TAIPEI (Taiwan News) — The Ministry of Economic Affairs has fined Taobao NT$1.2 million (US$37,000) for breaching the scope of its business activities in Taiwan and will force the Chinese e-commerce giant to exit the Taiwan market if it fails to pay the penalty by the deadline.

According to officials from the MOEA, Taobao placed print advertisements on the Taipei MRT, which do not comply with the business activities registered by the company, per CNA on Wednesday.

In 2018, Taobao was approved by Taiwan’s authorities to operate as a Chinese-invested company through its Hong Kong-registered entity, Taobao China Holding Limited. However, it was only permitted to carry out brand marketing and promotional activities in Taiwan. 

DPP Legislator Kuo Kuo-wen (郭國文) said during a session at the legislature Wednesday that Taobao’s actual operations do not match its registered business scope and raised issues related to leaking personal information.

Vice Economics Minister Chiang Wen-jo (江文若) said the MOEA had already imposed a fine on Taobao for advertisements it posted for last year’s Singles’ Day (Double 11). When asked by Kuo what the ministry would do if Taobao failed to comply, Chiang responded that, if necessary, the MOEA could order the company to withdraw its investment from Taiwan.

DPP Legislator Lai Hui-yuan (賴惠員) asked about the deadline for Taobao to make corrections. Chiang replied it was in the first half of this year.

The MOEA explained that Taobao is registered in Taiwan under two business categories: “electronic information supply services” and “advertisement flyer distribution.” The ministry determined that placing print advertisements in MRT stations exceeded the scope of the latter category, leading to the NT$1.2 million fine.

Also, the MOEA said if Taobao wishes to legally place print advertisements in the future, it must first apply to add new business activities. However, this is only allowed if the activity is open to Chinese investment and has passed regulatory review. 

The company left Taiwan in 2020 after the government tightened regulations on foreign businesses serving as fronts for Chinese investments.