I owned an art gallery in Shanghai for a time. More accurately, I co-owned an art gallery.
I came upon a smallish gallery – and my future gallery business partner – while sightseeing one evening on Shanghai’s historic East Nanjing Road, not far from People’s Square. Nanjing Road stretches 5.5 kilometers from Shanghai’s historic waterfront (The Bund) in the east to the famous Jing An Temple in the heart of the city. The road features more than 600 retailers, and draws an estimated 1.7 million visitors every day. That’s right … every day.
For the past two decades, Shanghai has ranked as one of the largest cities, if not the largest, in the world.
When I first began bouncing between the U.S. and China in 2004, I often stayed near East Nanjing Road, part of which is open only to pedestrian traffic. There was always plenty to see, eat and buy. at the end of each visit, I’d drop in on this particular gallery and buy original art as gifts for family.
In those days, most transactions in China were cash-based, and enterprise wasn’t as strictly regulated as it is today. With additional working capital in the bank, my new business partner left almost immediately for Beijing to acquire paintings for our new gallery.
The space we leased was open and airy. It needed only fresh paint, track lighting and a few interior walls on which to hang paintings. Decorating was quick and inexpensive. Within a few weeks, we celebrated our grand opening.
We hired a couple very talented painters as artists-in-residence to paint on weekends as tourists drifted in and out of the gallery. And we assembled a good team whose sales abilities were matched, I would soon learn, by their diplomatic skills with the local police.
Our building was located on bustling East Nanjing Road just meters from The Bund, a prime location. It was a hub for tourists and always crowded. Our gallery had a fabulous wall of windows that looked out on the street. Everything was ideal except for one thing … our space was located on the sixth floor. To ensure we had a steady flow of customers, our sales people would position themselves on the street below where they’d engage tourists, and invite them into the elevator and up to our gallery.
Our street-level marketing was effective, but not exactly in compliance with local code. To avoid interference from the police, our sales team kept the local constabulary well supplied with cigarettes. The police, as it happened, had more pressing concerns in the world’s largest city. They never seemed particularly concerned with the marketing efforts of our gallery.
My happy excursion into the world of art lasted a mere twelve months – the length of our lease with the Peace Hotel. My business partner decided to relocate to Beijing. In the end, I got back all the capital I invested, along with several great pieces of art that hang in my home today. My partner and I parted as friends. In fact, I’ve since commissioned paintings through her new stable of artists. Moreover, I had the great satisfaction of keeping several people gainfully employed that year.
So, to the actual point of this post: is art a good investment?
Well, my brief experience as a Shanghai gallery owner hardly made me an expert on anything to do with art. But it did open my eyes to one salient fact: There are many very gifted artists out there who can brilliantly duplicate a photograph, line for line, shadow for shadow. And with equal precision and skill they can duplicate another work of art – even famous ones.
Now just to be clear, I assure you our gallery never bought or sold forgeries. We never sold copies of anything, and never referred customers to those who did. Our customers were tourists, not collectors. We sold very affordable original works, most of which had a Chinese theme, painted by Chinese artists. But forgery of investment-grade art is in fact a huge problem or, as Katherine McGrath writing in Architectural Digest noted, “a major worldwide epidemic.”
In fact, in 2017, twenty of twenty-one works by famed modernist Amedeo Modigliani on exhibit at Ducal Palace in Genoa, Italy, were found to be fake. Modigliani expert Marc Restellini believes there might be a thousand or more fake Modigliani paintings in collections around the world. That’s a serious problem indeed, considering Modigliani is believed to have produced less than three hundred paintings during his short life. And these works come with huge price tags. A Modigliani sold at auction in 2014 for more than $70 million, and another in 2015 for more than $170 million.
In 2018, a museum in Elne, France showcasing the works of Elne native Étienne Terrus was horrified to learn that eighty-two paintings professionally curated by the museum, sixty percent of its collection, were fake. It was, as Elne mayor Yves Barniol put it, “C’est une catastrophe.” To that, I’d add, “et très embarrassant!”
Google “art forgeries.” You’ll find several entertaining articles.
How can you tell a forgery from an authentic piece of art? Oh, I don’t have a clue! And it seems neither do the curators at Ducal Palace or the Terrus Museum in Elne.
According to Tuscan art critic and collector Carlo Pepi, who called out the fakes at Ducal Palace, “When a painting is fake, it is missing its soul, and these were missing that three-dimensional elegance of Modigliani.”
I saw a couple Modigliani paintings at the Guggenheim in New York. Were they authentic? I assume so. They seemed to have sufficient three-dimensional elegance, and didn’t appear to be missing their souls.
If you’re thinking about investing in art, here’s a suggestion. Don’t buy a Modigliani, Picasso, Matisse or any other $100 million masterpiece on Craigslist or eBay. On second thought, don’t buy alleged masterpieces, period. Invest instead in real estate and index funds. I encourage you to fill your house with works of art that you love; we have. But unless you’ve got enough expertise to tell if a painting “is missing its soul,” I’d steer clear of art as an investment.
