"Korean Art Market Stagnates Over 10 Years... Institutional Support Needed Including Payment-in-Kind System"

[Asia Economy Reporter Jeong Hyunjin] Recently, there have been calls for the introduction of institutional support measures such as the payment-in-kind system to promote the development of the art industry, which is gaining increasing interest domestically.

On the 30th, the Federation of Korean Industries (FKI) analyzed in its report titled 'Current Status and Challenges of the Global Art Market' that the global art market has developed into an advanced country-type industry led by the United States, the United Kingdom, and China, reaching $64.4 billion (approximately 74 trillion KRW) as of 2019, while the domestic art market has stagnated over the past decade. The FKI stated that while the global art market grew by 63% over the past 10 years from $39.5 billion in 2009, which was sharply contracted due to the global financial crisis, the domestic art market grew only 1.6% during the same period, reaching 414.6 billion KRW (2019).

The FKI noted, "The art industry is a high value-added industry with significant economic and industrial synergy with related industries such as tourism," and evaluated that "although the global art market size last year was $50.1 billion, down 22% from the previous year due to the impact of COVID-19, it still forms a huge market compared to the global automobile semiconductor market size of $38 billion and the music album market of $21.6 billion."

(Data provided by the Federation of Korean Industries)

According to the FKI, when looking at the competitiveness of the trading market, which plays a platform role in industrial development, South Korea ranks around 15th in the world. The Artprice index, which shows art price indices, reported that the global fine art (excluding antiques) auction market in 2019 was led by three countries: the United States ($4.614 billion), China ($4.102 billion), and the United Kingdom ($2.107 billion), with South Korea trailing by approximately 84 times and 74 times compared to the United States and China, respectively.

The FKI pointed out that the reason for the sluggish industrial development of the domestic art market is the insufficient art industry infrastructure. Looking at the holdings of major world art museums, the Museum of Modern Art (MoMA) in New York, USA, holds about 200,000 pieces, and the Tate Modern in London, UK, holds about 66,000 works, whereas the National Museum of Modern and Contemporary Art (approximately 8,500 pieces) and the Seoul Museum of Art (approximately 5,000 pieces) show a significant gap.

The FKI also evaluated that the brand competitiveness of the domestic art market, which can be seen through the sales amount of artists' works, is still low. Among the top 1,000 artists by annual auction sales compiled by Artprice, China has 395 artists, the United States 165, while South Korea has only 21 artists listed.

The FKI explained that major countries in the United States and Europe have emerged as advanced art markets through donations and the development of art appreciation culture, noting that since the 1960s, countries like France and the United Kingdom have introduced the payment-in-kind system allowing inheritance taxes to be paid with artworks. Recently, discussions on introducing the payment-in-kind system have continued in the domestic art world, especially with attention on the late Samsung Chairman Lee Kun-hee's collection, but ultimately the plan failed.

Kim Bong-man, Director of International Cooperation at the FKI, said, "With the cancellation of the global art fair 'Art Basel Hong Kong' last year due to the Hong Kong democracy protests and COVID-19, there is growing interest and opportunity in the potential of the domestic art market, as Art Basel is considering Busan as a post-Hong Kong location," adding, "For Korea's art market to gain the reputation of 'K-Art Market' like K-pop, institutional support and industrial development plans that enhance industrial competitiveness like advanced art countries must back the current interest and opportunities."

This content was produced with the assistance of AI translation services.