to be able to trust investment dealers and advisors, and, after all, that is what art really is: an investment. We have been in both the art and the investment businesses for several decades, and we have always endeavored to be ethical, honest, and fair. Indeed, as a marger arbitrageur, there were many times when I had inside information, in my possession. I just never used it to make a profit. We also know that there are dishonest people in both fields. In fact, we have seen quite a few of them end up in jail over the years. We just will not deal with them or even listen to them, and we will tell others to avoid them, too. We encourage you to be both honest and careful, in your dealings, in teapot art, as well as in all of your other investments.
Yixing Teapots: what you need to know
Last edited by leonacraig on Apr 14th, '09, 10:10, edited 2 times in total.
Teapot pricing
If you think that on the ground, in-country experience, insight, observation, and analysis is spam, then, that's your opinion
Leona Craig: the art of China
reply to reply
Actually, I editied it before. The original had more links and links from their, which would have taken a reader to more topics on article boards. I teach finance and econ at a major university and live in China. part of our website, and actually, the original part, dealt and still deals with free investment education. That has been expanded to other additions of the website and to other sites, like our blogs and articles about general and art investment. Once Chip informed me that such links were not allowed and that articles, themselves, were better, I replaced it with the article and even reomved any referneces or links to articles, blogs or parts of the website where there is free analysis of many investment topics.
Hope you are ok with the revision. Let me know. I'm new to the site, so I don't know all about the site and its members.
CLM
Hope you are ok with the revision. Let me know. I'm new to the site, so I don't know all about the site and its members.
CLM
Leona Craig: the art of China
Apr 14th, '09, 10:54
Posts: 20891
Joined: Apr 22nd, '06, 20:52
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Location: Back in the TeaCave atop Mt. Fuji
P.S. to MarshalN
You say some of my info is bogus, then, which part isn't. To say it's bogus with no refute is strictly grade school tactics. As for my teapots, can't really know what you know about teapots since your profile is blank and the link to the website you list, there, didn't work. To end with a grade school expression: sticks and stones...
Leona Craig: the art of China