Taobao Taiwan shuts e-commerce site as government questions Chinese ownership

TAIPEI (Reuters) - Taobao Taiwan shut its e-commerce site on Thursday after the government ordered the firm to re-register as China-backed or leave the island in a drive to step up scrutiny of Chinese firms amid rising tension with Beijing.

British-registered Claddagh Venture Investment, which runs Taobao Taiwan, said it had shut the e-commerce site due to "multiple uncertainties in the market", but did not elaborate.

Claddagh said it would shut its Taiwan operation by the end of the year, adding that it would help merchants deliver existing orders to buyers.

"After cautious deliberations ... the company has made a painful decision to stop Claddagh's operation in Taiwan on December 31 this year," it said in a statement.

In August, Taiwan said Claddagh was in effect controlled by China's Alibaba Group Holding Ltd and gave it six months to divest or re-register as Chinese-backed rather than foreign, or leave the island.

Claddagh had said Taobao Taiwan did not come under Alibaba and was a different company from Alibaba's Taobao China.

An Alibaba spokeswoman said the firm respected Claddagh's decision. "Alibaba businesses are operating as normal in the Taiwan market, and we will continue to serve local consumers with quality products through our Taobao app."

Democratic Taiwan, which China claims as its sovereign territory, has long been cautious of Chinese investments on the island. In August, it barred local sales for Chinese TV streaming services operated by the likes of iQiyi and Tencent Holdings.

(Reporting by Yimou Lee and Ben Blanchard; Additional reporting by Josh Horwitz in Shanghai; Editing by Himani Sarkar and Clarence Fernandez)