Taiwan may give Tencent the boot over WeChat registration flap

PUBLISHED : Tuesday, 16 June, 2015, 4:49pm
UPDATED : Wednesday, 17 June, 2015, 8:34am

Chinese internet giant Tencent may have to pull out of Taiwan as a regulator has said its business registration there does not cover the company’s hugely popular WeChat messaging service, according to local media reports.

Taiwan's Investment Commission will screen a unit of Shenzhen-based Tencent to examine if its businesses in the region fall within the approved range, Taiwan's Central News Agency reported. 

Failing an outright ban, it could be fined MT$120,000 and NT$600,000 (US$3,900-$19,400) for any transgressions, local media said.

Tencent came under fire at an economic committee meeting of Taiwan’s Legislative Yuan – equivalent to a court of government - on June 8.

At the meeting, a lawmaker questioned the security of the information flowing through the WeChat platform as it is back by Tencent, a company from the Chinese mainland, the report said, adding that Tencent has over 6 million users on the island. 

The commission, which is responsible for reviewing foreign and Chinese investments in Taiwan, said theTencent subsidiary was registered as a mainland Chinese investor, but that the application did not cover its WeChat business.

Tencent applied to set up its Taiwan subsidiary via its Hong Kong unit in June 2012, according to a secretary of the Investment Commission. 

But even though it is listed in Hong Kong and has foreign investors among its major shareholders, it is managed from the Chinese mainland and should therefore be treated as such an entity, Taiwan’s Want Daily reported.

A spokesperson for Tencent did not immediately respond to a request for comment on the matter.

The commission previously fined e-commerce giant Alibaba and its online marketplace Taobao for violating investment rules required for a Chinese company.

Since Taiwan began receiving applications in June 2009 from Chinese mainland funds to invest in it, the island has issued 15 separate fines worth a total of NT$1.86 million, the commission said.

As of the first quarter of 2015, WeChat has more than 549 million monthly active users, mainly in China. Tencent does not release regular figures for WeChat's overseas user base, but reports suggest this makes up between 10 and 20 per cent of total users.