Ham­mer time

CHINA'S ON­LINE ‘JU­DI­CIAL AUCTIONS' FACE GROW­ING PAINS

The World of Chinese - - News - – HATTY LIU

The Novem­ber auc­tion of two Boe­ing 747 jets, seized by the Shen­zhen In­ter­me­di­ate Peo­ple’s Court from a bank­rupt air­line in 2013, brought at­ten­tion to an as­pect of China’s boom­ing e-com­merce sec­tor that few re­al­ized ex­isted: ju­di­cial auctions.

Taobao’s plat­form, called sim­ply “Ju­di­cial Auc­tion” ( Sifa Paimai), be­gan in 2012, ini­tially in col­lab­o­ra­tion with a district court in Ningbo, Zhe­jiang prov­ince. The first item un­der the ham­mer was a BMW sedan seized in a law­suit. Since then, more than 2,000 peo­ple’s courts in 30 prov­inces have jumped on the band­wagon, and sales have ranged from bad loans to com­pany shares to as­sets seized from of­fi­cials charged with cor­rup­tion, in­clud­ing prop­erty de­vel­op­ments and art col­lec­tions.

In 2016, the Supreme Peo­ple’s Court is­sued reg­u­la­tions on their pro­ce­dure, while ap­plaud­ing Taobao’s sys­tem for low­er­ing costs by elim­i­nat­ing third-party com­mis­sions and in­creas­ing trans­parency of sales—in the past, off­line auctions risked un­der-the-ta­ble deals be­tween auc­tion agents and court staff to fix bids.

On­line auctions also re­move bar­ri­ers for bid­ders, such as ge­og­ra­phy and in­ex­pe­ri­ence—the Boe­ing jets had lan­guished since 2015 in local auctions, which tended only to be an­nounced in news­pa­pers and court web­sites. They were snapped up by courier firm SF Ex­press within two days of list­ing on­line. Taobao’s “dis­rup­tion” has nat­u­rally made en­e­mies. In a re­cent ed­i­to­rial, He­nan news­pa­per Da­he­bao ar­gued in fa­vor of “pro­fes­sion­al­ism”: Com­mis­sioned agents are likely to be more thor­ough than local courts in the mat­ters of ap­prais­ing and au­dit­ing the lots. The ed­i­to­rial came in re­sponse to news that a wo­man in Zhengzhou won an apart­ment on­line for 2.3 mil­lion RMB, and found she owed

460,000 RMB of taxes on the prop­erty, due to a tech­ni­cal­ity that the court had been un­aware of.

And cor­rup­tion has been not so much elim­i­nated, as adapted: Sev­eral re­cent cases of “ma­li­cious bid­ding” on Sifa Paimai had own­ers ar­rang­ing with on­line bid­ders to bid up the price of the item, then re­fus­ing to pay, al­low­ing the owner to po­ten­tially keep the item.

In Septem­ber, authorities made their first ar­rest of a ma­li­cious on­line bid­der, and are now call­ing for stricter rules and penal­ties for par­tic­i­pants. Mean­while, the e-auc­tion ma­nia con­tin­ues to grow. Cities like Beijing and Nan­jing have opened up their own plat­forms for local courts, and re­cent as­sets sold in­clude an “aus­pi­cious” cell phone num­ber from a debtor in Shan­dong prov­ince (193,800 RMB, via Taobao) and 11 horses from a dis­pute be­tween co-own­ers of an closed-down eques­trian club in Beijing (224,000 RMB on Jd.com).

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