Is South Korea Asia’s New Dominanting Art Market Force?

It is no secret that Hong Kong has been the crown jewel of the Asian art market for many years. Yet, recent regional developments have allowed historically weaker national markets to rise in importance, ultimately leading to a potential new dominant art market force in Asia. South Korea has proven an indisputable challenger; its strong market structure and recent performance prove South Korea possesses the infrastructure and cultural attitude conducive to a thriving market.

Undoubtedly, the COVID-19 pandemic changed the art world on a global level. In particular, the shutting of galleries, museums and art fairs has led to a long road of recovery which the Western world is still paving. This includes the discontinuation of The European Fine Art Fair New York and Masterworks, and a third of all galleries globally expect to close permanently due to the impacts of COVID-19.[1][2] In general, the COVID-19 pandemic led to a decline in the global gross domestic product, decreasing by almost 3% year over year from 2019 to 2020.[3] This decline equates to half of the gross domestic product loss seen during the Global Financial Crisis of 2008, showing how impactful COVID-19 was on a global economic scale.

Asia, in particular, was heavily impacted by the COVID-19 pandemic, with almost 12% of global deaths resulting from COVID-19 isolated to the region.[4] This resulted in strict quarantine and travel rules. Hong Kong implemented a myriad of restrictions and only removed all quarantine restrictions on January 30, 2023, and outdoor mask-wearing requirements on March 1, 2023.[5],[6] Initially, these restrictions were cause for concern. Hong Kong is indisputably the centre of the art market in Asia; all major auction houses have Asian bases in Hong Kong. The city also hosts Art Basel every March, houses the second-largest Contemporary art market in the world and accounts for about USD 1.7 billion in annual turnover.[7],[8] The impact of COVID-19 on Hong Kong’s art market, and therefore a meaningful portion of Asia’s art market, had the potential to be extremely significant. 

People wear face masks in the MTR station a day before the government scraps the mask rule in Hong Kong, China, February 28, 2023. Photo. Courtesy of REUTERS/Tyrone Siu.

Yet, during this period of notable shutdown, the art market continued to grow. Phillips joined forces with Poly, a Chinese state-owned auction house, to produce a record-breaking 20th-Century and Contemporary sale in Hong Kong in November 2020.[9] Christie’s held a 20th-Century sale in December 2020, which saw six records broken in Hong Kong.[10] Experts attribute this rise to young collectors flushing the market with much-needed liquidity during a time of uncertainty. A private dealer in Hong Kong, Anna Ning, quoted, “There is a new group of young collectors, in their 30s and 40s… they have big spending power… much less careful with their money and focused on contemporary art”.[11] The advent of COVID-19 also led to an increase in virtual auction participation, allowing young buyers flush with cash to continue purchasing art throughout the COVID-19 pandemic, regardless of national travel restrictions.

Phillips auctioneer Jonathan Crockett selling lot 16, Gerhard Richter’s Kerzenschein (Candle-light), which sold for HK$101 million/ US$13 million. Photo. Courtsey of Phillips.

At the same time, Hong Kong experienced a period of material, political change that has left the art world uncertain about the city and, therefore, the future of Asia. This began in April 2019, when political powers in Hong Kong were considering legalising the extradition of Hong Kong criminal suspects to Mainland China.[12] Although the law was scrapped, protests and resulting violence escalated as local Hong Kongers felt a shift in the city’s autonomy. Coinciding with Hong Kong’s shutdown during the pandemic, the government banned protesting due to pandemic concerns.13 Alongside this, the People’s Republic of China National People’s Party implemented The National Security Law in June 2020.[13] This law criminalised secession from China, undermining the power or authority of China and collaboration with foreign forces, along with sixty-three other articles that can result in life in prison. The majority pro-democracy party was expelled from Hong Kong’s local councils, with many being convicted under the new law and sent to jail.[14] This dramatic political shift has left the city in a suspended state, with many international art communities uncertain about the future of the city’s market.

Protestor Participating in the Hong Kong 2019 Protests. Photo. Courtesy May James/HKFP.

Although Hong Kong’s art market has remained strong throughout both the COVID-19 pandemic and political adjustments, its future is uncertain. Global corporations and Hong Kong’s population have left; working visas dropped by 76%, and an estimated 2% of the city’s population has emigrated to other countries.[15],[16] This exodus has led many former residents and corporations to emigrate, leaving room for a new art market power to emerge in Asia. Ultimately, even if Hong Kong does remain the centre of the Asian art market, it will see a material change in how business is practised and who is ultimately buying art. Within this battle for new market power emergence, South Korea has proven a top contender.

South Korea has emerged as a top player in the wider Asian art market. The government includes bodies such as the Ministry of Cultural, Sports and Tourism, established officially in 1948 to promote education, Korean culture, harmony between leisure and work, and improve quality of life through cultural events.[17] This body passes laws aimed at promoting the cultural industry, such as the Framework Act on the Promotion of Cultural Industries in 2002.[18] This law intends to “lay the groundwork for the development of cultural industries… improvement of the quality of national cultural life and development of the national economy… supporting and fostering cultural industries”. This includes providing funding to cultural institutions, creating and promoting cultural events and requiring financial institutions to guarantee debt to cultural manufacturers. In this context, the prior includes industries related to “exhibitions, expositions, fairs, festivals, etc. of cultural products”. This definition includes digital art and even video games. It is clear from the historical establishment of the Ministry of Cultural, Sports and Tourism and the implementation of framework laws that the foundation of the cultural sector is important to the government and is inherently linked to economic development in South Korea.

The historical establishment of cultural sector importance in South Korea led to the development of dynamic creatives and a history of strong biennials, which act as a form of institutional validation and celebration of the country’s artistic history.  The catalyst for this growth was a period of political change in the 1980s, in which the Gwangju Uprising took place, and included protesting against the government's censorship of art and artists.[19] Ultimately this resulted in the implementation of a fully democratic government in 1987. From the 1990s onward, South Korea’s cultural sector experienced rapid change due to rapid economic growth and a subsequent increase in biennials.

In 1993 the Whitney Biennial was held in the National Museum of Modern and Contemporary Art in Seoul. This was followed by South Korea participating in the 1995 Venice Biennale. In the same year, South Korea held the first Gwangju Biennale, which established the spirit of South Korea’s art market, celebrating the democratic spirit of the country and its deep artistic traditions. These biennials focused on changing global perception of South Korea, and its artists, as evolved and globalised figures who respected their artistic traditions. Essentially, they showcase South Korea’s art market on a global level, helping to link the art market to its peers in the Western world. Ultimately, the rise in art market importance led by biennials has helped to reach global recognition by the extremely respected art fair, Frieze, establishing Frieze Seoul in 2022.

Installation view of Lehmann Maupin’s booth at Frieze Seoul, 2022. Photo. Courtesy of Lehmann Maupin.

Alongside the prominence of biennials in South Korea is the importance of chaebols. These are large, family-owned corporate conglomerates who have supported the rapid development of South Korea’s economy, politics and art market. They include the likes of Samsung, LG and Hyundai, who have taken an interest in the country’s art market. Chaebols have established museums, such as the Samsung Museum of Art and the Amore Pacific Museum of Art. Alongside this is strong sponsorship locally, chaebols also sponsor internationally, such as Hyundai’s sponsorship of the South Korea Pavilion at the Venice Biennial.[20] The Ministry of Cultural, Sports and Tourism also financially incentivises corporations who provide patronage when promoting the South Korean art market and cultural identity.

Although chaebols provide needed infrastructure and financial support, it is important to note that they are subject to the taste of their corporate governing bodies. Alongside this infrastructure is a plethora of galleries, primarily Contemporary and concentrated in Seoul. There are also galleries in Gangnam, Daegu and Busan, showing that the country’s art market is geographically diversified. On top of this, South Korea is home to many artist-run spaces such as Loop, Open Space Bae, out_sight and so on. Clearly, South Korea contains robust infrastructure for the cultural sector, which has fostered a myriad of artistic bodies to flourish.

Outside the Leeum Samsung Museum of Art in Seoul, South Korea. Photo: Sotheby’s.

The establishment of biennials and subsequent support from chaebols has led to a strong respect for art and artists in the country and an accepted collecting culture that has been cultivated over the past thirty or so years. This has been spurred further by the economic slowdown of COVID-19. Young Koreans became tired of low investment returns and instead have turned to Contemporary art specifically as a store of value. K-Auction, an auction house in Seoul, cited that more than 50% of all bidders in 2021 were under forty years old.[21] This led to a threefold increase in South Korea’s art market from 2020 to 2021, coinciding with Asia’s more considerable market growth during COVID-19. South Korea’s rapid art market growth was expected to continue into 2022 with the advent of Frieze Seoul.

Yet, it has become clear that South Korea’s rapid growth may be met with a slowdown. This can be attributed to interest from collector groups and a cooldown of cash influx. According to the Korean Art Market Sector 2022 report, millennials and Generation X are the largest groups of Korean collectors. They comprise 85% of art purchases, and in particular, Korean millennial collectors prefer to buy outside of Korea.[22] Alongside this, while biennials and art fairs are essential to the cultural infrastructure of South Korea, comprising 15% of art market sales, the most significant driver of sales is held by Korean galleries, which account for almost 50% of sales. This concentrated distribution may hurt South Korea in the future, as young Korean collectors may have expressed less interest in local gallery support, moving interest and cash to foreign markets and galleries.

At the same time, the rise of younger collectors can lead to future opportunities and adjustments in the art market. This can be attributed to young collectors' interest in new forms of art and investment, such as digital art, which is also supported as part of the cultural sector by the government. As of the first half of 2022, the fractional art investments in South Korea totalled KRW 100 billion, with more than KRW 31 billion invested in the first quarter of 2022 alone. Clearly, there is an opportunity for market growth in the digital art sector. South Korea has shown that rapid growth in the art market is possible, and additional attention to the budding market will need to be focused on young collectors who will shape the market’s future.

Art Busan 2021. Courtesy: Art Busan.

The COVID-19 pandemic and the implementation of The National Security Law has given way to a shift in the Asian art market. This is leaving way for a new dominant force in the Asian art market scene, and South Korea is vying for the top spot and is positioned to become more important in a global context. South Korea shows a profound cultural and historical devotion to the art market, manifesting in biennials, local corporate support and a community of collectors. At the same time, South Korea’s market is inward-looking, mostly propped up by South Korean companies and collectors, with young local collectors seeing more buying opportunities internationally. Based on the above analysis of the current market structure and recent performance, South Korea possesses the infrastructure and cultural attitude conducive to a successful market. However, a forecast of decreased young collector interest in the local market may prove to damage performance in years to come.

Footnotes:

[1] Daniel Cassidy, “Tefaf permanently scraps autumn fair in New York—but spring edition will return in 2022,” The Art Newspaper, April 8, 2021.

[2] “A Third of Art Galleries Closing as a Result of the Pandemic? Can We Really Let This Happen?” Fine Art Multiple, April, 2021.

[3] “Global gross domestic product (GDP) 2027,” Statista, last modified February 16, 2023. 

[4] “Asia-Pacific countries have managed COVID-19 crisis relatively well but major challenges remain in low-middle-income countries,” Organisation for Economic Co-operation and Development, last modified November 11, 2020.

[5] Kathryn Armstrong, “Hong Kong to scrap almost all its Covid rules,” BBC, December 28, 2022.

[6] Kari Soo Lindberg, “Hong Kong to Remove Mandatory Quarantine for Covid Infections,” Bloomberg, January 19, 2023.

[7] “Hong Kong: where art thrives.” Hong Kong Economic and Trade Office, last accessed April 14, 2023.

[8] ArtPrice, Art Market Report 2021, ArtPrice, 2021.

[9] Vivienne Chow, “In the First Partnership of its Kind, Phillips and Poly Auction Set Their Sights on Hong Kong,” The Art Newspaper, August 21, 2020.

[10] Kabir Jhala, “A Tale of Two Cities: Christies 20th Century Relay Sale Sees Six Records Set in Hong Kong Before Slower New York Finish,” The Art Newspaper, December 3, 2020.

[11] Georgina Adam, “Asian Art Market Flies in the Face of Coronavirus,” The Art Newspaper, December 16, 2020.

[12] “The Hong Kong Protests Explained in 100 and 500 Words,” BBC, November 28, 2019.

[13] Hong Kong Special Administrative Region, The People’s Republic of China National People's Congress, The Law of the People’s Republic of China on Safeguarding National Security in Hong Kong Special Administrative Region, Basic Law Article 23, Enacted June 30, 2020.

[14] Human Rights Watch, “Hong Kong: Prominet Democracy Advocates Arrested,” Human Rights Watch, May 13, 2022.

[15] Paul Yiu. ”Global companies moving top posts out of Hong Kong: survey,” Nikkei Asia, August 17, 2022.

[16] William Yiu. “113,200 residents leave Hong Kong in 12 months, contributing to 1.6 per cent drop in population, census figures show,” South China Morning Post, August 11, 2022.

[17] “About MCST,” Ministry of Culture, Sports and Tourism, Last accessed April 14, 2023. 

[18] Republic of Korea, Culture, Sports and Tourism Ministry, Framework Act on the Promotion of Cultural Industries, Enacted January 26, 2002.

[19] Jihyun Hur, “Becoming Asia’s Next Art Hub: A Reflection on the Rise of the Contemporary Korea Art Market” (MA diss., Sotheby’s Institute of Art, 2023), 7-10.

[20] Hyundai Motor Group. “Hyundai Motor Drives Global Art Patronage in partnership with Korean Pavilion of the 59th La Biennale di Venezia,” Hyundai Motor Group Newsroom, April 22, 2022.

[21] Subin Kim, “Tired of stocks, South Korea’s millennial investors bank on art,” Al Jazeera, June 21, 2022.

[22] Korea Arts Management Service, Korean Art Market Report 2022, Seoul, 2023.

Megan Brown

Art Market Co-Editor, MADE IN BED