Volkswagen has bowed to years of pressure and agreed to sell its

Volkswagen has bowed to years of pressure and agreed to sell its
factory and assets in the Chinese province of Xinjiang, home to the
country’s Uighur minority.

The German car manufacturer confirmed that it and its local Chinese
partner, Shanghai Auto, were pulling out.

China has grown into VW’s biggest market in recent years, accounting
for about half its sales. But the plant in Xinjiang had become more of
a burden than a blessing: the company has had to fend off allegations
about China’s treatment of Uighurs and, in particular, [1]claims that
VW’s supply chain used forced Uighur labour.

Volkswagen’s plant in Xinjiang has not produced any vehicles since 2019

Volkswagen’s plant in Xinjiang has not produced any vehicles since 2019

JOHANNES NEUDECKER/DPA/ALAMY

A VW statement confirmed that the partnership was selling its factory
in Urumqi, the provincial capital, and its test tracks, including one
in the historic Xinjiang town of Turpan, but it insisted this was part
of a “realignment” towards electric vehicles, which would involve
bringing new models onto the market.

“Due to economic reasons, the site has now been sold by the joint
venture as part of the realignment,” the statement said.

The plant has lain mostly idle since the coronavirus pandemic, and in
any case the company’s market share in China is falling as a wave of
cheap Chinese electric cars hits the streets.

The decision was still welcomed by human rights activists. “Incredible
news,” said Adrian Zenz, an academic and adviser to the
Inter-Parliamentary Alliance on China who helped to uncover China’s
network of “re-education camps” for Uighurs in Xinjiang. “A huge
victory for the Uighur cause. This comes after our work exposed forced
labour linked to the test track and the faulty factory audit.”

VW said it was pulling out of the region for economic reasons

VW said it was pulling out of the region for economic reasons

REUTERS

The audit Zenz mentioned may have been the last straw for VW. It was
commissioned by the company last year under pressure from investors in
the firm, which include a German state government, and was supposed to
assess working conditions. It gave the company a clean bill of health,
but reports in September alleged that the auditors had not been
qualified for the work and the terms of the standards VW said it was
applying had not in fact been met.

One of the auditors was a Chinese law firm. Chinese authorities have
been increasingly hostile to foreign auditing firms — specialist
companies used by western investors in the country to perform “due
diligence” in response to concerns over labour standards and human
rights issues.

The Uighurs are one of several Turkic Muslim groups living in
territories in the far west of China that came under imperial rule in
the 18th century. President Xi ordered a crackdown a decade ago after
years of unrest that he blamed on “separatists” and “Islamist
terrorists”. [2]Huge detention camps were built, in which hundreds of
thousands — perhaps millions — of Uighurs have been interned while they
are taught the virtues of conforming to Communist Party ideology.

Activists and writers remain jailed, and Uighur prisoners have
documented how they were used as forced labour in factories, including
some supplying western markets.

VW said the factory and test tracks were being sold to Shanghai Motor
Vehicle Inspection Certification. Its parent company, Shanghai Lingang
Development Group, is owned, like Shanghai Auto, by the city’s
government.

However, VW also said it was extending its partnership with Shanghai
until 2040. The German car industry is under huge pressure from cheap
competition but is resisting suggestions that the EU should impose
protective tariffs on Chinese imports for fear of retaliation by
Beijing.

Likewise, VW always denied claims that it kept open the Xinjiang plant,
which used to make its Santana model but has not produced any vehicles
since 2019, under pressure from Beijing.

“As is well known, Volkswagen AG has never owned the joint venture
sites in Xinjiang,” VW added. “We do not comment on any speculation by
third parties about the possible motives for the Chinese joint venture
partner’s business decision.”

References

1. https://www.thetimes.com/article/vw-under-pressure-to-quit-xinjiang-after-chemicals-giant-pulls-out-v558nnncp
2. https://www.thetimes.com/article/nation-after-nation-condemns-chinas-persecution-of-uighurs-qmbgzd5tj