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Alibaba ordered out of Taiwan

China-based e-commerce group Alibaba has been ordered to cease operations in Taiwan, as the Taiwanese government accuses it of hiding its status as a Chinese entity.03 Mar 2015

The Taiwan Investment Commission, which is a branch of the Ministry of Economic Affairs, has fined Alibaba NT$120,000 (US$3,824) and ordered the company to withdraw from the country within six months, or transfer its holdings from its operation in Taiwan, according to the Financial Times.

Alibaba attempted to disguise its status as a Chinese company by entering the Taiwanese market through a Singapore-registered entity, the Financial Times said, quoting the Commission.

Chinese investment in Taiwan is strictly regulated. Mainland China is considered a political enemy in Taiwan, despite growing trade ties, Reuters said.

Alibaba said it would work with the Taiwan authorities to resolve the problem, the Financial Times reported: "Since Alibaba Group, the parent company of Alibaba.com, went public in the US last September, the [Taiwanese] authority took a different view about the internal structure of Alibaba Group and deemed it as a mainland Chinese company. We legitimately set up our business in Taiwan and complied with Taiwanese law."

The Taiwan branch was set up in 2008 as a Singapore-registered wholly owned subsidiary "in accordance with the regulations ... at that time," Alibaba said. Taiwan did not allow Chinese investment at the time, the Financial Times said.

Alibaba runs its e-commerce site Taobao in Taiwan and also engages in business-to-business activities. It employs around 100 people on the island, Reuters said.

Alibaba launched an IPO on the NYSE in September 2014. Shares in the company were initially available at a price of $68 per share but reached $93.89 per share in value by the end of the day. The company raised $21.8 billion from its IPO, making it one of the biggest IPOs ever recorded.