The Ministry of Economic Affairs yesterday announced a draft bill that would ban Chinese-funded companies from operating research and development (R&D) offices in Taiwan, while toughening rules governing Chinese for-profit businesses establishing subsidiaries in the nation.
The draft amendments to the Measures to Approve Chinese For-profit Businesses Establishing Subsidiaries or Offices in Taiwan (大陸地區之營利事業在臺設立分公司或辦事處許可辦法) state that no Chinese-funded companies may perform R&D activities in Taiwan, with the bill defining “research” as “conducting or compiling market-related analysis and statistics,” the ministry said.
If passed, the bill would change the name of the law to Measures for Approving Chinese For-profit Businesses or its For-profit Business in a Third-party Region Establishing Subsidiaries in Taiwan (大陸地區之營利事業或其於第三地區投資之營利事業在臺設立分公司或辦事處許可辦法), it said.
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The bill references the Measures Governing Investment Permits to the People of the Mainland Area (大陸地區人民來臺投資許可辦法) in defining what constitutes a “Chinese for-profit company.”
If 30 percent of a company in a third-party region is directly or indirectly owned by a Chinese firm, or if a Chinese firm could control the entity in a third-party region, that company would be considered a Chinese for-profit enterprise and the Foreign Nationals Investment Act (外國人投資條例) would not apply to it, the ministry said.
The draft amendments would also include clauses to further restrict Chinese companies from headhunting Taiwanese R&D talent, it said.
The ministry cited a Ministry of Justice Investigation Bureau probe, which found that 10 Chinese companies had illegally established a subsidiary or R&D branch in Taiwan by pretending to be foreign investors or Taiwanese companies in an attempt to poach talent from Taiwan’s high-tech industries.
The bureau report said that some Chinese companies attempted to pass themselves off as personal offices, subsidiaries of parent companies or belonging to companies established in a third-party region.
Officials said that the draft amendments would allow the government to take a tougher stance on preventing Chinese companies from systematically poaching talent from Taiwanese companies, which could affect the nation’s economic development and national security.
The amendments would also prevent Chinese companies from “launching operations” without officially registering with the government, they added.
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