Taiwanese Government Orders Taobao to Retreat Operation Within Six Months

After Alibaba.com was forced by the Taiwanese government to stop its operation in the region in March due to failure of submitting required permit for mainland companies, its subsidiary Taobao Marketplace was issued the same order on Monday, Reuters reported.

Aside from the order, the online shopping site was also penalized with an amount of T$240,000 ($7,896).

"Mainland companies registered in foreign countries need to apply for mainland business permits in Taiwan. Neither Alibaba nor Taobao have done so," said Emile Chang, executive-secretary of the Investment Commission.

The executive-secretary further said that Alibaba.com and Taobao's permits are classified as foreign-owned company wherein Taobao has a registration in Hong Kong and Alibaba.com has a registration in Singapore.

Despite the orders, they could still reapply for a Chinese mainland-owned company permits and resume their services in the country, Chang added.

Alibaba, in response through Taiwan's Taobao, said that they are "having positive ongoing discussions with the relevant Taiwanese authorities. We hope to find a suitable way forward in order to continue to serve the needs of Taiwan consumers and merchants."

According to Taiwan's investment policies, mainland-owned businesses face more absolute standard compared to foreign-owned companies. This is due to the mistrust issues that existed between the two entities for years.

Taobao, founded by Alibaba Group in 2003, provides a platform for small businesses and individual entrepreneurs not just in Chinese regions (Mainland China, Hong Kong, Macau and Taiwan) but also internationally.

The online shopping site is the ninth most visited site in the world, according to Alexa Internet, Inc., a California-based subsidiary company of Amazon.com which provides commercial Web traffic data.

In 2013, the company had recorded over 760 million product listings.