Online marketplace Taobao Taiwan said Thursday it will shut down its service at the end of the year after being told by the government to register as Chinese.
The move comes as relations between Taipei and Beijing have grown increasingly strained as the island looks to maintain its distance from the Asian superpower.
The company said it had decided to stop taking new orders around noon Thursday before officially going off-line on December 31 after “prudent evaluations”.
Taobao Taiwan is registered as a foreign company through its operator—UK-registered Claddagh Venture Investment—but Taiwanese authorities deemed that it was in effect controlled by Chinese e-commerce giant Alibaba.
The island’s Investment Commission in August fined Claddagh Tw$410,000 (US$13,700) for violating local law governing Chinese investments and gave it six months to “rectify” the situation or withdraw its investment.
The commission started the probe after a former lawmaker claimed it was illegally operating on the island as it shared the same platform with Alibaba-owned Taobao.
Under Taiwan’s regulations, a company is considered a Chinese investment if a Chinese entity owns more than 30 percent of its shares or has “effective control” over its operations.
The commission ruled that Claddagh is in effect controlled by Alibaba, even though it holds less than 30 percent of its shares.