Taobao Taiwan to close by 2020 following demand to withdraw Chinese funding

Taiwan's Investment Commission ruled in August that shopping website actually controlled by Alibaba Group

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Taobao Taiwan announces its exit on Oct. 15 (Taobao Taiwan website screenshot)

Taobao Taiwan announces its exit on Oct. 15 (Taobao Taiwan website screenshot)

TAIPEI (Taiwan News) — Taobao Taiwan, a formerly Chinese-owned shopping website, will cease operations in Taiwan at the end of the year as a result of the nation's investment screening authorities' ban on the company due to its liaison with Alibaba Group.

The Taiwan branch of UK-registered Claddagh Venture Investment Limited, which owns the shopping website, announced its decision to depart from the Taiwanese market via a statement on Thursday (Oct. 15). As of 11 a.m. Thursday, the website has stopped allowing new transactions and recruiting sellers.

The decision was made after Taiwan’s Investment Commission ruled in August that Claddagh Venture is controlled by Alibaba Group, the parent company of Taobao. Claddagh Venture launched Taobao Taiwan in October 2019 after raising capital worth roughly US$689,000 (NT$20 million).

According to the findings of the Investment Commission, Alibaba Group holds 28.8 percent of Claddagh Venture’s shares through its branch company in Singapore. Even though its holdings do not exceed 30 percent — one of the criteria Taiwanese authorities use to determine whether a company is Chinese-funded — upon looking into Claddagh Venture's structure, the agency found that Alibaba Group actually controls its operations.

Claddagh Venture was fined US$14,132 for violating the law governing Chinese investments and asked to withdraw Chinese funding or restructure the company within six months. The Taiwanese government in recent years has tightened its screening as part of its efforts to root out foreign companies used as fronts for Chinese investments.

The company will ensure the rights of both consumers and sellers by continuing to process orders that have been made, Claddagh Venture said in the statement. It added that it will start laying off employees and promised to provide good severance packages.