'Sold Paintings at Market Prices During IMF'... What Kind of Company Is 'Seoul Auction' Acquired by Shinsegae?

Korea's Largest Gallery 'Gana Art' Operates
Leading Domestic Art Auction Market Share
2007 Park Soo-keun's 'Laundry Place' Highest Price for Korean Modern Art
Forgery Controversy Erodes Trust
Listed as 'Seoul Auction' in 2008
First Surpasses 100 Billion KRW Annual Sales in 2015
Rapid Growth in Domestic Auction Market in 2021
Seoul Auction Holds 35.6% Share

[Asia Economy Reporter Hwang Yoon-joo] Seoul Auction is a domestic art auction company established in 1998 by Chairman Lee Ho-jae of Gana Art. Chairman Lee was the first in Korea to register Gana Art Gallery as a 'corporation' in 1990, and during the IMF crisis, he founded the country's first art auction company, Seoul Auction's predecessor, Seoul Auction.

The reason Seoul Auction was created was ironically due to a 'crisis.' Before 1990, domestic painting prices did not fall. Dealers were responsible for maintaining painting prices.

However, the situation changed with the outbreak of the Gulf War in 1991. Painting prices began to decline annually. When the IMF crisis occurred in 1997, the atmosphere in the art market completely changed. It was a brutal time when major companies went bankrupt and even banks could not hold on.

People who wanted to buy paintings disappeared. Instead, customers who had purchased paintings asked galleries to buy back their artworks to raise urgent funds, flooding the market with art pieces.

As galleries struggled to absorb this volume, Chairman Lee and eight art industry figures established Seoul Auction. They held the first art auction and sold paintings regardless of whether prices were low or high. The auction company, which had a contentious relationship with galleries, effectively gave domestic galleries a lifeline.

◆ New start as 'Seoul Auction'... Park Soo-keun's work sets highest price, and listing= In 2001, the company changed its name to Seoul Auction. In 2008, it invested in a local Hong Kong corporation, Seoul Auction Hong Kong Limited, adding it as an affiliate and held its first Hong Kong auction.

Seoul Auction was listed on the KOSDAQ market in July 2008. Before the listing, in May 2007, it set the highest record for Korean contemporary art auction prices. Park Soo-keun's 'Laundry Place' was sold for 4.52 billion KRW.

However, soon after, the work faced forgery allegations, bringing a crisis to Seoul Auction. Although the Korea Art Authentication Research Institute certified 'Laundry Place' as authentic, the trust was damaged.

In 2010, Seoul Auction launched Print Bakery, and in 2014, the eBid Now online auction. In 2015, Seoul Auction surpassed annual sales of 100 billion KRW for the first time since its establishment.

In 2016, Seoul Auction established Seoul Auction Blue Co., Ltd., specializing in online auctions, and in 2017, it founded Print Bakery Co., Ltd., a subsidiary specializing in the production and sale of art prints. However, in 2019, it excluded the latter from its consolidated subsidiaries due to partial share sales.

◆ Rapid growth of domestic art distribution market... surge in online auctions= The size of the domestic art distribution market surged in 2021. The domestic art distribution market (combined galleries + auctions + art centers) reached 922.3 billion KRW in 2021, a 180% increase compared to 2020.

Among this, the auction market, which includes Seoul Auction, reached 328 billion KRW in 2021, a 184% increase from the previous year, accounting for 35.6% of the total distribution market.

A notable trend in the 2021 auction market was the sharp increase in the number of auctions held online. As of November 2021, the number of online art auctions was 202, a 24% increase compared to 2020.

Yayoi Kusama, Pumpkin. acrylic on canvas, 116.7×90.3cm(50), 45.9×35.6in, 1981. (Photo by Seoul Auction)

In 2021, nine out of the top ten highest-priced works in Korea were traded through Seoul Auction, with Yayoi Kusama's 'Pumpkin' taking first place at 5.45 billion KRW, setting the highest auction price.

The scale of online art sales was 54.7 billion KRW, accounting for 23% compared to offline sales, but it recorded a high growth rate with a 118% increase compared to 2020.

Supported by its dominant position and attention in the art market, Seoul Auction maintained its industry-leading market share of 56.9% in the domestic art auction market as of the first quarter of 2022. Besides auction houses and exhibition halls in Pyeongchang-dong, Gangnam, and Busan, Seoul Auction owns the Zerobase platform for online auctions and the Blacklot platform for online brokerage.

◆ Global liquidity expansion, MZ generation influx... growing art market= This is not only a Korean phenomenon. Last year, the global art auction market size also surged to 17.1 billion USD (about 21 trillion KRW), a 63% increase compared to 2020. This is the largest scale since 2014's 17.9 billion USD.

Although there was a base effect due to the auction market contraction caused by COVID-19 in 2020, the expansion of global liquidity driven by expansive fiscal and monetary policies worldwide played a major role.

Above all, the influx of the MZ generation into the art market and the activation of online auctions had a significant impact. Transactions were active, with the number of auctions reaching 663,000 in 2021, a 29% increase compared to 2020, and the auction success rate rose to 69%, up from 61-66% the previous year.

Comparing auction sales by country, China and the United States dominated with 6 billion USD and 5.8 billion USD, respectively. Korea ranked 6th with 240 million USD. Korea's previous highest ranking was 15th.

[Reference= Korea IR Council Corporate Research Center]

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