Separated by a strait, the internet in Taiwan and mainland China are two different macrocosms. Even mainland tech monstrous Alibaba and Tencent have had little success recruiting the island, often running into regulatory impediments.

Less than a year after Taobao launched on small island developing through an Alibaba-backed joint venture, the marketplace announced it will cease functionings by the end of this year, the scaffold said in a notice to patrons on Thursday.

The decision came two months after the Investment Commission under Taiwan’s Ministry of Economic Affairs ruled that Taobao Taiwan is a Chinese-controlled company and required the house to either leave or re-register under a different corporate structure. Under Taiwanese law, Chinese investors must obtain permission from the government to directly or indirectly acquire a bet of more than 30% in any Taiwanese company.

Taobao Taiwan is owned and operated by British-registered Claddagh Venture Investment, which is 28.77% owned by Alibaba. Nonetheless, the financing regulator ruled that the one with de facto control over Taobao Taiwan is Alibaba, which has ” veto power” over Claddagh’s board decisions.

The app is currently the most downloaded shopping app in the Taiwanese Google Play store followed by Shopee, according to app tracking house App Annie. Unexpectedly, the Chinese edition of Taobao comes in sixth in the iOS shopping category, where Shopee tops.

Taobao Taiwan is distinct from Alibaba’s main marts, which last-place boast 874 million portable monthly useds. Most of Alibaba’s buyers are in mainland China, though clients in Hong kong residents and Taiwan have long been able to shop on the Chinese Taobao app and have the goods imported to them with additional fees.

Taobao Taiwan, on the other hand, established to attract regional marketers in a market of around 24 million people, playing with favourite alternatives like Singapore-headquartered Shopee and the indigenous PChome 24.

This isn’t the first time Taobao has been hit by local constitution. In 2015, the authority ordered Taobao Taiwan, at the time set up by a Hong kong residents entity of Alibaba, to leave because of its Chinese association. Even Shopee wasn’t exempt and was under investigation in 2017 for Tencent owned around 40% of its mother busines Sea.

” We respect the action taken by Claddagh ,” an Alibaba representative said in a statement to TechCrunch.” Alibaba businesses are operating as regular in the Taiwan market, and we will continue to serve neighbourhood buyers with quality products through our Taobao app .”

It’s unclear how Claddagh came to decide on its retreat rather than restructuring the seam endeavour. The firm did not reply to TechCrunch’s request for comment.

Taiwan set to bar Chinese streaming services like iQiyi and Tencent’s WeTV

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