Volkswagen to Sell Assembly Plant in Xinjiang Amid Mounting Pressure

A Volkswagen logo at the 2024 Paris Auto Show in France on Oct. 15, 2024. Benoit Tessier/Reuters

Volkswagen said on Wednesday it would sell its operations in China’s far-western Xinjiang region, citing its need to maintain business competitiveness and emphasizing that the company is primarily geared toward manufacturing traditional gas-powered cars, a focus increasingly out of step with China’s rapid adoption of electric vehicles (EVs).

Volkswagen had a joint venture assembly plant in Urumqi, the capital of Xinjiang—where the Chinese communist regime has been accused of committing massive human rights violations—in addition to a test track in the region.

The automaker said competitive pressure has been growing as the Chinese market’s demand for EVs continues to surge. In July and August, for example, half of all vehicles sold in China were either new EVs or plug-in hybrids, industry data show.

“In this context, existing production capacity for internal combustion vehicles will be gradually reduced in the coming years,” the company said in the Nov. 27 statement, noting that many of its Chinese sites are being, or have already been, converted to produce EVs, based on customer demand. “Alternative economic solutions will be examined in individual cases. This also applies to the joint venture site in Urumqi.”

Ownership of the Xinjiang plant and test track will be transferred to Volkswagen’s joint venture partner, SAIC Motor, which is owned by the Shanghai government. No price was disclosed for the transaction.

Controversy Over Xinjiang Presence

While the automaker said the decision was made for economic reasons, Volkswagen’s presence in Xinjiang has become a source of political and ethical scrutiny over the years.

Volkswagen and SAIC built the assembly plant in Urumqi in 2012 to make affordable cars for China’s less developed inland areas. However, as international criticism mounted over the Chinese Communist Party’s (CCP’s) actions in Xinjiang—including the construction of a sprawling surveillance network and the detention of more than 1 million Uyghurs in so-called “reeducation” camps—Volkswagen faced increasing pressure to explain its operations there.

Critics questioned whether forced labor had been used in any part of Volkswagen’s supply chain. A May study by the Victims of Communism Memorial Foundation described Xinjiang as housing “the world’s largest system of state-imposed forced labor,” which includes internment camps and coercive labor transfers in the name of “poverty alleviation.”

Volkswagen has long maintained that it’s unaware of any use of forced labor at its facilities in Xinjiang. In December 2023, the company told investors that its internal audit found “no indications of any use of forced labor or forced laborers among the employees” at the Urumqi complex.

However, critics argued that on-site interviews with Uyghur workers were unreliable under the CCP’s coercive environment.

Shareholders, human rights advocates, and bipartisan members of U.S. Congress have since called for Volkswagen to exit Xinjiang.

In February, Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.) wrote to Volkswagen Group CEO Oliver Blume urging the company to comply with the Uyghur Forced Labor Prevention Act, which automatically assumes any product coming from Xinjiang to be the product of forced labor unless proven otherwise by “clear and convincing evidence.”

“Volkswagen should not seek to brush off or minimize evidence of Uyghur forced labor within its supply chain when the Uyghur Forced Labor Prevention Act explicitly bans the importation into the United States of any products, regardless of size, made in-whole or in-part with such forced labor,” the lawmakers wrote.

Also among the groups that called for Volkswagen’s divestment was the Inter-Parliamentary Alliance on China (IPAC), a group bringing together hundreds of lawmakers from 35 countries to address the challenge posed by Beijing. It celebrated the Nov. 27 announcement as a “significant victory for all who have campaigned on this for years.”

“For companies still profiting from these abuses, this serves as a stark reminder: No brand can ignore human rights violations without jeopardizing its reputation and ethical standing,” IPAC founder and executive director Luke de Pulford told The Epoch Times.

“It’s time for others to follow suit or face the consequences.”

Volkswagen isn’t the only Western company to pull out from Xinjiang. BASF, the world’s largest chemical producer, announced in February it was accelerating its withdrawal after reports that its joint venture partner, Xinjiang Markor Chemical Industry, accompanied CCP officials in-home visits to Uyghur households as part of a region-wide campaign to spy on and intimidate them.

“BASF has no indication that employees of the two joint ventures in Korla were involved in human rights violations,” the German company said at the time.