1. Introduction

Two industry titans, Christie's and Sotheby's, have long controlled the global art auction market. These auction houses' outstanding quality standards, vast global networks, and in-depth knowledge of high-end art transactions have allowed them to maintain their position as industry leaders. But in recent years, the Chinese market's growth has become an indisputable reality, bringing new life to the world of art auctions [1]. In mainland China, up-and-coming rivals like China Guardian (established in 1993) and Poly Auction (formed in 2005) have made a big impact. Even though they dominate the Chinese market, they work in different cultural and economic environments and focus on artistic mediums that appeal to local tastes [2]. This specialization, combined with a focus on local markets, has limited their global influence in comparison to Christie’s and Sotheby’s.

Despite their remarkable achievements in China, these auction houses face substantial challenges in expanding their global influence and establishing a strong presence on the international stage. This paper seeks to provide a comprehensive overview of the latest developments in the art auction industry by analyzing relevant literature and current market trends. It will particularly focus on the strategic decisions and potential opportunities available to Chinese auction houses in the context of global competition. Furthermore, this paper will explore the transformative impact of technological innovations on the auction industry, including their role in enhancing transaction efficiency, broadening market boundaries, and improving customer experiences.

2. Basic concepts and models of auctions

2.1. Definition of Auction

An auction is a public or private event during which goods or property are sold to the highest bidder. Auctions can be held in a physical location such as a gallery, hotel, or auction house showroom, or through an online platform that allows bidders to participate remotely. There are two common types of auctions: live auctions, where participants attend and bid in person, and online auctions, where bids are placed electronically over the internet [2]. Items auctioned range from fine art and antiques to real estate and collectibles, depending on the focus of the auction. The main participants in auctions are sellers, buyers, and the auctioneer who conducts the sale. Auctions generate revenue through commissions charged to both the buyer and the seller, which is usually a percentage of the final sale price. For high-end auctions, this percentage can be substantial, making auctions a highly profitable business model [3]. Successful auctions depend on the careful curation of valuable items, effective marketing to attract bidders, and a well-executed bidding process to drive up prices.

2.2. Auction Process

Both online and offline auctions follow a structured process, with some variations. In online auctions, the process begins with the consignor providing details about the items, which are then photographed, cataloged, and marketed to potential buyers on the auction house's platform. Registered bidders place their bids over a set time period, either manually or through automatic bidding systems. The highest bidder at the close of the auction wins the item and is required to complete payment, after which the auction house arranges delivery. In contrast, offline (live) auctions involve a similar preparation stage, where items are cataloged, and previews are held for potential buyers to inspect them in person. During the live auction, the auctioneer starts bidding at the reserve price, and participants place bids by raising paddles. After the auction, the winning bidder completes the payment, and unsold items—those that do not meet their reserve price—can be re-auctioned, returned to the consignor, or sold privately [2]. Unsold items, also known as "buy-ins," can affect the item's market perception if repeatedly left unsold. Both types of auctions require careful preparation from consignors, bidders, and the auction house, ensuring that all roles are aligned to facilitate a successful sale.

3. Auction House's Operation Model and Market Strategy

Through organised sales, auction houses serve as crucial middlemen in the art market, enabling the exchange of valuable goods. The tactics and business plans that auction houses utilise have a big impact on their capacity to gain market share and maintain expansion. By utilising adaptable ownership structures, diverse portfolios, and creative market strategies, Western auction houses like Christie's and Sotheby's have become world leaders. On the other hand, by concentrating on traditional Chinese artwork and taking advantage of special ownership circumstances, Chinese auction houses like Poly Auction and China Guardian have become quite popular in the local market.

3.1. Ownership Structure and Flexibility

The ownership structures of auction houses play a pivotal role in shaping their operational strategies and market positioning, reflecting their adaptability to evolving industry demands and regional characteristics.

Christie’s operates as a private company owned by the Pinault family, allowing it greater flexibility in sales operations and strategic decision-making [4]. Sotheby’s, once a publicly listed company, shifted its approach after being acquired by private investor Patrick Drahi in 2019 [5]. This acquisition allowed Sotheby’s to prioritize private sales and reduce the operational pressures often associated with public ownership. In contrast, Chinese auction houses like Poly Auction and China Guardian have different ownership models. Poly Auction is backed by a state-owned conglomerate, providing substantial financial resources and support, particularly in accessing high-value cultural assets [6]. Meanwhile, China Guardian collaborates with Taikang Insurance, enabling it to focus on the curation and sale of traditional Chinese art while leveraging financial and institutional synergies [2].

3.2. Specialization and Diversity

The contrasting portfolios of Western auction houses like Christie’s and Sotheby’s and Chinese auction houses such as China Guardian and Poly Auction highlight their differing strategies in catering to international versus local markets.

Christie’s and Sotheby’s are known for their diverse auction categories, covering a wide range of art forms from different cultures, including contemporary art, luxury collectibles, and pop culture memorabilia. Their global reach allows them to appeal to an international audience, with sales dominated by well-known artists like Picasso and Warhol [1]. On the other hand, Chinese auction houses like China Guardian and Poly Auction are more specialized, focusing primarily on Chinese art such as antiquities, calligraphy, and traditional paintings. While these specializations cater effectively to local buyers, their limited diversification and focus on traditional art reduce their global impact and restrict their appeal to international collectors [2].

4. The impact of auction technology and digital transformation on the auction industry

In recent years, the art auction industry has further evolved through technological advancements, such as blockchain for ensuring provenance and authenticity, and artificial intelligence for predictive analytics and personalized bidder experiences. The global pandemic accelerated the shift towards online auctions, solidifying their position as a vital component of the industry. Today, auctions are a dynamic and adaptive marketplace, blending tradition with innovation to meet the needs of a globalized and digitally connected world.

4.1. The development of social media and digital transformation of o auctions

The advent of digital technology has significantly transformed the auction industry by enabling auction houses to reach broader, more targeted audiences. Social media platforms such as TikTok, Instagram, Twitter, and Chinese platforms WeChat, Weibo, Douyin (Chinese version of TikTok) have become integral tools for promoting auction events and engaging with potential buyers. The use of social media allows auction houses not only to publicize upcoming sales and showcase items but also to provide live-streamed previews, creating a dynamic, interactive experience that traditional advertisements cannot match [1].

Both international and Chinese auction houses are increasingly embracing technology to reach broader audiences. Sotheby’s and Christie’s have made significant investments in online auction platforms, with both reporting a surge in online sales during the COVID-19 pandemic [6]. Chinese auction houses, such as China Guardian, have also ventured into online auctions, although they still prioritize traditional physical auctions, particularly for high-value antiquities. Despite this, online auctions are becoming an increasingly dominant method for both international and Chinese auction houses as they adapt to changing market dynamics [5].

4.2. Advantages of online auctions

The transition from static advertisements featuring simple images and descriptions to immersive formats such as video, virtual reality (VR), and augmented reality (AR) marks a transformative evolution in auction marketing. These advanced technologies offer unparalleled interaction with auction items, significantly enhancing buyer experience [7]. VR VR enables a comprehensive 360-degree exploration, offering buyers a sense of the item’s texture, scale, and appearance in various settings, while AR integrates items into the user’s actual surroundings, providing a tangible sense of how they might fit or function. By employing these technologies, auction houses foster deeper engagement and interest, potentially increasing participation rates and final bids [6].

Additionally, the proliferation of digital platforms has dismantled traditional geographical limitations. Online marketplaces and targeted social media campaigns now connect auction houses with global audiences, enabling seamless participation from virtually anywhere in the world . This expanded access has effectively widened the market for auction houses, allowing them to attract buyers and sellers from across the globe, thus reinforcing their influence and elevating the potential for revenue [5].

4.3. Technology Integration Comparison: International vs Chinese Auction Houses

While both international giants like Sotheby’s and Christie’s and leading Chinese auction houses such as China Guardian and Poly Auction have embraced technology, their strategies and applications reflect distinct market and cultural preferences. Western auction houses were early adopters of online platforms, investing heavily in digital transformation to meet the expectations of a global, digitally-savvy audience. This proactive approach, especially during the COVID-19 pandemic, helped sustain operations and tap into new buyer segments. Consequently, online sales have become a substantial portion of revenue for these houses, offering everything from fine art to luxury items [3].

Chinese auction houses have historically prioritized traditional, in-person auctions, particularly for categories like antiquities and traditional Chinese art, where physical inspection has long been considered essential. Recently, however, these auction houses have embraced technological advancements, making notable progress in online sales. Despite this shift, physical auctions remain the preferred format for high-value items, aligning with cultural norms that prioritize firsthand inspection. At the same time, the growing influence of younger, tech-savvy buyers in China is driving these auction houses to innovate by blending tradition with modern technology. Initiatives such as live-streamed previews on social media and virtual reality (VR) previews for exclusive items exemplify this evolving approach.

This divergence in strategy reveals a unique cultural and market dynamic. Western auction houses focus on a global audience accustomed to online shopping and digital interactions, leveraging these preferences to expand their reach. In contrast, Chinese auction houses primarily serve a domestic clientele, where the longstanding tradition of physical auctions and in-person engagement remains deeply ingrained. However, as technological adoption rises in China, it is likely that Chinese auction houses will increasingly rely on online platforms and digital marketing to enhance their global presence [6].

5. Suggestions for the future development of auction houses

Auction houses use strategies such as setting entry barriers or selling event tickets to attract high-end collectors, investors, and wealthy groups with similar purchasing power [8]. This strategy effectively prevents auctions from becoming too mass-market and enhances the exclusivity of the events. The establishment of such entry requirements helps to cultivate the image of an upscale brand, making the auction experience more private and appealing to high-net-worth individuals. These customers tend to place greater value on the experience and enjoyment of the auction process, rather than merely purchasing the items themselves. Therefore, setting tickets or entry restrictions is not just a marketing strategy but also a form of market segmentation.In addition to enhancing exclusivity, ticket sales provide auction houses with an extra revenue stream beyond the traditional commissions charged to buyers and sellers. This supplemental income helps auction houses optimize their revenue structure while expanding their influence in high-end markets, particularly in the sale of rare and limited-edition artworks. For Christie's, this dual-focus strategy bolsters its market leadership and financial stability.

Although this strategy enhances the brand image, it could also introduce inequalities in the market. Setting entry barriers may prevent certain potential buyers—especially younger buyers or those with lower incomes—from participating in the auction, thus limiting the diversity of the market. In contrast, auctions that are open to the public without entry tickets can attract a broader range of attendees and participants. Thus auction houses need to strike a balance between exclusivity and inclusivity when erecting these barriers to avoid unduly limiting their market potential. To address the limitations of in-person ticketed auctions, auction houses like Christie's have strengthened their online platforms to increase interaction and global participation. For instance, Christie's has integrated online previews and live-streamed auctions, allowing buyers from around the world to participate even if they are unable to attend in person. This digital integration not only broadens market reach but also enhances the transparency and engagement of the auction process, attracting a more diverse clientele from different backgrounds.

6. Conclusion

In conclusion, this research has examined the development and present situation of the international art auction market, highlighting the divergent approaches and technological integration of established global auction houses like Christie's and Sotheby's and up-and-coming Chinese auction houses like China Guardian and Poly Auction. The results emphasise how important ownership arrangements, specialisation, and digital transformation are in determining the competitive environment. Through broad portfolios, adaptable ownership structures, and early adoption of cutting-edge technologies, Western auction houses continue to dominate the global market. Chinese auction houses, on the other hand, are strong in local markets. They concentrate on traditional Chinese art and progressively employ digital technologies to draw in younger, tech-savvy buyers.

However, the rapid pace of technological advancement may outdate some findings, especially concerning digital platforms and tools. Longitudinal studies could track the evolving impact of digital transformation on both Western and Chinese auction houses, providing deeper insights into how technology shapes consumer behavior and market strategies.