Alibaba’s Belgian hub is being monitored over ‘espionage’ concerns, report says

The country’s security service told the paper it had been monitoring a logistics hub in Liège operated by Alibaba’s subsidiary Cainiao as it sought to detect “possible espionage and/or interference activities” by Chinese entities “including Alibaba.”

Citing people familiar with the matter, the FT said the Belgian State Security Service (VSSE) was scrutinizing the group’s introduction of software systems at Liège Airport, which they said collate sensitive economic information.

Alibaba denied any wrongdoing to the paper.

In a statement to Fortune, a representative for Cainiao said: “We strongly deny the allegations based on prior conjecture. Cainiao is in compliance with all laws and regulations where it operates.”

A representative for the VSSE told Fortune that Alibaba’s presence “still constitutes a point of attention” for security services.

“The Chinese legal framework that obligates every Chinese company to answer any request of the Chinese intelligence services is still relevant,” the representative said.

Citing “a person familiar with Alibaba’s relations to China’s government,” the FT reported logistics hubs in Europe are required to pass on information about local sentiment to Chinese authorities. They’re also required to pass on trade data, the paper reported.

2018 hub plans

In 2018 the conglomerate, once run by the elusive Jack Ma, announced plans to build a site at Liège Airport, one of Europe’s busiest cargo airports handling 3,000 metric tons of freight a day. The group’s smart logistics spin-off, Cainiao, operates the hub.

Cainiao helps Alibaba, China’s leading e-commerce group, fulfill the company’s online orders through its sophisticated logistics operations. The group aims to fulfill Chinese orders within 24 hours, while it tries to process orders across the rest of the world within 72 hours.

In September, Alibaba said in a regulatory filing it would list its subsidiary on the Hong Kong Stock Exchange as part of a massive overhaul that will see the holding company split into six business units. The group is planning to expand its international presence.

But the report by the FT suggests a roadblock for the company’s continued expansion in Europe, and is reflective of increasingly strained ties between China and the West.

As far as handling freight, the Liège agreement has lived up to its promise of increasing cargo moving through the site. 

While freight declined in 2022, cargo movement through the airport increased by 50% in 2020 and 2021, according to a January press release. 

Before Alibaba opened its site in 2021, former Belgian Prime Minister Sophie Wilmès said the hub would increase the country’s exports to China, helping to improve the country’s balance of payments, The Brussels Times reported.

However, the latest data would suggest the opposite has happened, with locals apparently taking advantage of cheap imports while exporters struggle to get into the Chinese market. 

Belgium’s trade deficit with China has more than tripled from €8.7 billion (about $9.2 billion) in 2018 to €27.6 billion (around $29 billion) in 2022, according to data compiled by the Belgian Foreign Trade Agency.

According to Cainiao data seen by the FT, only one-fifth of cargo that is processed in the Liège hub is shipped back to China.