With the COVID-19 pandemic having triggered global anti-China sentiment, the UK is planning to form a “D10 club” with nine other democracies to reduce dependence on China.
Amid this, Taobao Taiwan, labeling itself an e-commerce company, is doing all it can to boost its market share.
It launched its “Five Zeros” subsidy program last month to attract sellers by waiving fees for shipment, advertising, listing, handling and commission. It also ran the “618 Super-buying Festival” to attract customers.
Taobao Taiwan is suspected of trying to undermine Taiwan’s economy.
The Alibaba Group authorized Claddagh Venture Investment Co, Taiwan Branch, a UK-registered company, to enter the Taiwanese market using the Taobao Taiwan brand, bypassing restrictions on Chinese investment.
Claddagh registered a branch in Taiwan on July 4, 2019, allowing it to engage in electronic information supply and general advertising services, but the registration does not include e-commerce operations.
Former Democratic Progressive Party (DPP) legislator Yu Wan-ju (余宛如) found out that Claddagh was registered in the UK with capital of US$1 just two months before establishing its Taiwan branch, and that the registered address was the same as that of its secretary.
The company is a subsidiary of Claddagh Investment Holdings, which is incorporated in the Cayman Islands. That the ownership of the holding company had changed less than one year after its establishment makes it even more suspicious.
Moreover, Taobao Taiwan’s domain name being “taobao.tw” is a strong indicator that it is part of Alibaba’s Taobao Marketplace.
In a cross-strait service trade agreement proposed during former president Ma Ying-jeou’s (馬英九) administration, Taiwan was to be allowed to operate e-commerce platforms in China’s Guangdong Province, but cross-border services were excluded. However, Taiwan would have been open for Chinese businesses to operate e-commerce platforms, including cross-border supply and marketing.
Fearing that the arrangement might allow China to undermine Taiwan, the proposal was rejected by the legislature.
Now the DPP administration allows Alibaba via its Hong Kong- based Taobao branch and via a UK-based business worth US$1 to enter Taiwan and illegally run an e-commerce platform.
It is estimated that the number of items listed on the platform last month was as high as 61.83 million. Only 2 million were listed by sellers in Taiwan, and only 1 million items came from outside Taiwan or China — the remaining 60 million items were listed by Chinese sellers.
Those Chinese-made products are sold across the border to consumers, without having passed Taiwan’s quality control.
Moreover, Taobao Taiwan solicited Taiwanese sellers to offer Chinese-made goods and to be solely liable for the products.
Taiwanese sellers source products through the Taobao platform without knowing suppliers or quality of the products, yet they have to take on legal and tax liabilities. Opening a business without inventory pressure attracts millions of small sellers who depend on potentially unreliable Chinese suppliers.
The government must investigate Taobao Taiwan’s illegal e-commerce platform, and the Fair Trade Commission must determine whether the platform’s zero-cost model for sellers causes unfair competition.
It should also prevent sellers from taking on the legal risks involved in reselling Chinese products without handling the products themselves, while also preventing the risk of Taiwan’s economy being undermined by the cross-border operations of Chinese e-commerce companies.
Wang Wei-hsin is a Taipei-based business owner.
Translated by Lin Lee-kai
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