Joining the United States and India to crack down on China’s tech companies, Taiwan announced a ban on iQiyi and Tencent from operating streaming services in the country via local distributors.

The Ministry of Economic Affairs said that the ban will take effect on September 3 after a 14-day public notice period. Violators of the ban will be subject to penalties up to NT$5 million under the Act Governing Relations between the People of the Taiwan Area and the Mainland Area.

iQiyi, a video streaming platform backed by Baidu, has been operating in Taiwan via a local entertainment distributor. The Chinese company has established a Taipei office through its Hong Kong branch. Last year, Tencent also started running its WeTV service in Taiwan through a similar workaround method.

Beijing’s iQiyi had applied in 2016 to set up a subsidiary company in Taiwan, but the application was rejected because online streaming was not among the services open for Chinese investment.

Taiwan’s National Communications Commission (NCC) proposed in July to regulate overseas streaming services, including iQiyi and Tencent. According to a draft of the resolution, services that operate “illegally” in Taiwan, including telecommunications and network providers that host the services, would be subject to fines. While this resolution was still under review, the Ministry of Economic Affairs took a step further to ban any local distribution or brokerage of Chinese streaming platforms.

The ban, however, does not mean that Taiwanese audiences will be unable to access Chinese streaming services. The China-based platforms could opt for directly offering overseas subscriptions or make the platform available via a third-party international distributor.

A former iQiyi employee in the Taipei office told The News Lens that the NCC proposal in July has already affected the company’s advertising business. But the sweeping ban would create a much larger impact on the operation as a whole, according to the source.

Some iQiyi employees have been terminated and transferred to a new company that was established in June. The company is registered under the name of a staff member of iQiyi's distributor in Taiwan.

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TNL Editor: Nicholas Haggerty, Daphne K. Lee (@thenewslensintl)

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