China's art market to see potential boost from free trade zone
"A free trade zone is not a freeport," said Shen Mingchu, the deputy president of Beijing Gehua Cultural Development Group, referring to the recent discussion stirred by a report from The Art Newspaper with the headline, "Beijing to get freeport to challenge Hong Kong's supremacy."
The Gehua group and the management committee of Beijing Tianzhu free trade zone have jointly established a culture free trade zone in Tianzhu, near Beijing Capital International Airport.
The project, which aims to promote cultural communication and trade by offering different levels of policy advantages in that area, was supported by the people's government of Beijing and the Ministry of Culture.
Changing policies
Since the ground-breaking ceremony in March, discussion about the free trade zone has not stopped.
In April, China changed its policies surrounding custom duties. The tariff rate on artworks was reduced but supervision became tighter.
A few large transportation companies providing services to auction houses faced pressure from customs. The 17 percent value-added tax did not change.
Many art collectors and auction companies have complained about the changing policy in China while anticipating the arrival of a free trade zone to bring in relief for the market.
The free trade zone will allow international companies to exhibit, trade and hold auctions for cultural products, tax free in the given area. Many see this as a positive influence on the Chinese mainland art market.
"People are unclear about the idea of a free trade zone. It has little effect on collectors who want to bring art to China," said Shen, who explained that the concept of a free trade zone was mistaken by many media organizations as a "freeport".
"The cultural environment in Beijing is not comparable to Hong Kong. The art transaction market is mature in Hong Kong, a real free port," said Shen.
Convenience for consumers
The free trade zone consist of three parts: An international exhibition and trade center for cultural products, a cluster for trading enterprises, and a logistics center for storage and delivery. In total, the area will be 173,300 square meters.
Shen said the idea is to provide a platform for creative industries around the world to communicate, exhibit and trade with each other.
"For example, many domestic films were sent abroad for post-production, because we lacked the required high-tech editing equipment. With the free trade zone, there is no need to send our films abroad or worry about the high tax of importing expensive machines. It can be done within the zone in Beijing," said Shen.
He explained that people usually connect tax issues with the art industry, but in fact the art market is not the only industry that will enjoy the benefits of a free trade zone.
The free trade zone can also hold international events such as film festivals, book fairs and art festivals.
Wang Xiaowen, vice general manager at Beijing Googut Auction Co. Ltd is optimistic about the impact of a domestic art free trade zone.
"It is a good thing, especially as the tax policy is becoming stricter. Many collectors store their collections in Hong Kong and Singapore. If we have a free trade zone for storage in China, it would be more convenient," said Wang.
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