A bit of culture for you money mad Asian under acculturated investors.
For Private Use only
(C) Far Eastern Economic Review
June 4, 1998
Ryoei Saito's purchase of Vincent van Gogh's Portrait of Doctor Gachet on May 15, 1990, epitomized the height of Japan's Dionysian party: That day at Christie's in New York, frenzied bidding shot from $25 million to $60 million in just eight seconds before climaxing at Saito's offer of $82.5 million.
The industrialist's bid was considered ridiculously high, but collectors had come to expect that of aggressive Japanese buyers, who for several years had been driving Western art prices to unparalleled levels. Saito later told a Tokyo newspaper that he wanted the painting "at any cost."
The former chairman of Daishowa Paper Manufacturing cherished the portrait and even vowed to have it cremated with him. But when he died in 1996, at age 79, the time for such lavishness was over. His company was mired in Japan's post-bubble economic malaise. In May 1997, the family quietly sold Pierre-Auguste Renoir's Le Moulin de la Galette for $50 million--a huge loss from the $78.1 million Saito paid in May 1990. And while a spokesman refuses to comment on Saito's collection, he wouldn't deny reports that the van Gogh would be next to go.
The art bubble peaked in 1990 amid the rush of overzealous and often inexperienced Japanese collectors to amass Western art. Now, however, tough times have forced more and more of the estimated 1 trillion ($7.4 billion) in paintings and drawings imported from 1987 to 1990 onto the selling block. And as the government increases pressure on financial institutions to trim assets and write off bad loans--some of which fuelled Japan's art explosion--Western art is making a quiet exit.
Last year Christie's Japan sold $41 million worth of Japanese collectors' art. That's double the figure from three years ago. This year, the exodus has been even swifter; the auction house says that sales until late May had reached $31 million.
This can be attributed partly to the yen's weakness, which is encouraging Japanese collectors to let go of their holdings and foreign buyers to take advantage of good prices, says Roderick Ropner, vice-president of Christie's Japan. But the yen is stronger than it was during the late 1980s--and even in dollar terms, many of the paintings aren't worth the excessive prices Japanese paid for them.
Harunori Takahashi, former president of two defunct Tokyo credit associations, sold 11 paintings by German Anselm Kiefer to Britain's Entwistle Gallery for $6.5 million late last year. Takahashi reportedly paid $13 million for the works in 1989. In May, an anonymous Japanese collector sold Renoir's Seated Nude for $2.75 million--he had bought it in 1990 for $6.05 million. Also in May, another collector sold Degas' Danseuses for $2 million, $1.3 million less than he had paid in 1989.
Not all sellers are losing money. Hideto Kobayashi, who owns a gallery in Tokyo's posh Ginza shopping district, says some works by famous masters hold their value, or even appreciate. In mid-May, New York dealer David Nash, reportedly acting on behalf of Microsoft billionaire Paul Allen, paid $12.1 million for Claude Monet's The Grand Canal. Its previous owner, a Japanese, had paid $9.9 million in 1990. But Kobayashi says modern art must be drastically discounted to attract buyers. "The worst case I've seen is American pop art," he says. "They sell for one-fourth or one-fifth of the original price."
He estimates that about 200 billion in Japanese-owned, bubble-era art remains to be sold. Precise details are hard to come by, though, since companies prefer to play down their troubles. Lake Loan, a mid-sized finance company that specializes in making high-interest consumer loans, is trying to unload art it seized as collateral. A spokesman won't say what works Lake Loan owns or how much they're worth, but he acknowledges that the lending got out of control. "It's like land purchases," he says. "People kept buying paintings by putting down paintings they had previously bought as collateral. Land prices crashed, and so did art."
Another problem, says Kiyotaka Kori, a dealer specializing in Impressionist paintings, was the ignorance of buyers in the late 1980s. "One time I saw a Japanese guy bidding at a London auction, thinking the amounts were in dollars," says Kori. "I told him they were pound figures." He adds that some of these amateur buyers also probably bought counterfeits as dealers scrambled to meet the Japanese demand. "Art dealers had to check the obituaries every day because there were few things to sell," Kori recalls.
Reselling the paintings, however, is a more arduous process. Kobayashi says he receives calls from overseas art dealers fishing for good deals, but Japanese collectors feel safer transacting business in person. Kobayashi established Japan's first local auction house in 1994, on the premise that companies would be more amenable to the transparency an auction provides. He now sells 200 million-300 million worth of mostly European paintings every quarter. Collectors tend to participate by telephone. Finance companies "usually set the amount of bad loans to be written off every year, and according to that plan, they bring their art to the auction," he says.
Despite his booming business, though, Kobayashi says he'd like to see more valuable artworks stay in Japan. The government seems to agree. A bill now being debated in parliament and expected to receive approval would enable Japanese to submit art in lieu of inheritance taxes. The government would then lend the works to museums for free. "There are a lot of new museums, but we lack 'software' to put in them," says Hiroki Watanabe, an official at the Cultural Affairs Agency.
The ultimate solution, of course, would be to revive Japan's faltering economy so that more domestic collectors aren't forced to sell. But that looks far off".
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