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November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

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From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek technology

OCTOBER 1, 1999 VOL. 25 NO. 39

Danger: Falling Gavels
Online auctions, hits in the States, are coming to Asia. But even electronic flea markets are bound to draw parasites. Try not to get bitten
By STEWART TAGGART

"It is difficult but not impossible to conduct strictly honest business." So said Mohandas Gandhi, and he might as well have been talking about Internet auctions. Every day, thousands of strangers log on to auction sites such as eBay to sell each other all manner of merchandise, from antiques to Hello Kitty dolls to zithers. Buyers and sellers never meet each other, may never know each other's real name, and may be located on opposite sides of the planet. Products - new, used and refurbished - are purchased by the highest bidder sight-unseen, often with cash sent through the mail.

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Auction networks are business by the honor system in the purest sense. Most deals are completed without problems. But inevitably, some participants are less than honorable, as in the case of a 31-year-old California man who recently pleaded guilty to mail fraud after accepting $37,000 in payments for consumer electronics merchandise he auctioned off through eBay but never delivered. In what may have been pranks, human kidneys and babies were recently put on the block. Those sales were halted, but not before one bidder offered $5.75 million for an organ.

No question, the world of online auctions can be a jungle. With several sites cropping up in Asia, buyers are advised to take along some bug repellant before going in search of that too-good-to-be-true bargain. Rule number one: you are on your own. Site operators haven't the means to supervise hundreds of thousands of transactions going on all at once, so systems are largely self-regulated. There is no referee to settle disputes or monitor for fraud. Most Web auctioneers offer a feedback mechanism that allows participants, satisfied or otherwise, to post comments on their dealings with sellers, providing basic screening against suspicious or dishonest participants. When deals go awry, buyers and sellers must work out solutions on their own. If you think you've been cheated, don't count on the police to get involved. Legal jurisdiction is often murky or absent altogether in trades where parties are located in different countries.

Pitak Siriwong, who has participated in thousands of online auctions over the past two years while amassing 5,000 collectible pins, says Internet auctions work, but not always smoothly. The 33-year-old Thai graduate student has suffered a host of headaches in dealing over the Internet - buyers who disappear or back out of trades, difficulties in transferring payments in different currencies around the world, merchandise that is either lost or stolen in the mail.

"Computer systems in my country are often down," Pitak says. "That means I can't send e-mail promptly to people who have won my auction or to those from whom I've won an auction." A bigger problem is payment. Cashing a U.S. check or money order in Thailand costs up to $7.00 and can take 45 days. He prefers to deal in cash, but sending paper money, even by registered mail, can be risky.

"Internet trading is not an easy task and is very demanding," according to two Singaporeans who trade Star Wars collectibles and go by the online moniker MyDNA. "It depends a lot on the personal integrity of buyers and the sellers, but also depends on an efficient postal service and the presence of appropriate financial infrastructure."

The latter may be a particular problem as Asian websites jump into the auction game. The Beijing-based Netease.com has been testing auctions since July. In the first trial, Netease sold 150 Great Wall personal computers, drawing some 20,000 bidders. But William Ding, Netease chief executive, says that it is not certain that auctions will work on the mainland. Reputable companies with established distribution networks may have success, but person-to-person sales are fraught with potential complications. Delivery systems are unreliable. Credit cards are scarce and electronic payment networks are undeveloped.

To cut down on the chances of fraud, Netease is considering setting up an escrow service. In that way a trusted third party could accept, verify and hold payments until products are delivered, thereby acting as a go-between for buyer and seller. In the U.S., several online escrow services are already serving auction site participants successfully. They are usually operated by banks or established escrow companies, and they charge for their services (the fee is usually 5% of the item's purchase price).

Sometimes the quality of the goods available on the electronic block creates friction. The U.S.-based Software & Information Industry Association estimates that approximately 60% of software products offered in online auctions, for example, are illegally copied, meaning they may be buggy or contain viruses and have no warranty. Also, buyers sometimes complain that items they get aren't what they expected. Bidders may assume that - when buying a refurbished computer printer, for example - they will also receive all product documentation, manuals, and related software, only to receive just the printer in the mail.

To avoid disappointments, on-line auction experts suggest that participants get as much information about both the product they are looking for and the seller before jumping into the auction arena. It's all too easy to get caught up in the action and make hasty decisions that will later be regretted. To avoid overpaying, buyers should try to find out the retail price of the item they want or similar ones via shopping search engines on the Net such as Excite's Product Finder. When items are put up for auction, they are usually accompanied by a fairly detailed description; read it carefully to ensure that what you are bidding on will meet your expectations.

Finally, buyers should also check the auction site for any feedback on sellers. This will often be your only yardstick for sizing up the strangers with whom you intend to do business. Stay away from those who generate a lot of complaints. The Net also has plenty of auction resource sites where you can learn the advantages and pitfalls of online auctions. For further tips, check out sites such as www.auctionwatch.com and www.biddersedge.com.

Like any real-world flea market, online auctions have their share of amateurs, shady dealers and trouble-makers. The risk can be managed if you are careful, use common sense, and deal as much as possible with those you have successfully traded with in the past - or can check on prior to sale. Honest trades are far from impossible.

Try These
www.ebay.com
http://auctions.amazon.com/
http://auctions.yahoo.com/
www.netease.com (currently in trial, chinese only)
www.sohu.com (chinese only)
www.auctionasia.net (industrial and heavy equipment)
www.imerchants.com
www.clubciti.com.hk

Buyer Beware
Below are simple guidelines for those who want to enjoy the heat of online auctions without getting burned

DO:
- Learn the rules before you bid
- Pass up deals that seem too good to be true. Super-cheap software in particular is likely pirated, and fake merchandise is out there
- Document transactions by keeping copies of the item listing and e-mails
- Report scams to the site
- Pay with a credit card when possible, or use an escrow service (www.iescrow.com, www.internetclearing.com, www.securetrades.com)
- Carefully read the item description, as well as seller policies on refunds and shipping. Be skeptical of those who won't divulge their physical address
- Check the item's retail or fair-market price (www.jango.excite.com, www.biddersedge.com)

DON'T:
- Buy from individuals with scant - or negative - feedback
- Pay with a money order or cash unless you trust the seller and have confidence in your postal system
- Assume used or refurbished products will come with accessories and manuals. Make sure you are getting what you think you are paying for

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