Taiwan Orders E-Commerce Firm To Divest Chinese Internet Giant Alibaba Group’s Ownership Stake

A guy walks page signage at Chinese e-commerce giant Alibaba’s head office in Hangzhou in China’s … [+] eastern Zhejiang province on September 4, 2019.

Taiwan’s government has purchased the locally popular e-commerce service Taobao Taiwan to register as a business from mainland China or divest an ownership stake presently held by Chinese billionaire-founded internet giant Alibaba Group within six months.

The order from Taiwan’s Ministry of Economic Affairs was said to be provided out of concern over details security since the site’s user data can be sent out to China.

Taobao Taiwan is run by U.K.-based Claddagh Venture Financial Investment, however Taiwan’s officials state the entity is eventually controlled by Alibaba.

“A Ministry of Economic Affairs investigation found that either by law or by contract, Alibaba Group can control the direction of British Claddagh Venture Financial investment and has resolved to possess the capacity to control it,” a ministry statement states.

Alibaba developed the Taobao brand name and runs an e-commerce website by the exact same name in China, where it offers about 1 billion products. Some media reports in Taiwan say the regional service shares a platform and personal privacy contracts with the one in China.

Taobao Taiwan agents did not react to a demand for remark.

Taiwan’s political ties with China are strained and the federal government in Taipei is requiring more examination of financial investments from Chinese companies to prevent Beijing from gaining too much influence on Taiwan’s affairs. China declares sovereignty over Taiwan, a self-ruled island that’s 160 kilometers away, and insists that the two sides ultimately unify under the Chinese flag.

Taiwan also limits using telecom products made by China-based Huawei Technologies. The U.S. federal government, involved in its own struggles with China, is moving to prohibit Chinese internet video app TikTok from the U.S.

Taobao Taiwan’s compliance with the federal government order is unlikely to faze Taiwanese consumers unless it leads to a shutdown and disables the local customer care center, says Shirley Tsai, a research study manager with the tech analysis company IDC in Taipei.

A protester in Taiwan displays a poster urging others to oppose China.