Competition for a slice of the lucrative Chinese art market is hotter than ever Hong Kong, of course, already has free port status. That fact, together with the concentration of wealth there and its relative proximity to Indonesia, Taiwan, Korea and China, has made it the natural location for Sotheby's and Christie's to concentrate their Asian operations. And, since the boom in the Chinese market, sales in Hong Kong account for over one quarter of their global business. Last year, Sotheby's clocked up over one billion dollars of auction and private sales in Hong Kong. China Guardian generated more, at $1.77 billion, inside China alone, but its first Hong Kong sale is unlikely to surpass Sotheby's as it will be restricted to 340 lots (compared with Sotheby's 3,300). Its focus will just be on the strongest areas of the market that it deals with in China - traditional 20th-century Chinese ink paintings and classical Ming and Qing dynasty furniture. But in the modern ink paintings category there will be a head-to-head with Sotheby's, which has the same number of lots, estimated to fetch $27.8 million. China Guardian has not released a total estimate, but its top lot is likely to be an album of 1920s landscapes by Qi Baishi, estimated at $2 million to $3.5 million, which has come from a Japanese collection. In a clear challenge to the West, China Guardian is only selling works that it has sourced outside China, through its network of offices from Tokyo to New York. Sotheby's therefore remains unopposed in all other categories, from wine and jewellery to Chinese ceramics and contemporary art. But how will prices fare? Patti Wong, chairman of Sotheby's Asia, says that the problem with what she calls "a minor slow-down" is not demand but lack of supply. The highest prices expected are for ceramics such as a Yongzheng dynasty (1723-35) "nine-dragon charger," which is estimated to fetch $4 million-$5 million. The supplier is 80-year-old businesswoman Alice Cheng, who is selling five works worth $10 million in all. She bought the charger seven years ago for $2.5 million, and Wong believes that revealing her name as the seller - for the first time at Sotheby's - will help it on its way. Cheng is one of the biggest buyers in Hong Kong. Besides paying a record $32.4 million two years ago for a famille-rose double-gourd vase, she has also donated works to mainland museums. Whatever happens, the closest observer of the Sotheby's auction is likely to be China Guardian; and vice versa, of course.