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

In the e-commerce industry, a problem has recently arisen over the issue of management succession, or in some instances ownership, given the lack of quantifiable, fixed 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 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 e-commerce marketplace, Taobao, has come up with a novel mechanism governing property inheritance in the virtual world.

Taobao has recently come out with guidelines that confer the online property rights, in cases of death and divorce, to those applicants who can provide documentary proof to support their claim over online property.

At first glance, it appears to be the same as the laws governing the inheritance of physical property. The virtual inheritance rights also stipulate that the successor will honor existing deals and support claims of ownership with legally recognized documents.

The new guidelines 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 Taobao's succession process transparent and free of litigation, sources say.

According to the guidelines, if a man wants to inherit his former wife's online shop, he must first submit the divorce and property distribution certificates to Taobao staff members and complete all the online deals made by his former wife.

The applicant should also accept all contracts that the previous owner had signed before and pay the necessary inheritance fees.

In cases involving the death of the previous owner, the claimants must provide the death certificate and documentary proof that details the division of inheritance.

"Many shop owners had come to us seeking a solution to the inheritance issue after the two deaths last year. It was then that we realized that a long-term solution needed to be put in place," said Ting Xiang, one of the key personnel involved in developing the new guidelines at Taobao.

"All inheritance claims will be settled based on court verdicts and legal certificates," Ting said, adding that the company will encourage claimants to submit their forms online.

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

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

The guidelines have been viewed by more than 90,000 online 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 said.

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

The shopping platform 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 said.

There were about 242 million online shoppers in China by the end of 2012, a year-on-year increase of 25 percent, according to the China Internet Network Information Center.

Experts say China needs to improve its e-commerce regulations and learn from other countries on how to cope with disputes that involve online property.

There are currently no specific rules in China on online inheritance, thereby making it difficult for online companies to establish a legal precedence, said Chen Wei, a lawyer in Beijing.

Chen, who specializes in inheritance cases, said many online shops with a good reputation in foreign countries have physical stores in their local markets, thereby making it easier resolve disputes.

But most Chinese shops on e-commerce platforms such as Taobao do not have a physical presence at all and are operated by individuals, making it difficult for Web companies and authorities to manage and supervise, he said.

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

"Most Western countries have proper rules and regulations to address issues such as online property claims."

The owner of a Taobao shop called City Angels welcomes the guidelines but feels that it is important for the existing owners to communicate the change of ownership to buyers before they halt transactions.

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

Such steps will boost consumer confidence and prevent fraud, he added.

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

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

"We can use Taobao's case to examine e-property inheritance. 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 said.

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

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

According to the company's registration agreement, mailbox users and micro-bloggers cannot transfer their accounts to anyone else.

According to the regulations of the micro blog website Sina Weibo, accounts are deleted if they are not used for more than 90 days, except for celebrities and people of great social importance.

"Inheritance is a vexed issue for us," said a Sina employee, on condition of anonymity. "There are no laws on e-property or account purchasing and transference. This limits what we can do."

Cheng said: "Online accounts, including micro blogs and e-mail, contain 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 said.

Emarket, a US research company, said global e-commerce sales were worth about $1 trillion in 2012 and are likely to be worth $1.3 trillion this year. The company said online sales in the US last year were worth $343.4 billion and $181.6 billion in China.

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