Sotheby's and Beijing GeHua Art Company, a state-owned company, have entered into a joint venture agreement to create Sotheby's (Beijing) Auction Co., Ltd. Sotheby's says the deal would make the company the first international fine art auction house in China.

The agreement, which the Chinese government has not yet officially approved, would greatly expand Sotheby's business operations in China, an important and quickly expanding art market.

Per the agreement, Sotheby's will hold a controlling share in the business and handle all routine management of the business. GeHua is currently developing a free port project in the Tianzhu Free Trade Zone in Beijing, which will provide the venture with numerous perks, including tax-advantaged storage.

The companies have already planned an auction (the first conducted by an international auction house in China) on Sept 27 and two exhibitions, running Sept. 28–Oct. 7, to celebrate the pairing.

The first auction, to be held at the World Art Museum at the China Millennium Monument, will present a single work: Self and Self Shadow (2011–12), an abstract aluminum alloy wall piece, roughly 83 inches high, by Chinese artist Wang Huaiqing (b. 1944). It carries an estimate of $128,000–192,300.

One inaugural exhibition, "Recoding," will focus on contemporary Chinese art, while the other will document Sotheby's current international dealings and 260-year history.

The new auction firm will schedule a major international sale in 2013.