Sotheby's CEO William Ruprecht Discusses the Globalization of the Art Market
The past decade has been one of major change in the auction business. With massive wealth generation occurring in China, the industry's center of gravity has shifted from the United States and Europe to Asia, where three of the five largest auction houses now sit. Sotheby's, which has been in business since 1744, has remained one of the two largest auction houses by capitalizing on new technologies and the globalization of the art trade.
"There has been a total shift of where the demand and supply are," said William Ruprecht, president and CEO of Sotheby's. "We now have 90 offices in 40 countries. We have to be local to acquire works of art because that's how people behave."
Ruprecht spoke at Yale SOM on October 18 as part of the Leaders Forum lecture series. He has led Sotheby's since 2000, seeing the company through the aftereffects of a price-fixing scandal, a financial crisis, and dramatic shifts in the art market. Last year marked the second-most-profitable year since the company's founding in 1744.
Dean Edward A. Snyder interviewed Ruprecht, asking him about the state of the art market, its evolution, and the kind of person who excels in the industry. Ruprecht explained that his industry is dependent on relationship building. He'll work with a collector for years, he said, before anything is put up for sale. "I'll often spend 20 or 30 years in relationship with a family before ever doing business with them," he said. "We'll plan holidays or help them find second homes. I've entertained people in five cities around the world [before] finally we'll get a call: Come over and get the Monet."
While much of the business is performed in the same people-intensive manner as it has been since Sotheby's founding, the last several years have witnessed a rate of change never seen before. Ruprecht noted that the acquisition of art tends to rapidly follow the creation of wealth. Four years ago, the United States became a net seller of art for the first time in one hundred years. Europe has become the biggest seller in the world. Meanwhile, the Chinese market has exploded. Four years ago, only 4% of Sotheby's sales were in China. So far this year, that number is 35%; China has become the largest art market in the world. "This is the most dramatic shift in demographic consumption in the last 270 years," Ruprecht said. "It's bigger by far than the early 20th century, when the so-called robber barons in the United States began to wish to replicate what they saw on their grand tours of English country houses or grand European collections."