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Title Korea CQ - Epilogue of Lecture ‘What Decides the Price of Artwork’
Posted by webmaster Hit 10506 Date 2016.03.10
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Dear Korea CQ members,

I hope you are having a wonderful day.

On March 8, Korea CQ visited Cheongdam Financial Center, Hana Financial Investment, for the lecture ‘What Decides the Price of Artwork’ by Tae Sung Kim, CFA of Hana Financial Investment and Executive Secretary of Supporter’s Association of Seoul Museum of Art.

Bill Miner, Lissa Miner, Susan Ling, Uloff Münster, Patricia Münster, Youngha Go, Myung Ja Kim, Yuni Chung, Jee Yeon Kim, Eun Ja Min, Soeun Park, Jae Chul Sung, Jai Wook Lee, Hye Soon Lee, Ian Jeong, Didier Beltoise, Jungwha Choi, and special guests, Mickey H. Kim, Susie Lee, Chafika Derragui attended the lecture.

CQ members arrived at Cheongdam Financial Center, Hana Financial Investment, located at Cheongdam-dong, and had time to catch up with each other.

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Before dinner, the lecturer Tae Sung Kim gave a tour of the office, highlighting some artworks for our members to appreciate. 

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After the tour, members enjoyed the delicious Korean food dosirak as dinner.
The lecture on ‘What Decides the Price of Artwork’ started after dinner. Lecturer Tae Sung Kim explained various factors that affect the price of artworks, and stressed the importance of developing an eye for art rather than fixating on the price. 
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The end of the lecture was followed by passionate questions by CQ members. 
It was an interesting and beneficial lecture in which our members learned about factors that decide the price of artworks, and Tae Sung Kim's passion regarding artworks. 

CICI would like to express gratitude to Tae Sung Kim for the interesting lecture. 

We also wish to thank all CQ members who attended the forum and enjoyed the evening with us, and Crystal Park for her outstanding interpretation help.

Notes on the lecture are attached below.

Coming on March 29, Korea CQ will have a lecture on ‘Globally spreading K-Beauty’ by Hyun Tae Kim, CEO of Ra Beauty Core, at the Kuwaiti ambassador's residence.

We are looking forward to our members' active participation. 

Thank you again for your unwavering support and have a nice day.



For more pictures, please click the link below.

https://goo.gl/photos/PNqMwe5bDXu3AsTh9


 

<Lecture Notes>

<What Decides the Price of Artwork >


Lecturer: Tae Sung Kim, CFA of Hana Financial Investment and Executive Secretary of Supporter’s Association of Seoul Museum of Art.


1. Global Art Market
The size of the global art market is estimated to be 7.7 trillion Korean won. The demand only affects the price, and not the value of the work. Figures compiled show that Korea’s art market is 42 billion Korean won. However, there is a tendency to not announce ownership of artworks due to the negative perceptions on the subject, so the actual size is estimated to be around 1 trillion Korean won.
The art market is affected by the country’s economic power and social flow. Based on 2015, the largest transactions made were the following countries (in descending order); USA, China, England, France, and Germany


2. Factors that Decide the Price of Artwork

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There are numerous factors that decide the price of an artwork, a few of them being who the artist is, the provenance, the catalogue raisonné, and the condition of the piece.

1) The Artist
The highest factor that decides the price of the artwork is the artist is. Artworks are priced according to who the artist is, and the more well-known ‘major works’ are priced higher.
For example, Leonardo da Vinci’s Mona Lisa in the Museo del Prado was sketched by da Vinci himself, but was painted over by an apprentice. It is called the ‘Prado Mona Lisa’. One can see that the Louvre Museum’s ‘unfinished Mona Lisa’, deemed so because the mouth was never finished, is priced higher.
Da Vinci had cared a great deal for his masterpiece the ‘Mona Lisa’, and took it with him wherever he went until 1530, when he sold it to the king of France. It was displayed at the Louvre, stolen in 1911 by the handyman that had been hired to make protective glass cases, and returned after 2 years.

2) Provenance
Provenance is the chronology of the ownership, custody or location of a historical object. The quality of provenance of an artwork can make a considerable difference to its price. This is affected by the degree of certainty of the provenance and the status of past owners as collectors.
For example, designer Yves Saint Laurent was known to buy art pieces with good provenance, thus confirming authenticity, through private dealers. After his death in 2009, all the works that were displayed in the living room of the designer were sold at high prices.
As shown in this example, the status of the owner of an artwork affects the price. Recently, there have been cases where art pieces owned by famous people were uploaded on Instagram and thus sold at high prices.

3) Catalogue Raisonné
Artworks from the same artist can differ in price according to when it was made, and whether or not it reflects what the artist was trying to pursue. In general, earlier pieces of abstract artist tend to be priced higher, while later pieces of experimental artists are usually priced higher.
For example, the first edition of J.K.Rowling’s Harry potter was sold at 34 million Korean won, but the book with J.K.Rowling’s notes and sketches was auctioned at 250 million Korean won.
In addition to the above, Germany’s KKK index is based on elements such as exhibition experience and records of which art museums owned the work; higher scores increases the price of the work.


3. Collecting Art
Collection starts from buying an artwork. It is important to accept information, think of the work, and develop one’s own philosophy. Attending art fairs where one can see various artworks can help in developing an eye for finding valuable works.


4. Characteristics of Artwork
1) Informational asymmetry
There is a large gap in the amount of information that can be accessed by experts of the field, such as artists or galleries, and the general public.

2) Transaction Cost
Commission is charged when an artwork is traded. Depending on the method of distribution the fee can be 1~10%, up to even 40%.

3) Liquidity
An artwork can only be sold if there is a buyer, so the liquidity is low.

4) Cost of Ownership
Maintaining an artwork requires additional expenses such as security and insurance.

5) Tax
There is a transfer tax when an artwork is transferred to someone else.

6) Economic Power & Cycle
The art market is related to economic power. Works of Japanese artists used to be highly priced, but since China’s economic growth in 2008, works of Chinese artists have become higher than those of the Japanese.


Artworks are affected by the artist, the representativeness, authenticity, ownership, location, value in artistic history, criticisms and more. Usually works of larger sizes and ones in better conditions are priced higher.

If the owner of an artwork does not reveal their ownership, the location of the work is then lost to the public. This way, one can have complete ownership of an artwork, which makes it an object of desire.

One can develop and eye for art, as well as values and philosophy as long as one takes and interest in the field.


< Q & A >

Q. Chafika Derragui, Embassy of Algeria : Why is the painting by Picasso named ‘The Women of Algiers’?

A. Tae Sung Kim, CFA of Hana Financial Investment : The model of Picasso’s painting was his wife, not of an actual Algerian lady. The title was taken as an homage to Eugène Delacroix's painting, ‘The Women of Algiers in their Apartment’

Q. Mickey Hyunyu Kim, Head of Google : I would like to buy an artwork, but do not know where to start. How should I approach this?

A. Tae Sung Kim, CFA of Hana Financial Investment : It is important to visit and see many works until you find one you like. There are many galleries at Samcheong-dong and Cheongdam-dong, as well as art-fairs where you can see various different artworks.

A. Choi Jungwha, President of CICI : I visited a gallery because I wished to buy a painting, but the price was too high so I could not buy it. So, I went to an art-fair at Coex and bought a painting at 7 million Korean won. The artist later contacted me, wishing to buy the painting off me because the price rose over 10 million Korean won.

Q. Youngha Go, CEO of AMC Asia : I have an artwork I bought some time ago, but people told me it is not good to hang on a wall at home. Is artwork affected by ‘feng shui’?

A. Tae Sung Kim, CFA of Hana Financial Investment : There is a difference in culture. In Asia, artwork made with hair is considered taboo, but it is not in western cultures. It is up to interpretation. Sometimes, dreary drawings are considered to be ghastly and like for that aspect.

Q. Didier Beltoise, President of Cs : How would intangible culture be priced? For example, the number of African tribes have decreased in the past years. How can this kind of tribe life be priced?

A. Tae Sung Kim, CFA of Hana Financial Investment : Take antiques as an example. Decanters represent wine culture better when there are 10 rather than just one.
Also, the teacups you see here are all from the 1930-40s. The value of the teacups can be felt when they are used, and when more of them are gathered, it give a greater appeal to people. Thus, the formation of values are often made by collectors.

Q. Jae Chul Sung, Executive Vice President of Doosan Magazine : I find it regrettable that artists did not receive attention for their works during their lifetime. Are there any artists that did receive attention during their life?

A. Tae Sung Kim, CFA of Hana Financial Investment : That was the pattern in the past, but nowadays the opposite situations occur as well. There are artists that gain attention as soon as they graduate, and gain even more fame through SNS. However, this also leads to unknown artists to suffer even more.
 

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