Alibaba suspected of supply chain espionage

Belgian intelligence services are investigating whether Alibaba is facilitating Chinese espionage at its distribution hub close to Liège. The Chinese e-commerce giant is suspected of attempting to gain insight into supply chains and their eventual vulnerabilities.

The intelligence services are looking into “possible spying and/or interference activities by Chinese entities, including Alibaba”, the UK business newspaper Financial Times reports. The espionage suspicions relate to software at Cainiao, Alibaba’s logistics spinoff that is responsible for the online store’s nine overseas sorting and distribution centres.

The Belgian distribution centre (DC) in Bierset is specifically mentioned by the intelligence services. There is concern that the Cainiao software on the Alibaba platform is being used to gain access to all kinds of information about merchants and consumers. That information could be economically sensitive, according to the intelligence services. Cainiao denies all allegations.

Warning

Fears about Alibaba’s possible involvement in spying are not entirely new. Belgian Justice Minister Vincent Van Quickenborne warned about this three years ago, according to the Financial Times. His warning came shortly after Belgium emerged as the victor in a lengthy battle with the Netherlands to secure the Chinese e-commerce company’s presence.

Alibaba ultimately chose a prime location near Liège-Bierset Airport as the site for its hub. Although the initial plans were for a 380,000m² DC, eventually only a 30,000m² hub was built, according to Dutch financial newspaper Het Financieele Dagblad. Moreover, the newspaper reports that the number of jobs created by the new DC turned out to be much lower than originally promised.

The expectation was that the arrival of the online giant would make it easier for Belgian companies to export to China. However, the Chinese turned out to be mainly self-serving in Liège, according to Professor Jonathan Holslag from the Vrije Universiteit Brussel, as indicated by a huge increase in Chinese exports through the local airport. According to customs data, the volume of Alibaba shipments rose from 384,973 parcels in 2017 to 649,969,780 in 2021. Although these figures do not distinguish between imports and exports, the number of parcels exported from Belgium would be very limited.

Insights into supply chains

“The biggest concern is that Alibaba, alongside a couple of other logistical platforms that the Chinese have been proposing to European countries, is giving them a lot of insights into supply chains and into eventual vulnerabilities,” Holslag is quoted as saying in the Financial Times. The risk, he said, is that Cainiao could gain access to information about consumers. “Knowledge about important changes in consumption patterns and knowledge about the logistical chain is valuable for China as a country that tries to dominate the supply chain,” Holslag stated.