Japan’s Surprisingly Small Art Market

In 1987, the Yasuda Fire and Marine Insurance Company (now Sompo Japan Nipponkoa Insurance) paid the equivalent of around ¥5.3 billion for Vincent van Gogh’s Sunflowers. In 1990, Saitō Ryōei, honorary chairman of Daishowa Paper Manufacturing (now Nippon Paper Industries), paid more than ¥24 billion for two paintings, one by Van Gogh and one by Pierre-Auguste Renoir. Together with the acquisition of the Rockefeller Center Building in New York by Mitsubishi Estate, these purchases became symbolic of the Japanese bubble economy. Not long after this, the bubble burst, and in the early 1990s, Japan entered what would be two “lost decades” of sluggish economic growth. More recently, the stock market has become more buoyant again thanks to the economic stimulus measures introduced since Abe Shinzō took office as prime minister for the second time in 2012, but the recovery is not yet at the stage where people can sense a real difference in their day-to-day lives.

Against the background of this steady, if unspectacular, recovery, the government is working to accelerate the shift from an economy supported by manufacturing and heavy industries to one built on information technology. As part of this drive, it is also looking to culture and tourism as ways of boosting the economy. Inspired by the “Cool Britannia” mantra of Tony Blair’s time as British prime minister, since 2010 the government has been promoting the concept of “Cool Japan,” with the Ministry of Economy, Trade, and Industry playing a leading role in promoting Japanese film, music, fashion, anime, and other cultural properties overseas.

In 2016, the government established the Council on Investments for the Future. The new council, chaired by the prime minister, will be responsible for proposing integrated growth strategies bringing disparate ministries and government agencies. One strategy under consideration involves trying to stimulate the Japanese art market.

According to data published by the Art Tokyo Association, in 2016 the value of artworks purchased from Japanese dealers by people living in Japan was around 200 billion yen. Art exported from Japan was worth around 35 billion yen. For a country with the world’s third-largest GDP, these figures are extremely low—especially next to countries like the United States and China. Japan has only 3.1 percent share of the global art market (2016), compared to 40 percent for the United States, 21 percent for the United Kingdom, and 20 percent for China.

Moving to Get Art Back on the Market

In the context of these discussions, minutes from a meeting released in 2018 provoked considerable conversation and controversy in art circles. These materials, purportedly indicative of government thinking on future policy, call for the introduction of a “Leading Museums” concept as one way of invigorating the art market. Designated museums would place works acquired through purchase or donations back on the market and sell them. As a rule, once an artwork is acquired by a museum, all the basic information about the artwork and its provenance is verified and vouched for. The work acquires a place in art history. I suppose the idea is that this would help to boost the price of the artwork on the market. And indeed, the fact that a work once belonged to a museum collection does often increase its market price.

However, the idea provoked strong reactions from the art world, and not only from museums themselves. The chief objection was that a museum’s objective in acquiring artworks is to build a systematic collection to pass on to future generations, not to stimulate the art market. In June, the Japanese Council of Art Museums, which has some 400 museums as members, released a statement saying that museums should not engage in activities whose main purpose is direct involvement in the market.

Behind this response was an attitude fiercely hostile to government interference in culture and art. In the period before and during World War II, art and culture were used for political ends; remorse about this has meant that postwar Japan has tended to be cautious about close relationships between the arts and politics. In the United States, museums occasionally sell works from their collections, but the purpose is normally to use the proceeds of the sale to acquire new works for the collection. If a museum were to put the funds to another purpose, it would certainly come in for harsh criticism—this was another point reason for opposition to the idea.

Tax Reforms and Better Publicity

The resources I have cited also make it clear that a large proportion of transactions on the Japanese art market involve Japanese buyers and sellers. If we compare this to the Japanese stock market, where more than 60% of transactions involve foreign investors, the difference is clear.

One possible way to revitalize the market, at least as far as Japanese participants are concerned, would be to change the taxation system. In 2018, changes were made to inheritance tax law, introducing a reprieve on taxes on national treasures, important cultural properties, and registered cultural properties that were loaned for exhibition in a museum. However, the conditions for this are quite strict, and more far-reaching reforms will be necessary to encourage the sale of artworks.

Another factor is that investing in stocks and real estate is less common in Japan than in the United States or China. There is a tendency to regard investment of this kind as risky speculation, especially on a personal level. Since 2014, the government has been trying to change this attitude, such as by introducing the NISA, or Nippon (Japan) Individual Savings Account, a new type of tax exemption program for small investments. The aim is to encourage a shift from mere accumulation of personal assets to greater investment. If these policies are successful, then artworks may be incorporated into portfolios as investments whose price fluctuations are largely independent of the stock market. It is possible that this will help to bring new investment into the art market to a greater or lesser extent.

There is the possibility that increasing internationalization will lead to a greater awareness among Japanese business people and companies of the social cachet of being an art collector. Art might come to perform something of the same role that until now has been played by golf. But where people are looking to buy artworks for reasons of social prestige among their international business colleagues, it is likely that they will look to acquire works by overseas artists via auctions in the United States and Britain. Maezawa Yūsaku, president of Zozo (formerly Start Today), which operates the online fashion website Zozotown, made the news when he bought a work by Jean-Michel Basquiat for over ¥6 billion—but this purchase too took place at a Christie’s auction in New York.

The total amount spent by foreign art purchasers in the Japanese market every year is estimated at a mere ¥35 billion. This reflects the small scale of the Japanese art market. Buyers from China and Hong Kong represent the largest portion of this market, together accounting for around 30% of the whole. Universities and art museums must continue to invest in research on Japanese art, in holding exhibitions, producing catalogues, and building up archives. More information needs to be made available in English and online, so that it reaches museums and investors overseas, especially in the major markets of the United States, China, and Britain.

One example of what can be achieved is the Echigo Tsumari Art Field triennial, a unique international art event that makes use of mostly rural areas of Niigata Prefecture. When it was held for the seventh time in 2018, many of the visitors and volunteer staff were from Chinese-speaking countries. There have also been international pavilions sponsored by national or regional governments: an “Australia House” in 2009, “China House” in 2016, and “Hong Kong House” in 2018. International art events of this kind represent an ideal opportunity for giving Japanese art a greater presence on the international markets.

As well as reforming the tax system to increase the numbers of Japanese investors in the long term, working to improve the ways in which Japanese art is communicated to the outside world will also be key to bringing new energy and vigor to the Japanese art market.

(Originally written in Japanese. Banner photo: Art inside the Kiyotsu Gorge Tunnel during the Echigo Tsumari Art Field triennial, July 29, 2018, Tōkamachi, Niigata Prefecture. © Jiji.)