Why Taiwan Interrogated Tencent

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Why Taiwan Interrogated Tencent

Tencent started in 1998, became China’s most populous internet portal, and spawned a network of subsidiaries and other interests that challenge Alibaba, Amazon, Ebay, Facebook and Google for dominance. It has elbowed its way into Taiwan’s cyberspace but may not have done this diplomatically enough to satisfy mainland China’s tiny neighbour.

Tencent Faces Questioning by Investment Commission

Since the island agreed to accept Chinese capital on 30th June 2009 it admitted significant cash inflows, although these have begun to ebb as interest shifted elsewhere. On June 8th 2015 the Investment Commission of Taiwan interrogated Tencent concerning its WeChat operation. It believes was not included in the original foreign investment application.

If the Commission finds that Tencent engaged in a commercial area for which it does not have permission, then the giant portal may follow the fate of Alibaba’s Taobao. This walked the plank after it turned out the investment sourced from China, but it concealed the fact.

Taiwan Interrogated Tencent as Part of Bigger Picture

The Taiwanese investment commission has been quietly reviewing foreign investments to make sure these deliver desired benefits. So it is not true that Taiwan interrogated Tencent in isolation. The investigation was spurred on by concerns expressed by the Ministry of Economic Affairs, the Mainland Affairs Council and the National Security Bureau that the app with 6 million Taiwan users could pose an information security threat.

This lead to an investigation of Tencent’s networks. This revealed that – while the funds for the WeChat kickstart came from a Hong Kong office – this office is directly under control of Tencent China. Thus WeChat is technically an unauthorised social media business.

Possible Consequences for Tencent

After the administration of Taiwan interrogated Tencent in the first round of the discussions, Investment Commission chair Chang Ming-bin advised that possible penalties range from a low US$3,900 fine to expulsion with permission to reapply. Alibaba paid the lowest penalty for sneaking in Taobao, so the fact that Taiwan interrogated Tencent does not necessarily mean its 6 million Taiwan users have any cause to worry.

About Author

Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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