The Investment Commission on Monday ruled that Taobao Taiwan is Chinese-controlled, despite it listing UK-based Claddagh Venture Investment as its parent company. China’s Alibaba Group Holding is a major shareholder in the British company and must be represented at shareholder meetings, the commission said.
A Chinese company in Taiwan must be registered as such and Taiwanese users of a China-based platform risk the exposure of their personal information, but there is another reason for the government to be concerned about such firms.
The US and China are still locked in a trade conflict and Washington has promulgated laws preventing the trade of certain items with China, as well as requiring goods made in Hong Kong to be labeled as “Made in China.” A China-based online retail platform in Taiwan could potentially help Beijing or Chinese companies circumvent US laws when exporting goods.
Reports surfaced last year of Chinese companies allegedly doing a final assembly of goods in Taiwan to list them as “Made in Taiwan,” and this week allegations surfaced of a Chinese Nationalist Party (KMT) member helping Chinese retailers ship suspicious packages containing soil and seeds to other countries through Chunghwa Post.
If such incidents continue unchecked, it could be detrimental to legitimate Taiwanese manufacturers or harm the reputation of “Made in Taiwan” products.
Concerns about Chinese platforms such as Taobao had even emerged in the US before the trade dispute, due to the platform’s alleged sale of counterfeit goods — concerns that have not gone away, as the US government still lists Taobao, as well as DHGate and Pinduoduo, in its annual Review of Notorious Markets for Counterfeiting and Piracy. If for no other reason, Taipei should at least be concerned about Taiwanese potentially buying fakes of local brands through these platforms.
There appears to be little or no benefit to Taiwanese in allowing these platforms to operate locally, as the overwhelming majority of goods sold on the platforms are from Chinese sellers. An opinion piece by local business owner Wang Wei-hsin (王維新) published in the Taipei Times said that only 2 million of more than 60 million products sold on Taobao Taiwan were from Taiwanese sellers (“Chinese e-commerce undermines Taiwan,” June 13, page 8). Why should Chinese sellers be allowed to profit from Taiwanese when Beijing is unlikely to allow Taiwan’s own PChome Online to operate in China?
The same situation has arisen with over-the-top media streaming services. Beijing wants to censor content from Taiwanese producers, or ban content containing performers who do not adhere to its “one China” principle, while it disseminates political content in Taiwan as part of its “united front” efforts through services such as iQiyi and WeTV. That is why the Mainland Affairs Council in May declared such services illegal.
Things are never reciprocal with China and allowing Chinese businesses to operate freely here is an affront to all Taiwanese.
The commission has said that Taobao Taiwan must provide a solution to its ownership situation that can be implemented within the next six months or leave the Taiwan market, but even if it leaves, what would Beijing and Chinese firms attempt next to circumvent Taiwan’s laws or undermine its international interests? Foreign investment should be more carefully scrutinized rather than dealing with such issues only after concerns are raised.
The commission should seek to understand how companies such Taobao and content providers like iQiyi acquired registration in Taiwan without raising red flags. Perhaps it is time for an independent body to be tasked with aggressive investigations of foreign investment.
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