Zhejiang courts go online to sell confiscated goods

China's judicial authorities are embracing the feasibility of selling confiscated goods at "electronic auctions", as the country moves to ensure independent and fair use of its judicial power.

The High People's Court of Zhejiang province, in a pioneering move, has teamed up with Taobao Marketplace to auction seized property in an open and efficient manner.

Combined sales have reached 2.61 billion yuan ($428 million) since the partnership began in June 2012, according to Taobao's parent, Alibaba Group Holding.

Ninety-eight local courts in Zhejiang have warmed to the idea of displaying confiscated goods online, the statement said, with the majority pledging to prioritize the use of digital platforms for handling seized assets in future lawsuits.

As of Tuesday, 1,175 items, mostly automobiles, had been auctioned via the website.

Court auctions have traditionally been carried out by a third party in a brick-and-mortar auction house, where commission payments from bidders are ripe for corruption.

Taobao auctions, devoid of intermediaries or fees, benefit buyers and can maximize the value of the seized products.

Potential bidders have to pay a deposit and submit accurate personal information before they can successfully bid on any items.

More than 90 percent of the items offered were sold successfully through the platform, 15 percentage points higher than offline auctions, the company said.

Goods sold on Taobao appreciated on average by nearly 45 percent compared with the starting price, up 23 percentage points than via traditional channels.

"Digital auctions have gained traction as they allow more parties to get involved and require the least possible financial input," said Rao Wenjun, head of the judicial authentication department at the Zhejiang High People's Court.

Rao said the items for sale have extended to industrial plants, commercial sites and company equity, adding they won't rule out the possibility of listing more types of assets.

The "online move" ensures a fairer system for dealing with seized property by weaning judicial organs off rigging and corruption, said Ou Shuying, deputy secretary-general of the China Association of Auctioneers.

Yet the absence of specialized agencies may leave a lot of the presale investigative work largely undone, and may add to the burdens of local courts, she warned.

"In a typical auction, the majority of efforts are put into pre-investigation and paperwork, rather than the payment procedure per se. Officials at the courts will have to 'fill the gap', which complicates things and lowers efficiency," she said.

Yu Deqing, vice-president of Beijing Urban Construction Great Wall Engineering Corp and a regular at auctions, said digital auctions would slow the sales process.

"We have to wait for people to file their bids. Though this process can be done in minutes in an auction room, it could last up to 40 minutes online," he said.

But an even more defining difference lies in the rationale behind the offline and online approaches, Yu noted.

"The traditional auction is the selling of any type of product or service to the highest bidder, where the price rules. But in virtual auctions, people are jostling for scarcities. So more often than not, speed rules," he said.