HAMBURG, Germany -- Chinese logistics startup Speedaf's push into Ireland could come under scrutiny after Germany blocked a COSCO acquisition of a local company over security worries, as the EU tightens screws on investments from China in strategic sectors.

Germany on Wednesday blocked the sale of 80% of Zippel to Chinese state-owned shipping conglomerate COSCO, saying the acquisition would jeopardize its and the European Union's supply chains. Alibaba's logistics arm Cainiao, and JD Logistics, a unit of already have extensive Europe operations.

Backed by Chinese parcel giant ZTO Express, Speedaf is setting up a network in Switzerland where local reports suggest it aims to become the third-largest logistics company. It is advertising on LinkedIn for staff for new Dublin operations that will give it a direct presence within the EU bloc of 27 countries.

Switzerland isn't in the EU, although it is part of the European single market, which means it faces reduced barriers to trade with the bloc.

Market watchers say the EU is clamping down on Chinese investments by employing its screening regulation for foreign direct investment.

"European investment control against Chinese logistics and e-commerce players is becoming more systematic, more coherent and more motivated by security policy," said Christoph Tripp, a professor for distribution and retail logistics at the Technical University of Nuremberg, in response to Germany's move against COSCO.

The EU and China are on the brink of a trade war The leaders of Germany and France, the EU's biggest economies, this week wrote to European Commission President Ursula von der Leyen to ask for the implementation of stronger trade measures to protect their industrial sectors against unfair subsidies and dumping, without mentioning China. China had previously dismissed these allegations as protectionism.

The European Commissioner for Trade and Economic Security Maros Sefcovic is in Beijing to meet with Chinese Commerce Minister Wang Wentao on Thursday and Friday, during which he is expected to discuss the EV sector and bloc's trade deficit with China of over $1 billion per day European Commissioner for Trade and Economic Security Maros Sefcovic will be in Beijing on Thursday to meet Chinese Commerce Minister Wang Wentao.

Against this backdrop, Speedaf's strategy may face some pushback, if it moves beyond CEP (courier, express, and parcel) services into time-critical supply chains, Tripp said. The company operates in more than 30 countries, mostly transporting packages for Chinese e-commerce giants Shein Temu and AliExpress -- companies that European countries are also trying to erect barriers against.

By contrast, Cainiao and JD.com have established large operations in the EU. Cainiao operates a smart hub at Liege Airport in Belgium and manages more than 28 warehouses across Europe. Recent site openings include logistics facilities in Daventry in the U.K., Paris, Madrid and Rokitno in Poland. JD.com operates over 60 warehouses and depots across Europe and launched an express delivery service in Europe, offering same-day and next-day delivery in major cities this year.

Other major Chinese players like SF Express and Zongteng Group are also active in Europe. All the Chinese companies did not respond to Nikkei Asia's request for comment.

Local media had speculated earlier that COSCO's purchase of Zippel could be blocked because it plays an important role in bringing military equipment to the eastern border that is of strategic importance in the event of a NATO conflict. COSCO is already viewed with some suspicion in Europe, where it controls significant stakes and container terminal capacities at strategic hubs, including the crucial port of Piraeus in Greece.

In 2023, the German government intervened in COSCO's attempt to buy a 35% stake in the Tollerort container terminal in Hamburg and limited the acquisition to 24.9% to prevent the Chinese entity from gaining strategic or operational control.

"The [COSCO] move involves more than just an investment; it entails access to operational data, transport flows and critical infrastructure," said Tripp, referring to the Zippel case. "Together, these developments demonstrate just how deeply logistics is embedded in China's foreign economic policy." There also are concerns that China is tying its subsidized goods and overcapacity to its logistics expansion as a foreign policy tool to weaken the European economy and expand its own power.

"This must be understood as part of China's trade-war strategy against Europe and as a key aspect of its 'dual circulation strategy,'" said Roderich Kiesewetter, a lawmaker in Germany's ruling Christian Democratic Union party and a former high-ranking officer in the armed forces.

"China aims to make itself independent of sanctions, while simultaneously leveraging those export markets to make other countries dependent on Chinese products." There also is the suspicion that Beijing could order Chinese logistics companies to stop all activities in Europe in the event of a Taiwan contingency to cause a breakdown of economic activity that would then cut into governments' ability to promptly aid Taiwan.

"The European economy would be severely affected; it would be detrimental to China as well, but control over sea lanes, shipbuilding and railways creates leverage," said Stephan Wagner, a professor of supply chain management at ETH Zurich, a public research university.

"European alternatives would be unlikely to readily replace the Chinese operations, as the likes of [Germany's] DHL rely on global maritime capacity as opposed to owning their own ships." Benedetta Girardi, Indo-Pacific program coordinator of The Hague Center for Strategic Studies, called on policymakers to create a comprehensive overview of where critical dependencies are in the logistics sector.

"We lack a comprehensive overview of specific routes, warehouses, distribution centers, ports or data systems, and consequently where alternatives to readily replace Chinese inputs are available," Girardi said. Jens Kastner is a contributing writer.