Summer\u2019s almost over, and as kids go back to school many of our clients and friends are heading to Asia for Frieze Seoul.\u00a0 We assume that you will have done your homework before boarding your flights, but just to confirm that everyone is prepared for the fair \u2013 and as a nod to Korea\u2019s famously difficult exam culture \u2013 we are springing a pop quiz on an important topic: how to sell artwork in Korea.\u00a0 <\/p>\n\n\n\n\n\n\n\n
The format is true or false, and if\nyou cheat by looking at the answers below, you are only cheating\nyourselves. <\/p>\n\n\n\n
Question 1: Korea has a thriving economy, so its art\nmarket must be huge, right?<\/p>\n\n\n\n
False. In fact, the pool of active art collectors is\nsurprisingly small. According to Nacksoon Jang, the chairman of Gallery Bisunjae in\nSeoul, there were only about 1,000 collectors in 2017, and although that number\nhad tripled by 2022, when international galleries and art fairs started coming\nto Korea, the newest collectors tend to see art as an investment, meaning they\ncould easily leave the market if the economic tide turns.<\/p>\n\n\n\n
Question 2: The Korean art market is focused entirely on\nSeoul. <\/p>\n\n\n\n
False. Although the capital is the biggest player\nin the Korean market, collectors also hail from Busan and Daegu and are well\nworth researching for possible sales.<\/p>\n\n\n\n
Busan\nis a wealthy city with any number of new collectors and an active\u2014albeit\nconfusing and volatile\u2014art market. In\n2022, the city\u2019s biggest international art fair, Art Busan, reported more than\n$60 million dollars in sales, with many exhibitors selling out all their works.\n The pace of sales does seem to have\nslowed at Art Busan in 2023, which may be why fair organizers have so far declined\nto release the results. <\/p>\n\n\n\n
Daegu\nis more conservative and the art scene more local than Seoul or Busan \u2013 think the\nU.S. Midwest vs. East Coast — with many galleries selling only works by\nartists from that city. But Daegu also\nhas a longstanding tradition of art collecting, and its wealthy families have\nbuilt substantial collections over generations. \nConsider using local contacts before selling in Daegu. <\/p>\n\n\n\n
Question 3: Korean collectors lack good access to\ninformation on artists and artworks, so dealers can be aggressive in pricing.<\/p>\n\n\n\n
False (but you knew that). \nThis may be one of the biggest misconceptions about the Korean art\nmarket. Koreans are extremely digitally\nsavvy, and collectors do extensive online research before buying works of any\nvalue. They also share information and seek advice via social clubs, art\nfoundations, and gallery sponsored programs. If they like an artist\u2019s works,\nyou should assume they\u2019ve studied auction results and read relevant articles in\nthe Western press. And because the\ncollecting community is tight-knit, a Western gallery that takes a\nshort-sighted approach \u2013 say, by trying to overcharge \u2013 can quickly sink its\nreputation in Korea. <\/p>\n\n\n\n
Question 4: Korean buyers require a high level of\nprofessional service and \u201ctouch\u201d even after a sale is completed.<\/p>\n\n\n\n
True. Korea has a\nstrong culture of so-called \u201cafter service\u201d (think Hyundai \u2019s famous,\nunusually long 10-year car warranty), and galleries there typically\nprovide more services to their clients than in the U.S. or Europe, like\narranging for the hanging of works in clients\u2019 homes. Korean galleries also create social networks\naround their clients, including holding lecture series and even incorporating\nrestaurants and gyms into their galleries. This approach recalls the old Korean\nadage that churchgoers make the strongest troops — because they meet weekly\nand have shared experiences and beliefs.<\/p>\n\n\n\n
Question 5: Korean collectors rely heavily on local art\nadvisors before making purchases.<\/p>\n\n\n\n
False. Unlike in the U.S. and Europe, Korea has very few\nseasoned art advisors, and most are quite young. As a result, collectors do their own\nhomework. <\/p>\n\n\n\n
Question 6: The Korean tax system is favorable to art\nbuyers. <\/p>\n\n\n\n
True. Korea is\nactually a great place to buy and sell art, with beneficial VAT and sales tax\nregulations and no capital gains tax on the sale of works below 60 million\nKorean won (approximately U.S. $55,000) regardless of the artist\u2019s nationality.\nIf the work is created by a Korean artist who is living when a transfer is\nmade, no capital gain tax is imposed no matter what the price of the work. <\/p>\n\n\n\n
Note that Korea\u2019s special tax benefits are limited to unique\nworks of art, which the taxing authority has determined does not include works\ncreated electronically. For example, last year the Korean\nCustoms Office ruled that a work created by David Hockney on his iPad was not\nfine art and therefore not eligible for VAT tax benefits because the artist\ncreated and printed it through electronic means. <\/p>\n\n\n\n
Question\n7: Korean cultural institutions are notoriously\nslow in making decisions on purchases and exhibitions.<\/p>\n\n\n\n
False. In fact, we\nhave organized major exhibitions in Korea ranging from Matisse to Munch in as\nlittle as 18 months \u2013 transactions which would have taken years and years in, say,\nJapan. <\/p>\n\n\n\n
Question 8: Korean clients routinely ask for big\ndiscounts when negotiating art purchases.<\/p>\n\n\n\n
True again. Koreans enjoy\nnegotiating, and some galleries there may typically give a 30% – 50% discount\noff the initial asking price. Be\nprepared to take a sharp pencil to asking prices as the fair winds down. <\/p>\n\n\n\n
Conclusion: In Korea, planes are sometimes grounded to reduce noise levels during exams. We hope this pop quiz doesn\u2019t delay your flight home. <\/p>\n\n\n\n
By Charles\nDanziger, Thomas C. Danziger, and Kate Yuhkyoung Rhie<\/p>\n\n\n\n
Thomas and Charles Danziger\nare partners in the New York firm Danziger, Danziger & Muro, LLP,\nspecializing in art law, and DanzigerArt, specializing in exhibitions. Attorney\nKate Yuhkyoung Rhie<\/em> is of Counsel to Danziger, Danziger & Muro, LLP and is an\nart law research professor at Korea University.<\/em><\/em><\/p>\n\n\n\n Go to <\/em>danziger.com <\/em><\/a>and <\/em>DanzigerArt.com<\/em><\/a> for more information. Nothing in this article is intended to provide specific legal advice.<\/em><\/p>\n\n\n\n