Chinese technology behemoth Alibaba co has reportedly refused to take up board seats at the local firms it invests in at Taiwan, through it’s Taiwan investment fund. This rather unconventional move is being looked at as an attempt by the company to speed up the regulatory procedure in approval of the $45 million fund being raised by China Development Financial Holding (CDF), of which Alibaba will have a 29.9 percent stake.
The fund seems to be the most prominent example of investments being affected by the sour relations between Taiwan and China. China sees Taiwan as a breakaway province that will eventually become part of the country again, but many Taiwanese want a separate nation. Clearly, Taiwan is against the ‘One China’ policy and China, in response, had cut off all relations with it’s neighboring country in June last year.
Henceforth, both countries have been very cautious in dealing with all business related deals like the one between ChipMos tech and China’s Tsinghua Unigroup which failed to take off due to regulatory issues, leading to losses of $373 million.
As per Emile Chang, the Taiwan Investment commission’s executive secretary
We welcome foreign investments, and Chinese investments in principle as well. But the review process is stricter.
Alibaba had set up a NT$10 billion (US$316 million) not-for-profit fund to boost entrepreneurship among young people in Taiwan in March 2015. This came just a month after it created a HK$1 billion ($129 million) fund targeting Hong Kong startups. The company is renowned for making investment in high-profile start-ups like Snapchat and Lyft, but now they seem to be focusing on younger start-ups as well.
A number of accomplished business and community leaders had joined the board of directors of the Fund. They will oversee the governance and provide strategic direction of the Fund. The board of directors of The Taiwan Entrepreneurs Fund includes Mr. Charles Yen, co-founder and principal of the AAMA Taipei cradle program, Mr. Joseph Tsai, senior executive vice president of Cathay Financial, and Mr. Danny Chiu, chairman and CEO, Morrison Express Corp.
Mr. Andrew Lee, former chief financial officer of EnTie Bank, serves as executive director of the Taiwan Fund. Professional teams will source and analyze the investment proposals and the profits will be ploughed back into the fund itself.
The fund has invested $3mn in Health2Sync, that helps diabetic patients manage and check glucose levels and $2mn in iStaging, which is into VR and augmented reality software. Entrepreneurs that apply for investment have to use at least one Alibaba service. So yes, it’s still a win-win situation for Alibaba.