Shanghai's free-trade zone threat to Hong Kong art auctions
Opening of zone in Shanghai could see city hold tax-free sales of art and collectibles
Approval for Shanghai to open the mainland's first free-trade zone, widely considered a fresh threat to Hong Kong's position as a leading financial centre, may also be a big threat to Hong Kong in its growing competition with Shanghai for Asia's art auction business.
Christie's became the first foreign firm to win approval to open a mainland-based subsidiary, in Shanghai in April, and it is expected to set up a new storage base in the city's free-trade zone.
Shanghai government officials familiar with the situation said Christie's, one of the world's largest auction houses, would host its first mainland auction in September, after the launch of its Shanghai subsidiary. They said the firm had been in intensive discussions with the Shanghai government to establish a permanent storage facility in the city's free-trade zone, where successful bidders at its auctions could keep the goods they bought, such as wines and paintings, without paying tax.
Christie's already runs three storage sites around the world, in Singapore, in London, where it is headquartered, and in New York. Industry watchers say high land and operational costs in Hong Kong have discouraged Christie's from establishing a permanent storage site in the city.
A government source said: "I think this will be certainly very good news to many local collectors and investors if auctions firms like Christie's can have their own storage site in Shanghai. As long as you don't bring those wines or paintings that you bid for back to your home [outside the free-trade zone], then you don't need to pay any tax.
"For those professional art investors, all transactions can take place in the free-trade zone without any tax burden for both the buyer and seller."
