Prosecutors at the Shilin District Prosecutors Office in Taiwan have issued an arrest warrant for Pete Lau, founder and CEO of OnePlus, accusing him of violating the Cross-Strait Relations Act by illegally establishing a company in Taiwan and recruiting local engineers. Two other Taiwanese branch managers have also been indicted in the same case.
Fake foreign investment, real mainland investment? Entering Taiwan indirectly through Hong Kong companies.
According to an investigation by Taiwanese prosecutors, OnePlus adopted a roundabout method of establishment in order to circumvent Taiwan's review mechanism for Chinese-funded enterprises. The report indicates that Liu Zuohu is suspected of establishing "OnePlus Hong Kong" with two Taiwanese individuals in Hong Kong in March 2014, and then registering a branch in Taiwan the following year.
To cover its tracks, the company changed "OnePlus" to "Sonar" in its name in May 2019. Prosecutors found that between August 2015 and January 2021, OnePlus transferred more than 62 million euros (approximately NT$21 billion) to its Taiwanese branch through Hong Kong. These funds were nominally declared as "contract R&D revenue" and "sale of R&D assets," but were actually used to pay salaries for Taiwanese employees, recruitment costs, and purchase office equipment.
Targeting software talent to develop the OxygenOS operating system
The main task of this Taiwan branch is to assist OnePlus in developing its mobile operating system, OxygenOS. It is understood that OnePlus has recruited more than 70 engineers in Taiwan to be responsible for the software development of OnePlus and its sister company OPPO phones.
Under current Taiwanese regulations, Chinese companies must obtain prior approval from the competent authority before establishing a presence or recruiting employees in Taiwan. OnePlus clearly did not follow this procedure and is therefore deemed to have violated the relevant regulations. In recent years, the Taiwanese government has intensified its crackdown on illegal poaching of employees by Chinese companies. While the main focus has been on the semiconductor industry, this case demonstrates that software development talent is also within the scope of protection.
OnePlus: Operations Unaffected
Liu Zuohu, the founder of OnePlus, has not yet publicly responded to the warrant for his arrest. However, when contacted, OnePlus stated that its global operations are currently running normally and have not been affected by the case.
Regarding the current relationship between OnePlus, OPPO, and realme, OnePlus and OPPO merged more closely in 2021 to integrate R&D resources. Although OnePlus still operates as an independent brand, its supply chain and R&D system highly overlap with OPPO's. Therefore, the fact that OnePlus's founder is facing an arrest warrant from Taiwanese prosecutors may affect the development of OPPO's related businesses.
OPPO Taiwan responded: A low-key, low-key approach.
However, neither OPPO nor OPPO Taiwan has yet issued an official statement regarding this incident.
Although OnePlus and OPPO have a highly integrated global R&D system and even share the same core operating system, OPPO's operations and sales in the Taiwan market are handled by a legally authorized local distributor. It is speculated that OPPO Taiwan's decision to remain low-key is primarily to separate this legal controversy surrounding the alleged "illegal poaching" from its legitimate operations in Taiwan, thus avoiding damage to its brand image.
OPPO's sales and after-sales service in Taiwan are currently operating normally and have not been affected by the legal case involving the R&D center.
