By J.R. Wu and Faith Hung
TAIPEI (Reuters) - Taiwan has ordered Alibaba (NYSE:BABA) Group Holding Ltd to withdraw from the island within six months because the online retailer had violated investment rules required for a Chinese company, an economics ministry official said on Monday.
Alibaba has been fined T$120,000 ($3,824) and must withdraw or transfer its holdings from its operation in Taiwan, Emile M.P. Chang, acting executive secretary for the Investment Commission, told Reuters.
The commission falls under the Ministry of Economic Affairs and has authority over the review of Chinese investments in Taiwan.
Chinese investments into the island are regulated strictly because mainland China is still considered a political enemy despite growing trade and economic ties since the late 2000s. China deems Taiwan a renegade province and has not ruled out the use of force to take it back, particularly if the island makes a move toward independence.
On Tuesday at a university event in Taipei, Alibaba Group Executive Chairman Jack Ma started a speech by remarking on Alibaba's situation: "It's very strange. In China, we're viewed as a foreign company. In Taiwan, we're seen as a Chinese company."
Ma did not elaborate on his company's relations with authorities in Taiwan, where he is viewed as a celebrity among the young because of his business success and affable manner in his public speaking engagements.
The Alibaba Group on Monday said it intends to set up a T$10 billion fund to support the growth of entrepreneur-run businesses in Taiwan.
CHINESE COMPANY
Chang said the Investment Commission had been looking into the Alibaba situation since September and had requested documents from the company to clarify its shareholding, but those documents had not been provided.
"We will actively communicate with the authority and provide the required supporting materials to comply with the latest requirements," Alibaba said in a statement late on Monday.
"Since Alibaba Group, the parent company of Alibaba.com, went public in the United States last September, the authority took a different view about the internal structure of Alibaba Group and deemed it as a mainland Chinese company."
The Chinese e-commerce giant entered Taiwan in 2008 through Singapore-registered Alibaba.com Singapore E-commerce Private Ltd, which Alibaba says established operations in Taiwan in accordance to regulations at the time.
The company said it will continue to clarify the issues and, if necessary, will take proper actions to protect the legitimate interests of Alibaba.com.
(This version of the story was refiled to remove word country in first paragraph)