“The NDC states that mainland China’s legal environment is not transparent, with many unwritten rules increasing the risk of entrepreneurship. Mainland China is not the region of choice for Taiwan’s young entrepreneurs, and is not a good environment for entrepreneurship.” – Statement by the NDC
Image Credit: Shuttterstock/ Business man refusing money offered by business man isolated on white
Over the past several days, a conflict has emerged between Alibaba, China’s leading e-commerce company, and the Taiwan government. Just as Alibaba announced it would establish a US$315 million fund to support entrepreneurs on the island, Taiwan’s Ministry of Economic Affairs demanded the company withdraw from the island within six months. The bureau argued that Alibaba misleadingly registered in Taiwan as a Singapore-based entity, while its IPO filing revealed it to be a mainland Chinese company, which would henceforth subject it to a different set of regulations.
Yesterday, Taiwan’s National Development Council, a branch of the Executive Yuan, issued a public statement that directly addressed Alibaba’s proposed fund.
The NDC’s release primarily reiterates already-disclosed government initiatives to support domestic startups. Under the HeadStart Taiwan project, which was formally approved last August, the government has invested a total of US$83 million across four venture capital funds, and is in the process of building a 20,000 square-meter startup cluster in the Taipei Expo Park. It also mentions a proposed government-backed fund that would invest directly into Taiwan and Silicon Valley-based startups.
When in Taiwan, do as the Taiwaninees do
But the most telling part lies at the bottom of the release, where the NDC warns Taiwan’s entrepreneurs of alleged dangers of the mainland. It reads (translation ours):
“The NDC states that mainland China’s legal environment is not transparent, with many unwritten rules increasing the risk of entrepreneurship. Mainland China is not the region of choice for Taiwan’s young entrepreneurs, and is not a good environment for entrepreneurship. An investment fund will not change this fact, [and] we call upon Taiwan’s aspiring entrepreneurs to first use the resources provided by the government to start businesses.
“The NDC also emphasizes that funds from mainland China invested into Taiwan companies must abide by current regulations. The government will likewise examine proposals according to law.”
Yesterday at National Taiwan University, Alibaba founder Jack Ma told media that the company would abide by local laws in Taiwan.
It’s difficult to separate the real stakes from the imaginary stakes when one examines this conflict. But the very existence of a statement from the NDC shows that Alibaba’s fund presents a bit of a PR crisis for the Taiwan government. By some measures, that US$316 million fund that Alibaba has promised at the drop of a hat already exceeds the amount of money it has taken years for the government to come up with. If the government responds to news of the fund with no statement (or with open arms), it appears weak. If it rejects the fund, or makes Alibaba run laps, it risks losing the support of the island’s entrepreneurs.
At the same time, there’s a certain amount of obligatory fist-shaking that’s required when a mainland Chinese company, particularly one run by a media-savvy founder, waves cash towards Taiwan. It’s not clear, however, if this fist shaking ultimately will force Alibaba’s 100 employees in Taiwan to lose their jobs, or deprive the island’s startup founders of another potential source of funding.
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