TAIPEI, Taiwan – Taiwan declared an e-commerce platform affiliated with China’s Alibaba Group a potential security risk and told its operator Monday to register as a rival mainland company or remove its own stake.
The order adds mixed pressure on Chinese companies in the United States and other countries over security concerns.
Taiwan and China split in 1949 during a civil war. They have no official relations but flourishing trade and investment ties. Taiwan keeps those links close together to prevent being dominated by its giant neighbor, who threatens to invade the island.
Taobao Taiwan is operated by a separate company, British Claddagh Venture Investment Ltd., but Alibaba Group’s own interest in that company allows it to control the consumer-to-consumer platform in violation of Taiwanese rules, the Ministry of Economic Affairs said.
The user agreement for Taobao Taiwan gives permission to “send the member’s transaction data back to the Alibaba Group server in China,” the ministry said. “There may be a risk to information security.”
British Claddagh has six months to apply for permission to operate as a Chinese company or else ‘withdraw the investment,’ the ministry said. It did not specify what restrictions new status could bring, but said the company would face a fine of up to 410,000 New Taiwan dollars ($ 14,000) if it did not comply.
Headquartered in Hangzhou, southwestern Shanghai, Alibaba Group is the largest e-commerce company in the world by total sales volume.
Alibaba’s 29% stake in British Claddagh is below the legal limit of 30%, but the shareholding structure allows the Chinese company to control it through veto decisions, the ministry said.
Alibaba Group declined to comment.
Taiwan is also among governments that have imposed curfews on the use of telecom equipment from Huawei Technologies Ltd., the largest manufacturer of switching equipment in the world. The U.S. government has declared Huawei a security risk, denying the company and lobbying allies to prevent its technology as they upgrade to next-generation telecom networks.
Meanwhile, the White House is urging the Chinese owner of TikTok to sell the short video app due to concerns that it may transfer users’ information to China. President Donald Trump has issued a sweeping but vague order preventing U.S. companies from dealing with TikTok and WeChat, a popular Chinese messaging service.
