The Investment Commission yesterday said it would open an administrative investigation into the source of funding of Singapore-based Shopee Taiwan Co Ltd (樂購蝦皮), one of the nation’s largest e-commerce operators, and whether Chinese capital is involved.
Investment Commission Executive Secretary Emile Chang’s (張銘斌) announcement of a probe followed a morning news release from Taiwanese attorney Yeh Kuang-chou (葉光洲), who said he had reported to the Taipei District Prosecutors’ Office regarding Shopee Taiwan’s alleged violations of regulations governing Chinese investments and forgery.
Shopee Taiwan claimed to be a subsidiary of Singapore-based Sea Ltd and was registered in Taiwan as a Singaporean company with paid-in capital of NT$5 million (US$165,793.50), Yeh said.
However, Shopee Taiwan should be registered as a Chinese firm and be reviewed by the commission because Tencent Holdings Ltd (騰訊), a Chinese company, holds a 39.7 percent stake in Sea, Yeh said, citing Sea’s initial public offering (IPO) prospectus released last month.
Any foreign company with more than 30 percent of Chinese capital should be registered as a Chinese company in Taiwan, Yeh said, citing the Measures Governing Investment Permit to the People of Mainland China Area (大陸地區人民來台投資許可辦法).
Sea’s two other local subsidiaries, Garena Taiwan (台灣競舞) and Aipei Taiwan (艾貝), should also be registered as Chinese firms, not Singaporean companies, the lawyer said.
Shopee Taiwan, Garena Taiwan and Aipei Taiwan appear to have intentionally hidden their investor structure and provided untrue information to the government, which would mean that their company registrations are acts of forgery, Yeh said.
Shopee Taiwan has denied Yeh’s allegations.
It said it did not forge official documents or violate regulations regarding Chinese investments.
“We have been abiding by Taiwan’s regulations and we are willing to explain our operations to relevant agencies,” Shopee Taiwan said in a statement.
It said it has been working to improve Taiwan’s e-commerce environment and it was sorry to hear “comments” targeting it.
The company said that it hopes e-commerce operators in Taiwan can focus on improving the nation’s e-commerce environment and improve shopping platforms to provide better services to consumers.
“The company will be subject to continuous penalties of up to NT$600,000 per fine if it is proven to have involved Chinese capital,” Chang said by telephone.
“The worst scenario would see Shopee Taiwan be asked to withdraw its investments from Taiwan,” Chang said.
The commission asked Taobao Hong Kong Ltd (香港淘寶) in 2015 to leave the Taiwanese market after it was found to have Chinese capitalization, even though it claimed to be a Hong Kong-based company, Chang added.
Shopee entered Taiwan two years ago and quickly became one of the nation’s leading e-commerce operators by offering free listings for sellers and free shipping for purchases of NT$99 or more.
Its app offers both business to consumer and consumer to consumer services.
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