Inspired by the Singapore Freeport that neighbors Singapore Changi Airport, the Chinese state-owned conglomerate Beijing Gehua Cultural Development Group is building the Beijing Freeport of Culture in close proximity to Beijing International Airport, with a planned partial opening date in early 2014.
The Beijing Freeport of Culture will probably dwarf the Singapore Freeport, which specializes in secure art storage and trading inside its 323,000-square-foot facility, with another 270,000 square feet of space being added to accommodate growing demand. To match the level of technological sophistication and innovation of the Singapore Freeport, Gehua Group has invited its creator, EuroAsia Investment SA from Switzerland, to design and construct a similar facility with a floor area of 893,000 square feet inside the Beijing Freeport. The Wall Street Journal reports that the negotiation between the two is making significant progress.
Gehua Group currently operates a wide range of businesses in the art and culture sector in China. Its business activities range from animation to large event production. In the blueprint of the Beijing Freeport, Gehua aims to attract international art, culture, and media companies of many different kinds, as well as technology companies that can does research and development. The scope of planned businesses to be opened is so wide that Gehua expects the annual transactions to reach $8 billion by 2016, 10 times the cost of building it.
In 2012, China’s auction sales of fine and decorative art and antiques shrank to three quarters of its size in 2011, the year that China overtook the U.S. as the world’s largest auction sales market. Despite so, the market was still worth over $16 billion, according to The Art Newspaper. The numbers may alleviate some uneasiness associated with Gehua Group’s ambitious undertakings.
In addition, the general belief in China’s growing middle class to become sophisticated consumers in art shall give confidence to Gehua and its potential partners to make long-term investments in China. With the government’s tax incentives, the Beijing Freeport of Culture can hand out tax exemption packages similar to those in other EuroAsia-run Freeports to both domestic and international companies wishing to set up businesses in Beijing.
Although companies in the art sector will be cautious to invest if the global economic climate remains cool over the next few years, the Beijing Freeport, once completed, may still shift the center of gravity of the Asian art auction world. This northward trend first took place when Christie’s and Sotheby’s moved their auction sales from Singapore to Hong Kong in 2002 and 2008 respectively.