Just before Art Basel Hong Kong this year, Sotheby’s Hong Kong hosted China’s first exhibition of ancient erotic art entitled “Gardens of Pleasure: Sex in Ancient China,” which attracted thousands of viewers within a fortnight. The show’s singular theme also garnered much media scrutiny, triggering heated debate in Hong Kong. This museum-caliber exhibition was not only ground-breaking in subject: the gigantic 1,500 sqm venue was itself a force to be reckoned with—especially when every square inch of Hong Kong property is practically worth its area in gold (Gagosian takes up the entire seventh floor of the Pedder Building, and is also a third of the size of Sotheby’s space). During its two years of operation, Sotheby’s has already held eleven sales exhibitions, three dedicated exhibitions and twelve auctions, as well as other events such as expert lectures and seminars. Technically, Sotheby’s has transcended, or rather blurred, the lines between gallery, museum and auction house which, as it turns out, is the reason for the existence of their Hong Kong gallery. At the same time, it is also a manifestation of the intense, tacit race between a number of international auction houses to be the top player of the art economy; one after another, they are blending private sales with quarterly auctions and art education. One cannot help but wonder why this is happening, and what impact this will have on the art market.

Sotheby’s art space has its programming planned out all the way up 2016. As for the subject matter, Angelika Li, Director of Curation at Sotheby’s Hong Kong Gallery, says: “We try to find a suitable time period for each exhibition, looking at seasonality, for example. Our hope is that our curatorial vision will bring a unique artistic sensorial experience to the viewer. We also try to curate exhibitions that are rarely seen in Hong Kong.” The opening exhibition attracted around two thousand visitors within the first five days. The Hong Kong gallery space has been branded differently from Sotheby’s New York and London S|2 Spaces; it has been designed to suit the needs of collectors in Asia—encompassing many levels and angles, and acts as an avenue for exploring and cultivating a new market.

Rather than designing the space as a traditional “white cube” gallery, the auction house has chosen to set up their gallery as a series of flexible modules which can be rearranged so that Sotheby’s different identities can be accommodated. This multi-channel, multi-platform exhibition model acts as a supplement to the long period of inactivity between the auction house’s spring and autumn auction seasons. Furthermore, it removes the cloak of mystery from their private sales business, and places it in the spotlight.

But there are also concerns. Currently, the gallery is fully booked for events until 2016; following “Gardens of Pleasure” will be the Chinese artist Song Yige’s solo exhibition “Another Dimension.” By directly launching an auction for a young artist who currently has no gallery representing them, Sotheby’s is clearly signaling how their operating model and goals differ from galleries. Traditionally, an artist’s agent makes decisions based on what might be best for the artist’s career in the long run; rather than selling to the highest bidder they tend to place works with collectors they trust, whom they believe will hold onto a piece for a period of time. Thus, galleries run by auction houses have the potential to create a bubble around artists, which creates a potential worry for many gallerists and agents.

Situated at One Pacific Place, Poly Auction Hong Kong launched their Poly Auction Gallery in March of last year. Their gallery model differs from Sotheby’s in their close collaboration with Mainland galleries. In November 2013, they worked with Star Gallery on “Uneasy Trip in Asia IV—A Selling Exhibition of Works from Young Asian Artists,” and worked with Soka Art Center during Hong Kong Art Basel to present “Aspiration—Hong Ling Solo Exhibition” in May. Last year, Poly Auction also held a preview exhibition of their Beijing fall auction in Hong Kong in order to strengthen business development for their Beijing headquarters.

Nick Buckley Wood, a director at Pearl Lam Galleries, believes that “The auction houses have the funds, an existing client list and a brand. A space which is open year-round is also a good way to diversify the business outside of the usual twice a year auction peak periods as well as attract new clients.”

Bonhams Hong Kong, which officially opened on May 8, also chose Pacific Place to open its gallery space. The next day, Bonhams also held its auctions within this space, obviating the need for a temporary auction space. Meanwhile, at the end of February this year, the inaugural exhibition of the James Christie Room was held on the 22nd floor of the nearby Alexandra House in Central. François Curiel, head of Christie’s in Asia had this to say: “We welcome collectors and art lovers alike to come and visit us, and we expect the James Christie Room to become an important part of Christie’s in Hong Kong.” Arguably, international auction houses have an advantage when it comes to organizing exhibitions in their art spaces, as they can draw upon an internal team of experts from around the world. This also means a greater range of exhibitions can be held in these auction house galleries, a fact evident in the first exhibition held at the James Christie Room—“The Best of the Best.” The different pieces on show came from Christie’s private sales category; a portion of the pieces were for exhibition purposes only, while the remaining works will be auctioned off in Hong Kong, London and New York. Thus, the show also served the purpose of a preview exhibition. Pieces on show spanned a wide range of fields, including 20th Century and contemporary Asian art, Chinese calligraphy, Chinese ceramics and other handcrafted pieces, jewelry, watches, post-war and contemporary art, impressionist works and modern art. The quality on display was excellent, but there was an obvious lack of definition to the exhibition theme, and was in no way a benchmark for the caliber of exhibition achievable by auction houses.

All these international auction houses have opened gallery spaces in Hong Kong in response to the rapidly developing art market in Asia, and these auction houses are no longer relegating the management of art spaces to a single department. Evidently, the spaces themselves are beginning to reflect the trajectories the auction houses are restructuring towards. The top-tier art market, with top galleries at its core, operates under different game rules in Asia than in Europe and America; equally, auction houses play the role of “validating” value for Asian collectors. While international auction houses have long had exhibition spaces—like the “James Christies Room” in London, New York and Paris—their exhibitions go on continuously and the auctions are not merely limited to the spring and autumn. Targeting the ever-expanding scale and scope of collectors in Asia, these “art supermarkets” are no doubt a logical strategic development. As Jehan Chu, a Hong Kong art consultant states, “This slap-in-the-face to galleries isn’t only from the auction houses though; it’s also from the artists and estates that choose to show there. Auction houses are doing what they need to do boost their bottom line, and they have so much power that most galleries are helpless to meaningfully challenge them.”

Amid this process where auction houses redefine their place, this casts a shadow of doubt—or even challenges—other players within the art ecology. Perhaps, just like the enormous impact of supermarkets on retail decades ago, this may also rewrite the rules of the art market.

[Correction: Angelika Li’s name in English was erroneously stated as Li Anqi. It has now been corrected. June 11, 2014]