Although a strait separates Taiwan and Mainland China, the internet in the two is worlds apart. This has made it difficult for tech giants such as Alibaba (NYSE:BABA) to succeed on the Island where they often face regulatory hurdles.
Taobao Taiwan asked by authorities to leave the Island
Barely a year since Alibaba-backed marketplace Taobao launched in Taiwan, the company is ceasing operations on the Island by the end of this year. The announcement comes two months after Taiwanese authorities deemed it to be a Chinese-controlled firm. As a result, Taobao was required to either leave the Island or re-register through a different corporate structure. According to Taiwanese law, all Chinese investors should obtain government permission to either directly or indirectly acquire an interest of over 30% in a Taiwanese company.
Taobao Taiwan is a UK registered entity under Claddagh Venture Investment that is 28.77% Alibaba-owned. According to the Ministry of Economic Affairs’ Investment Commission, it is Alibaba that has de facto control of the company and can veto Claddagh board decisions.
Taobao Taiwan to fold operations from January 2021
A statement from Taobao Taiwan indicated that they have reached a tough decision of leaving Taiwan as of January 1, 2021. This I because of market uncertainties, and currently, they are in discussions with employees regarding a layoff scheme. The Taobao app is the most downloaded app, followed by Singapore-based Shopee. However, Taiwanese Taobao is sixth on the iOS shopping list, where Shopee leads.
The company said that the app helps sellers complete accepted deals to safeguard their rights and buyers. Already Taiwan Taobao has closed most of the site’s major functions that include placing new orders. This is in preparation for the expected closure of the site at the beginning of next year.
However, this will not be the first time Taobao is being asked to leave the Island. In 2015, authorities asked Taobao Taiwan, which was set by Hong Kong-based Alibaba entity, to leave because of Chinese connections.