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China set to boost auction industry, restrain abuses

By Li Xiaoshu (Global Times)

10:13, December 23, 2011

China will boost its domestic auction industry and curb abuses, with a target of average annual growth of 18 percent in the period of 2011-15, the Ministry of Commerce said on its website yesterday.

The sector's sales are hoped to account for 6 percent of China's retail sales of consumer goods by 2015, said the ministry.

Efforts should be made to change the auction market's development pattern in the next five years, particularly in improving the loose existing auction laws, cultivating leading auction houses and promoting fair competition by enhancing supervision of illegal practices that have disturbed the market, according to the ministry.

"The move will bolster momentum in the primary related markets, such as art, luxury goods, property and vehicles, in spite of the teetering global economy," Lü Lixin, a researcher with the Culture Market Development Center under the Ministry of Culture, told the Global Times.

However, there have been numerous reports of dubious practices, which have triggered worries about unhealthy development in the sector.

It's not just the items that might be fake, but the bids too," He Xinchun, manager of Beijing Tranthy International Auction Company, told the Global Times. "Fake bids are often seen at auction houses, as buyers, speculators and even intellectual property owners try to push up the prices."

Late payment or even non-payment is another sign of improper auction practices, said Ou Shuying, deputy secretary-

general of the China Association of Auctioneers, which announced an industry self-disciplinary convention on June 10.

"More than 5.5 billion yuan ($866 million) or 40 percent of all 408 lots sold at auction on the Chinese mainland last year remains unpaid," Ou told the Global Times.

Sometimes auctions are also used for money laundering, insiders admitted.

"Many auction houses turn a blind eye, since the higher the price, the higher their commission," said Huang Xiaojian, the association's vice chairman. "Whether or not any money actually changes hands, those record prices still inflate a potential bubble."


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