Waves of illegal activities by Luxshare, and Wang Lai-chun of the Chinese People’s Political Consultative Conference. Investment Commission of the MoEA, handle it or be shut down!

As a representative of China’s red supply chain, Wang Lai-chun, chairwoman of Shenzhen Luxshare Precision Industry Co.,Ltd (herein after “Luxshare-ICT”), was elected as a member of the 14th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) in March of 2023. In August 2022, the Taipei District Prosecutors Office indicted Wang for allegedly committing forgery and violating the Act Governing Relations between the People of the Taiwan Area and the Mainland Area by establishing Hao-da Investment Co.,Ltd (“浩達投資有限公司”) through Ming-zhi Company (“香港商明志國際實業有限公司”) in Hong Kong in February 2012, concealing the identity of the Chinese capital, and then acquiring shares of listed company SpeedTech (“宣德科技股份有限公司”). In addition, the waves of illegal investments of Luxshare-ICT and SpeedTech have taken over Taiwanese factories and spread throughout Taiwan. However, officials from the Investment Commission calmly said, “If the judgment confirms that it was in fact Chinese capital, Ming-zhi Company will be revoked of its original review result, and will be limited to stop, withdraw investment, or correct it.” Faced with the overwhelming evidence of illegal Chinese capital presented by the prosecutor, the officials of the Investment Commission insist on waiting for the court to issue a final verdict before taking action. In fact, this Investment Commission should close down and start anew. Only then can Taiwan’s economic and national security be saved! Today, the Economic Democracy Union convened a press conference, demanding the Investment Commission to immediately revoke all investment approvals of Luxshare-ICT for SpeedTech and urge the Secretary-General of the Investment Commission Chang Ming-bin to recuse himself from handling this case in accordance with the law.

Lai Chung-chiang: Solid evidence of illegal Chinese investment had completed its liquidation amidst of procrastinated handling of the Investment Commission.

According to the indictment filed by the Taipei District Prosecutors Office on August 30th of 2022:

  1. On November 24, 2011, Wang Lai-chun and Tsai Chien-wei, representing Luxshare-ICT, signed a confidentiality agreement with Chiang Chang-lin, representing SpeedTech, regarding the cooperation between Luxshare-ICT and SpeedTech on the proposed purchase of SpeedTech’s equity.
  2. At the end of 2011, Wang Lai-chun instructed Chen Wen-bin, a director of Ming-zhi Company, to sign an investment agency authorization letter, concealing the fact that Wang Lai-chun, as a Chinese investor with controlling power over Ming-zhi Company, applied to invest in Taiwan under the guise of a Hong Kong investor. The Investment Commission approved the investment by Ming-zhi Company to establish Hao-da Investment Company on January 6, 2012.
  3. In February 2012, Hao-da Investment Company transferred its investment to Li-kang Company and Da-ching Company, and through these two companies, it acquired 17.12% of the shares of SpeedTech, becoming the largest shareholder of SpeedTech. This occurrence will be referred to as Wang Lai-chun’s first-stage investment hereinafter.
  4. On June 15, 2012, at the shareholders’ meeting of SpeedTech, Wang Lai-chun, through Li-kang Company, obtained two director positions. Chen Li-sheng, a director of Luxshare-ICT, and Tsai Chen-lung, the general manager of marketing at Luxshare Taiwan, were respectively elected as directors and supervisors in their personal capacity. Wang Lai-chun was able to control the board of directors of SpeedTech and passed the equity plan for reduction of capital and subsequent private placement during the shareholders’ meeting, in order to facilitate further expansion of Luxshare-ICT’s investment in SpeedTech.
  5. On September 25, 2012, the board of directors of SpeedTech approved the use of Hong Kong Lien-tao, a subsidiary of Luxshare-ICT, as a private placement target. Hong Kong Lien-tao then applied to the Investment Commission for approval to invest in 25.2% of SpeedTech’s shares on November 23, 2012, becoming the first case of a Chinese investment officially entering a listed company in Taiwan (hereinafter referred to as Wang Lai-chun’s second-stage investment).

The convener of the Economic Democracy Union Think Tank, Lai Chung-chiang, criticized that the Investment Commission officials stated that they would not revoke Ming-zhi Company’s illegal investment until the verdict of Wang Lai-chun’s criminal case is confirmed. However, according to the investigation conducted by the “Observation Team on the Chinese and Hong Kong Investment” of the Economic Democracy Union; Wang Lai-chun, who was prosecuted by Taiwan’s judiciary, had already completed the liquidation procedures for all her companies, including the reduction of capital of Hao-da Investment Company, a subsidiary of Ming-zhi company, as early as March of 2022. In August of 2022, she dissolved Hao-da Investment Company and transferred the assets of Hao-da to dummy accounts. Wang will be set free before anyone had the chance to wait for the ruling of the Investment Commission or the court.

In addition, according to the shareholding information of the directors and supervisors of the Department of Commerce of the Ministry of Economic Affairs, as of November 29th last year, among the six common directors of SpeedTech, two seats were held by Wang Lai-chun’s dummy company (Li-kang Company) which held 7.25% of the shares; three seats were held by Hong Kong Lien-tao, a subsidiary of Luxshare-ICT, which held 30.51% of the shares; one seat is held by Hua-wei Investment Co., Ltd., which held 4.69% of the shares. Surprisingly, the chairperson of the Hua-wei Investment Co., Ltd. is Tung Tzu-hsien, who is also the chairman of Pegatron; the current vice chairman of the Democratic Progressive Party’s think tank, New Frontier Foundation for Education and Culture; and the vice chairman of Fair Wind Foundation (with its chairman being Jiang Yi-huah, former Premier of Taiwan). Chairman Tung Tzu-hsien has the responsibility to explain, what is the relationship between Pegatron and the enterprises of Wang Lai-chun, a member of CPPCC?

Chang Ming-bin was the decision-maker who approved the Chinese investment in SpeedTech at the Investment Commission in November 2012 and should recuse himself from this case.

In this case, the prosecutor has already seized the confidentiality agreement between Luxshare-ICT and Speedtech on November 24, 2011. The evidence of Wang Lai-chun’s illegal investment in SpeedTech through Ming-zhi Company in the first stage in February 2012 is solid. Why did the Investment Commission delay processing and insist on waiting until “court judgment confirmation” before processing? According to the investigation by the Observation Team on the Chinese and Hong Kong Investment of Economic Democracy Union, the decision-maker who officially approved Wang Lai-chun’s investment of 25.2% in SpeedTech through Hong Kong Lien-tao in the second phase in November 2012 was none other than Chang Ming-bin, the current executive secretary of the Investment Commission and the acting executive secretary at the time! Can Chang Ming-bin objectively investigate his own mistakes? If Ming-zhi Company’s investment in the first phase was illegal, then the application documents of Hong Kong Lien-tao in the second phase would involve false statements (not disclosing the relationship with the first phase). The acquisition of SpeedTech’s board seats by Li-kang Company, the reduction of capital and private placement passed in SpeedTech’s shareholder meeting in June 2012, and even SpeedTech’s board decision on the private placement, all involve illegal actions. Therefore, the Investment Commission should not have approved Wang Lai-chun’s second-stage investment at all!

The question is, can Chang Ming-bin objectively investigate and acknowledge his own mistakes? Economic Democracy Union has requested that the Investment Commission immediately revoke all approvals for Luxshare’s investment in SpeedTech ,and urge for Chang Ming-bin, the executive secretary of the Investment Commission, to recuse himself from handling this case in accordance with the law.

Ou Hsu-shao: All of the reinvestments made by SpeedTech are illegal!

Researcher Ou Hsu-shao of the Economic Democracy Union indicated that after the exposure of Wang Lai-chun’s illegal investment in SpeedTech through Hong Kong Ming-chi Investment Company, a chain of illegal activities has been triggered. As Wang Lai-chun’s first-stage investment through Ming-zhi Company in SpeedTech added to the second-stage investment of Hong Kong Lien-tao, their combined shareholding in SpeedTech has exceeded one-third of its total shares. Therefore, SpeedTech should be considered a “mainland investment business” according to Article 5 of the Regulations for Investment in Taiwan by People from the Mainland (provisional translation), which states that “an investment business with a shareholder or investment amount exceeding one-third of the total shares or capital of the invested enterprise shall be considered a mainland investment business, and the regulations of these regulations shall apply to the transfer of investment by the said mainland investment business”.

Therefore, all subsequent investment transfers by SpeedTech, after November 23, 2012 (as listed below), should have applied to the Investment Commission for approval as Chinese investments. However, SpeedTech did not apply for such approval for any of these investment transfers, which constitutes illegal investment.

(a) Reinvestment for establishment of SpeedTech (LS-ICT) CO., LTD in British Virgin Islands, August 2014.
(b) Disposal of Indonesian subsidiary P.T. TOYOSHIMA CORP, November 2017.
(c) Reinvestment in Castle Rock Co., Ltd., (城堡岩石股份有限公司), May 2019.
(d) Reinvestment in Caldigit Holding (Cayman), November 2019.
(e) Reinvestment in Cyber Acoustics(USA), May 2020.
(f) Reinvestment in AB Value Bridge Corporation (台橋投資公司), indirectly possesses shares of THPT (台翰公司), December 2020.
(g) Reinvestment to establish a subsidiary for the Kaohsiung plant, March 2022.
(h) Summary merger with AB Value Bridge Corporation, March 2022.

Luxshare illegally acquired the business assets of LiteOn (光寶科技公司) twice. How can the Ministry of Economic Affairs remain silent?

Ou Hsu-shao indicated that it’s not just SpeedTech that has violated Taiwan’s laws on transferring reinvestments. In February 2018, publicly listed company, LiteOn, announced the transfer of its camera module division to “LuxVisions Innovation Co., Ltd., (立景創新有限公司) owned by the Wang family, the founder of China’s Luxshare Group”, in exchange for $360 million US dollars (approximately NT$10.44 billion) and 10% equity in LuxVisions Innovation. In November 2022, the board of LiteOn passed a resolution to transfer its imaging business unit and assets to LuxVisions, a subsidiary of Luxshare Group, for RMB 910 million (approximately NT$4 billion) through business transfer, and the transaction was completed on December 31st of 2022.

The two transactions mentioned above involve LuxVisions Innovation Co., Ltd., a subsidiary of Luxshare Group, which acquiring the business assets of publicly listed companies in Taiwan. According to the Business Merger and Acquisition Act. According to the intent for the amendment of the Regulations for Investment in Taiwan by People from the Mainland issued by Minister of Economic Affairs Wang Mei-hua on December 31, 2020, such actions are fundamentally prohibited. Minister Wang’s announcement explicitly states:

  • “Due to the fact that the Business Merger and Acquisition Act only refers to the merger of domestic companies with foreign companies, and does not have provisions for the merger of companies from mainland China and companies from Taiwan, mainland Chinese companies are still prohibited from merging with companies in Taiwan.”
  • “If a Chinese capital from a third location wishes to acquires listed, OTC or emerging stock enterprises in Taiwan through enterprise mergers and acquisitions, which is not an investment activity that can be engaged in after being licensed by the competent authority in accordance with this Regulation, it shall return to the provisions of Article 73, Paragraph 1 of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area. Mainland Chinese investors may not engage in such investment activities in Taiwan.”

With such activities that blatantly went against the prohibition issued by Minister Wang, how can the Ministry continue to stand aside and do nothing?


[Regarding this press conference]
Organizer: Taiwan Economic Democracy Union
Time: 9:30, March 30th, 2023
Location: Chun-hsien Building curbside, Legislative Yuan
Speakers: Lai Chung-chiang (Convener of Economic Democracy Union Think Tank), Ou Hsu-Shao (Researcher of Economic Democracy Union)
Contact: Ou Hsu-shao


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