Taiwan Photo:VCG

The island of Taiwan on Monday said e-commerce platform Taobao Taiwan, established by UK-based Claddagh Venture Investment Ltd, is controlled by Alibaba Group, so it's a Chinese mainland-based investment rather than a foreign one, and it has six months to re-register or leave.

The firm was fined NT$410,000 ($13,951) and will need to either withdraw its investment or make rectification in six months, according to the investment commission of Taiwan's Economics Ministry.

Taobao Taiwan said it has not yet received an official notification but will actively comply with the government's request as soon as possible, local media reported.

The firm added that it respects the resolutions of the ruling, will maintain close contact with the local authority, and make protecting the rights and interests of businesses and consumers its first priority.

Re-registering as a Chinese mainland investment would cost Taobao Taiwan more in tax, and its business scope may be restricted as Taiwan treats investment from foreign countries differently than those from the mainland, with far more stringent rules, Dai Shugeng, director of the International Finance Research Office at Xiamen University, told the Global Times on Monday.

But Dai noted that the overall impact on the firm is quite limited.

Taiwan's latest shot against mainland investment comes amid intensified China-US tensions, with Washington cracking down on Chinese tech companies such as Huawei and TikTok.

"The island of Taiwan just wants to show the US that it follows its policy closely. It plays well its role of being a pawn, but it may be abandoned if it sticks to this short-sighted policy instead of focusing on lifting up its economy," Dai said.

The economic affairs authority of Taiwan announced on August 19 that it is tightening regulations to prevent local businesses from distributing video content produced by mainland companies, effective September 3. 

The notice said Taiwan companies may not provide agency, distribution, or engage in any way with over-the-top television and its intermediaries or related commercial services with groups and individuals from the mainland. Offenders will be fined NT$100,000 to NT$5 million.

"The move will only kick out the latest and most advanced technology from the mainland, which brings convenience and cheaper costs to local residents," Dai said.

The economic development of Taiwan still hinges on its ties with the mainland, said analysts, noting that only through cooperation can the two achieve win-win outcomes as the coronavirus pandemic is hindering the economic recovery of most countries.

Global Times