Among the sneakers, diapers and pet food for sale on Taobao, China’s biggest e-commerce platform, is a listing that may take up a little more space in the online shopping basket.

For $610,000, customers on the site owned by e-retailing giant Alibaba Group Holding can bid for the debt of a steelmaker from Zhejiang, a coastal province in eastern China. The company has failed to pay back a $1.5 million loan, including interest, so a distressed-asset manager is auctioning it off to the highest online bidder.

It’s not the only bad debt for sale on Taobao, which translates roughly as digging for treasure.

Used by millions of Chinese to buy everything from clothes to food and electronics, the platform, known for its bargains, typically markets more than 1 billion yuan of soured assets a day, according to Bloomberg calculations. Recent listings include a portfolio of 118 non-performing loans from some companies in Yunnan province, a villa seized by a bank in the southern canal city of Shaoxing, and a property in central Beijing that’s also in default.

“Financial technology and e-commerce in China has reached a high level of sophistication,” said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “Online platforms are leveling the playing field in the distressed debt market as it means everybody gets access to the same information.”

China’s embrace of e-retailing is helping it tackle another byproduct of the country’s rapid economic evolution: the rise of bad debt.

Slowing growth and an uptick in corporate defaults has fueled the market, with NPLs at commercial banks more than doubling over the past two years to 1.6 trillion yuan as of the end of March.

As Beijing pushes lenders to find market-oriented ways of dealing with soured loans, interest in distressed debt has climbed, spurring banks and asset managers to look beyond traditional venues like auction houses and exchanges to dispose of the assets.

China Cinda Asset Management Co. — one of the country’s biggest distressed-asset managers, and the firm marketing the steel company’s debt — said last month that it’s collaborating with Alibaba to set up a special section on Taobao to auction its wares. Though Alibaba declined to provide data on actual sales, the advertising of such loans shows how interest in the market for China’s distressed debt is developing.

Following Taobao’s lead, more than 50 other websites marketing their services to banks and other sellers of bad loans emerged in China in the first half of last year, according to a March report from PwC. More than 20 financial institutions are listed as partners on Taobao’s auction platform for soured assets, including Shenzhen-based Ping An Bank Co., Beijing’s China Minsheng Banking Corp. and China Citic Bank Corp.

But bad-loan investing isn’t like trading equities or even ordinary debt, which raises questions over the opening up of the market to rank-and-file investors.

Interaction with the seller is important in an NPL transaction and the deals can take months to complete, says Andrew Brown, a partner for macro and strategy in Hong Kong at ShoreVest Capital Partners, which invests in Chinese bad loans.

“The online auction sites open the marketplace up to potential buyers that may not be as diligent in the required analysis that we deem appropriate to price a portfolio,” he said. “If you are developing a platform for NPL portfolios, the question is does it allow for appropriate time and access to do the research? It’s not like buying and selling stocks.”

On Taobao, distressed assets are typically advertised several weeks or months before the auction date. The listing for the Zhejiang steelmaker’s debt says interested investors can call a local branch of Cinda for information on the offer, and includes details and photos of the collateral: a 2,580-square-foot apartment in the city of Hangzhou.

Both Alibaba and Cinda declined to comment for this story.

Industrial Bank Co., a lender based in Fujian province, signed an asset disposal cooperation agreement with Alibaba in May. The bank sold $34.3 million of NPLs on Taobao from May 20 to the end of June, according to Fang Zhiyong, general manager of the special-asset management department.

E-commerce platforms provide access to more investors, and the lender has garnered interest for assets marketed on Taobao that failed to yield inquiries offline. But while they can bring a level of transparency to bad-loan trading, sites like Taobao also attract individual investors who don’t typically have the skills needed to do full due diligence on an NPL deal, Fang said. Nonetheless, Taobao will be a “key” channel for the bank in disposing bad debt.

For Song Lingling, a partner at Beijing-based distressed debt fund DCL Investments, disposing of NPLs on web platforms can be less complicated than via auction houses, which usually charge commissions. Her firm has used Taobao to buy and sell soured assets.