In the 1980s, Japan dominated the impressionist and modern art market, for example importing $ 1.5 billion worth of paintings in the first nine months of 1989 alone. At one point, it was estimated that a third of the world’s art sales was accounted for by Japanese buyers during the frenzied “bubble period” when all asset prices soared.
Then it all fell apart, and today Japan’s market share is so small that UBS and Art Basel’s 2021 Global Art Market Report doesn’t even give a figure. Recently published Nikkei Asia reported that Art Tokyo – the country’s leading fair – valued the domestic market at 236.3 billion yen ($ 2.1 billion) in 2020, just 4% of the global share.
But will that change with the decision taken in December 2020 to deregulate Japan’s tax system to allow art imports without paying duties in free port areas?
“The government, in particular Taro Kono [the minister for regulatory reform], is completely determined to develop the art trade in Japan, so that Japan becomes a hub in Asia like Hong Kong, ”said Yasuaki Ishizaka, President of Sotheby’s Japan. He adds: “This reform of the free zone alone will not change the art market, but it is only the beginning. Study groups would look into the reform of donations, inheritances, tax on depreciation, etc.
“Taxation is heavy and complicates the conduct of business,” said Tim Blum, co-founder of Blum and Poe, which opened a gallery in Tokyo in 2014 and represents a dozen Japanese artists. “Until now, if we imported art to Japan, we had to pay 10% import tax in advance. It entered into escrow; if the art was re-exported then it was refunded, or tax paid if it went to a domestic buyer. And, he says, the repayment could take six months, which would put considerable pressure on cash flow.
Blum and Poe’s local gallery manager Marie Imai, who has met with the Tokyo customs office, says things aren’t that easy. “The process of applying for admission as a free port is long and the operation of the free port zones is strictly consulted and reviewed by the customs office,” she said. “It would take a lot of time, energy and manpower. Some gallery owners think this is not a realistic project at all.
Nevertheless, according to Blum: “Tokyo is the cultural capital of Asia, with its long tradition of history, architecture, fashion, cinema and art; I don’t know any artist who doesn’t want to go and show in Japan. And, he adds, “I have seen a dramatic increase in the number of young Japanese people starting to buy art, like Yusaku Maezawa. [the billionaire founder of Japan’s largest online fashion retailer]. “
Ishizaka confirms: “Young entrepreneurs in particular are starting to buy contemporary art. From lifestyle magazines to business magazines, major newspapers feature articles related to the art business. Only three years ago, when we asked the media to run our auctions, the response was always “art is a different world and it is unlikely to attract our readers”. But now they are coming to us. However, he says, while Sotheby’s has not ruled out restarting auctions in the country, there are no immediate plans to do so.
Today, for Blum, the changes in Japan are “100% on the Hong Kong estate.” With everything going on there, there is a race to see what other capital could replace or supplant Hong Kong. The most likely contenders are Singapore and Seoul, where Frieze has just announced the launch of its first Asian fair in September 2022. The South Korean capital is also attracting growing interest from Western galleries: Pace and Perrotin already have galleries there. , while Thaddaeus Ropac launched a space in October and Berlin-based dealer Johann König opened premises in Seoul last month.
“Maybe this is the opportunity for Tokyo,” says Blum: “And I’m more confident in the change now. Still, things tend to move like molasses here, so I don’t hold my breath.
The airport wants to be a hub for art as well as for travel
Tetsuya Kawabe is the Managing Director of the Haneda Future Research Institute and is responsible for developing projects around Tokyo’s second, more central airport. He believes the “sensitive” political situation in Hong Kong is an opportunity for Japan and has worked with Minister Taro Kono. “[Kono] decided to open the door by modifying the free port regulations, ”says Kawabe.
“This new deregulation is designed to attract the global arts community here, as an alternative to Hong Kong,” Kawabe said. “We want to host galleries, an international fair, as well as auctions, and we can facilitate the process. With one or two years, we might be ready for a big art fair.
An existing building, five minutes from Haneda Airport and within the free zone, is nearing completion and, when ready in 2023, will offer 30,000 m² of space, with the ambition of eventually become a gallery hub. Georgia