CHINA'S economic reforms have led to the establishment of the first state-run auction house in Guangdong. The Guangzhou-based auctioneer is a subsidiary of state-owned investment company Commerce Enterprise Group Corp of Guangdong and sells for the authorities foreign goods seized from smugglers. ''In the past, the authorities would sell the confiscated goods to their own staff at a discount,'' said auction house general manager Chen Jianxin. ''Now that our economy is becoming market-oriented, their mentality has also changed. They try to make the most profits out of the confiscated items by selling them to whoever offers the highest prices. ''This benefits everybody. The authorities can get more money, while the people can buy those foreign goods which they couldn't.'' A Guangzhou citizen said: ''It's something novel for us. We've always had auctions which involve a party selling goods to another which in turn auctions them. But now the new auction house offers an integrated service by organising all the stages involved in an auction.'' Mr Chen said the auction house was considered an important operation by Commerce Enterprise, of which he is a vice-president. Smuggled goods for auction will include consumer items, antiques, paintings and chinaware, and experts may be called to assess their value. The auction house will also accept assignments from the public including those on assets such as property. It charges a commission of 2.5 per cent. With the approval of the provincial government, the auction house was set up last month. It is now preparing for its first sale to be held on March 1. For this auction, there will be about 600 television sets, 600 air-conditioners, 300 cameras and video recorders, and a few thousand cartons of cigarettes. Mr Chen said he expected sales to reach five million yuan (about HK$6.73 million) in the first auction.