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Alex Tsai defends Alibaba’s right to operate in Taiwan

Alex Tsai defends Alibaba’s right to operate in Taiwan

KMT Legislator Alex Tsai seems to be slipping comfortably into the role of a contrarian in Taiwan’s political world. On Tuesday Tsai came out in defense of Jack Ma, the founder and chairman of Alibaba Group, which is the parent company of China's largest shopping website Taobao. Ma and Alibaba have been charged with operating illegally in Taiwan under the guise of a Singapore-based shell company set up in 2008.

The Ministry of Economics has ordered Singapore E-commerce to resubmit its application to operate in Taiwan within six months or pull out of the market, a move which came one day after the company was fined NT$120,000 (about US$3810) for violating Taiwan's investment laws concerning companies based in China.

Tsai begged to disagree, however, saying that Alibaba was being treated unfairly. Tsai said that Ma’s stake in Alibaba is much less than 30% thus the company should not be considered Chinese. Tsai sniped at the MOE for its action against Singapore E-Commerce, saying that the ministry is "too far behind the times!"

Chang Min-bin, Acting Executive Secretary of MOE’s Investment Commission, said a few days ago that Alibaba had applied to set up a Taiwan branch in 2008, but the application was packaged using a Singapore front as a way to get around restrictions on Chinese firms in the Taiwan market. The MOE conducted an investigation which confirmed that the Taiwan branch was indeed a part of the Alibaba Group, and slapped Alibaba with the NT$120,000 fine. On Tuesday the ministry added the proviso that within six months Alibaba must submit another application to operate in Taiwan or it will be banned from the market.

Tsai cried foul Tuesday, claiming that Taiwan’s government is saying that any company in which more than 30% of its capitalization is Chinese or Chinese have "substantive control" over its operations, can be considered a Chinese company.

Tsai protested that data from Alibaba shows that its largest shareholder is Japan's Softbank with a 32.4% stake, followed by the US’ Yahoo with 16.3%. After that comes Jack Ma with 8.8% and Vice Chairman Tsai Chung-hsin of Alibaba Group with a 3.6% share. Ma is Chinese, said Alex Tsai, but Tsai Chung-hsin is Taiwanese.

Alex Tsai went on to say that as the Chinese stake in Alibaba is far less than 30%, it should not be considered a Chinese company. The MOE has said, however, that Jack Ma has the right to nominate directors to the Alibaba board, which means he thus has "substantive control" over the company and its operations. This means that Alibaba should rightfully be regarded as a "hidden" or “concealed” Chinese company.

Tsai noted that Tsai Chung-hsin, a Taiwanese, also has a say in who should be nominated to the board at Alibaba. Would that make Alibaba a “Taiwanese” company? he asked. Tsai said he suspects the MOE is just trying to cause trouble for Ma and Alibaba because of its outstanding success in business. He said the ministry was showing prejudice toward Alibaba simply because it is too big, an attitude Tsai said was "way too far behind the times!"

Observers have criticized Tsai’s comments, asking why Ma felt it necessary to set up a Singapore shell company in 2008 if there was nothing wrong with coming directly into the Taiwan market. In addition, they ask, if the two largest holders of shares in Alibaba are Japanese and American, should Alibaba be considered a Japanese or a US-owned company?

A spokesperson for Alibaba has said the company will continue to work to clarify the issues being raised in Taiwan and take action to protect the legitimate interests of Alibaba if necessary.

Taiwan relaxed its regulations to allow investment by mainland firms in 2009, a year after Alibaba had already entered the market through the Singapore entity.

Updated : 2021-09-25 12:01 GMT+08:00