Private museums do not have a very long history in China, but in their short time in the country they have been booming.
Yet, despite this rapid growth in numbers, it seems that only a few have the ability to survive.
Claiming to be "the largest private museum" in China with its 6,600 square meters of exhibition space and more than 300 jades, porcelains and paintings, the Longsheng Museum closed down last month after operating for a little more than a year.
Earlier that same month, the Ullens Center for Contemporary Art (UCCA) in Beijing, which has been operating for eight years and is considered one of the most successful private museums in the Chinese mainland, announced it was going up for sale.
These news stories caused quite a stir throughout the art industry, leading many to start worrying about the health of the private museum industry in China.
Market woes
The Longshen Museum closed its doors due to the delayed payment of more than 6 million yuan ($903,000) in rent. It is currently unknown if the museum will reopen.
Longsheng is not the only museum facing a financial crisis. The Rongbaozhai Group, famous for traditional Chinese paintings, stationary and auctions, fell into a more than 50 million yuan crisis during the first half of this year.
Many other art institutions have also gone bankrupt this year.
According to the Shenzhen Economic Daily, Guo Xuelei, deputy director of the Shenzhen Museum, has said that these closures should be expected considering the recent unhealthy development of China's art market.
According to Guo, too many artwork dealers and companies have appeared, yet most are not qualified enough professionally, which poses a potential risk for the market.
Meanwhile, many collectors have been purchasing artworks by just following major trends instead of educating themselves as to the actual value and quality of works.
Guo also stated that these sudden bankruptcies are due to the currently money-driven domestic art market, which has caused less attention to be paid to the actual artistic value of cultural relics.
Guo also pointed to the government's increased anti-corruption efforts as another contributing factor, along with an overall sagging economy.
Decentralized investment
Since the first private museum in China, the Guanfu Museum, was founded in 1996, other private museums have explored different ways to survive in the mainland market with various degrees of success.
The news about the sale of UCCA, a relatively influential museum in China, has rocked the industry, but not everyone sees it as the end of the world.
"Unlike art museums in other countries, in China one individual tends to have far more influence on private museums," Zhu Zhu, a curator, told artron.net.
"Overseas, the decisions of a single investor, however, don't impact the operations of an entire museum."
During its early years, UCCA operated through investments made by founders Guy and Myriam Ullens.
However, over the years the UCCA administration has made many decisions that has allowed the museum to be less reliant on the Ullens' personal investment, such as establishing the UCCA Store and a sponsor council.
According to a report from UCCA, the total operating cost for the museum in 2015 was around 41 million yuan. Twenty-five percent of these costs were covered by the founders Guy and Myriam Ullen, while another 25 percent came from investment from enterprises, 20 percent from annual auction sales, 20 from UCCA Store sales and 10 percent from individual donations.
Artron.net has proposed that the UCCA model should become the new standard for private museums in China, since most museums are too reliant on their founders.
With this model and the brand that the UCCA has built over the years, some industry insiders feel it will be a great purchase for investors.
