TAIPEI (Reuters) – Taiwan gave e-commerce site Taobao Taiwan six months to re-register as Chinese-backed rather than foreign or leave the island, in the government’s latest shot against Chinese firms.
Taiwan has stepped up oversight of Chinese investments and the operations of Chinese tech firms on the island and last week said it planned to stop local sales of Chinese internet television streaming services, though it didn’t plan to block them.
Taiwan treats investment from foreign countries differently to that from China, with far more stringent rules for Chinese firms.
The investment commission of Taiwan’s Economics Ministry said on Monday Taobao Taiwan was operated by a British-registered company called Claddagh Venture Investment, which it said was in effect controlled by China’s Alibaba Group Holding Ltd.
Alibaba owns the wildly popular main Taobao platform in China.
The commission was also concerned about information security as user data was sent back to China, it said, adding that Taobao Taiwan had been fined T$410,000 ($13,961) and had six months to either withdraw its investment or re-register.
“We do not consider the company as a foreign investment,” commission spokesman Su Chi-Yun told Reuters. “They will have to decide whether to disinvest or rectify their investment.”
The company should have registered as a Chinese investment but came in as foreign since “it’s more convenient”, he added.
Claddagh’s Taiwan office expressed regret at the move and said it had received no formal notification from the government, but said it respected the decision and would “carry out rectification as soon as possible”. It did not give details.
It said Taobao Taiwan, launched last year, is an entirely different company from Taobao China and does not come under the Alibaba group.
Alibaba said it was “not in a position to comment”.
Claddagh is registered in the British town of Altrincham.
Su said even if Taobao chose to register as a Chinese investment in Taiwan, it could still fall foul of rules barring Chinese companies from sectors vital to its business model, such as third-party payments processing or advertising.
($1=29.3680 Taiwan dollars)
(Reporting by Yimou Lee and Ben Blanchard; Additional reporting by Brenda Goh in Shanghai Editing by Clarence Fernandez and David Holmes)