Taobao evades taxes despite Taiwan revenue: legislator
By Katherine Wei, The China Post
April 24, 2013, 12:00 am TWN
TAIPEI, Taiwan -- Popular Chinese shopping website Taobao Marketplace (淘寶網) has been evading taxes and inspections in Taiwan, despite reaping hefty profits from Taiwanese shoppers, according to Democratic Progressive Party (DPP) Legislator Hsu Tien-tsai (許添財).
Local manufacturers have argued that Taiwanese online stores do not stand a chance against Taobao, as it boasts the cheapest prices and fastest delivery speeds. While the Chinese government claims to allow open access of all shopping websites, it is in fact protecting Chinese shopping websites, making tilting cross-strait online shopping competition in favor of mainland sites.
Under the allegedly unfair terms of competition, Taobao is free to make profits from Taiwan shoppers without being taxed by the Taiwanese government and dodging quality inspections, leading it to take over the local ecommerce industry.
Statistics of Taobao sales in Taiwan would shock local shoppers, claimed Hsu, citing information from local manufacturers. Ten thousand Taobao parcels are shipped to Taiwan every day, a result of the 600,000 Taobao Taiwan users who shop on the site every year. A Taobao survey showed 150-percent growth of Taiwan users from 2010 to 2012, with 93 percent of all orders shipped to Taiwan having been recorded last year.
The Chinese website made a profit of over NT$46 billion from Taiwan last year, without the National Taxation Bureau levying any tax. Goods manufactured in China that have been the subject of health warnings, such as toxic toothpastes, lead-infused toys and easily broken pressure pots, were shipped to Taiwan without being required to pass any examination, accused Hsu.
Taobao makes its profits on low-priced goods, filling Taiwanese online shops, street vendors' stalls and local stores with cheap merchandise often costing less than NT$30 each.
Locals are known to use the PTT bulletin system to recruit other shoppers in order to combine orders and save on the overseas shipping fee. According to local survey website iGuang.tw, there were 1,962 Taobao orders on the PTT in March, taking up 37 percent of all online group purchases.
Leading ecommerce sites including PC Home and Yahoo are coming under pressure as more Taiwan shoppers continue to gravitate toward Taobao, Hsu said. Orders saw an especially large jump after Taobao began accepting payments with credit cards issued in Taiwan.
Online shoppers are advised to take caution when shopping on Taobao, as the website does not have a subsidiary company in Taiwan and thus transactions are not protected by the Consumer Protection Law or the Food Sanitation Act; any disputes can only be solved via rules of the Taobao website, said Hsu.