China's largest e-commerce marketplace, Taobao, is showing the way in a legal minefield. Provided to China Daily

E-commerce giant Taobao tries to resolve the prickly problem of who gets what

In an online world without bricks and mortar, a question that has recently come to the fore, is how one manages the vexed problem of succession, or in some instances ownership, given the lack of quantifiable assets or laws for resolving disputes.

The deaths of two e-commerce merchants in China last year and the subsequent wrangling over ownership, amid a rapidly growing Chinese ecommerce market, have once again raised concerns over the lack of proper regulations for the industry.

But as the adage "for every problem there is a solution" has it, China's largest ecommerce marketplace, Taobao, has come up with a novel mechanism governing property inheritance in the virtual world.

It has recently come out with regulations that confer the online property rights, in cases of death and divorce, to anyone who can provide documentary proof to support their claim to online property.

Though at first glance, these appear to be the same as laws governing inheriting physical property, the virtual inheritance rights also come with the rider that the successor will honor existing deals and support his or her claim with legally recognized documents that establish ownership rights over the said property.

The new rules have been under consideration for more than a year and are likely to come into effect by the end of March, sources say.

The main aim of the new guidelines, apart from addressing the thorny succession issue, is to make the entire online succession process transparent and free of litigation, they say.

If a man wants to inherit his former wife's online shop, he must first give the divorce and property distribution certificates to Taobao, and undertake to complete all the online deals made by his former wife, the guideline says.

The applicant should also accept all contracts the previous owner had signed and pay the necessary inheritance fees, the rules say.

In cases of online shops inherited after the death of the previous owner, claimants must provide the death certificate, and a will, or the appropriate documents.

"Many shop owners had come to us seeking a solution to the inheritance issue after the two deaths last year," says Ting Xiang, one of the key personnel involved with framing Taobao's rules.

"It was then that we realized that a long-term solution needed to be put in place.

"All inheritance claims will be settled based on court verdicts and legal certificates," Ting says, adding that the company will encourage claimants to submit their claims through online platforms, rather than in the bulky and cumbersome physical format.

The current rules address most cases of divorce and death and stipulate that the age of assignees should be between 18 and 70, he says.

"We'll continue to tweak the rules based on suggestions from members. Our ultimate aim is to create a smooth transition process along with strict supervision."

The rules have been viewed by more than 90,000 Web users, and more than 1,900 replies or suggestions have been received.

Taobao, the most popular online shopping service in China, has more than 500 million registered users and nearly 8 million daily site visits, the company says.

It has more than 800 million online products and more than 8 million online shop owners, with about 480,000 products sold every minute.

The shopping website is popular not only in China, but is also increasingly finding favor with European and US retailers, who believe it is a good way of reaching Chinese customers, Ting says.

It is estimated that there were about 242 million Chinese online shoppers by the end of last year, 25 percent more than in the previous year, the China Internet Network Information Center says.

Experts say China needs to upgrade its ecommerce laws and learn from other countries on how to cope with disputes that involve online property.

At present there are no specific rules in China on online inheritance, thereby making it difficult for Web companies to establish a legal precedence, Chen Wei, a lawyer in Beijing, says.

Chen, who specializes in inheritance cases, says most online shops with a good reputation overseas have physical stores in their local markets, thereby making it easier to establish presence in cases of a dispute.

But most Chinese shops on online platforms like Taobao have no physical presence at all and are operated by individuals, Chen says, making it difficult for Web companies and judicial authorities to manage and supervise.

"Most of the foreign online shops are shadows of the big enterprises that have rigid rules governing purchases and operations," says Chen Shousong, an e-commerce analyst working for Analysys International, a provider of information products, services and solutions in the China Internet market.

"Most of the Western countries have proper rules and regulations to address issues like online property claims," he says.

"City Angels", a shop owner on Taobao, while welcoming the guidelines feels that it is important for the existing owners to communicate change of ownership to buyers before they stop transactions.

"The reputation of the online shop won't change after it is transferred," he says. "So the seller must inform buyers about such changes."

Such steps will boost the confidence of the buyers and prevent fraud, he says.

Cheng Yi, a judge specializing in inheritance cases with Beijing Chaoyang District People's Court, says the Taobao experiment is an innovation in property transfer or purchase.

"It is important to have proper inheritance laws for online shops as such disputes have been increasing.

"This is a kind of test model on how e-property inheritance works. After all, e-property can be defined as property, and online shop owners die and have accidents. This is a good effort, and what it reveals will be worthwhile."

The transfer of online property needs to be strictly supervised to ensure it complies with company rules and the law, she says.

Apart from Taobao, no other large websites have established rules or made any attempt to clarify the matter of virtual property inheritance.

Sina, one of China's largest Internet companies, say it has no rules on giving relatives access to a deceased person's mailbox and micro blog users.

The company's registration agreement says mailbox users and micro-bloggers cannot transfer their accounts to anyone else.

The regulations of Sina Weibo, Chinese largest twitter-like service, say online accounts are deleted if they are unused for more than 90 days, except for celebrities and people with great social standing.

"Inheritance is a vexed issue for us," says a Sina employee, on condition of anonymity.

"There are no laws on e-property or e-account purchase and transformation. This limits what we can do."

Cheng says: "E-accounts, including micro blog and e-mail, include private information. That means they aren't easy to transfer. Legally, it is inappropriate to do so."

The country's inheritance law needs to be amended because China now has 560 million Internet users, and the number continues to grow, she says.

Emarket, a US research company, says global e-commerce sales were worth about $1 trillion (780 billion euros) last year and are likely to be worth $1.3 trillion this year. The company says digital sales in the US last year were worth $343.4 billion, and in China they were worth $181.6 billion.

caoyin@chinadaily.com.cn

(China Daily 03/29/2013 page21)