VW has long been criticized for its plant in Xinjiang, China. After BASF withdrew from the province, VW is now negotiating with its Chinese partner about the location.
After the chemical company BASF, Volkswagen is now also examining a reorganization of its business in the Chinese region of Xinjiang. The background is reports of possible human rights violations.
“The Volkswagen Group is currently in discussions with the non-controlled Saic-Volkswagen joint venture about the future direction of business activities in the Xinjiang province,” said a group spokesman for the financial news agency dpa-AFX and the German Press Agency. “Various scenarios are currently being intensively examined.” When asked, the spokesman left it open whether a withdrawal from the region was also under discussion. There is no comment on the content of the ongoing discussions.
The VW Urumqi location, which opened in 2013, has been criticized for possible human rights violations in the province inhabited by Uighurs. In the summer, the group commissioned a company to investigate the working conditions at the controversial plant in Xinjiang in light of the allegations. The auditors announced in December that they had been unable to find any evidence or evidence of forced labor among employees.
VW had previously pointed out that the Urumqi plant in Xinjiang was a joint venture with the Chinese manufacturer Saic, in which the partner had the majority control. The contract runs until 2029.
New allegations surrounding the construction of a test track
On Wednesday, the “Handelsblatt” reported that forced labor may have been used in the construction of a test track belonging to the site in the town of Turpan in the region. The newspaper relies on information from VW employees and research by scientist Adrian Zenz. A VW spokesman said that so far the company had no evidence of human rights violations in connection with the test site. If new findings or information emerge, VW will investigate these and take appropriate measures if necessary.
VW admitted that the test track was not part of the consulting company’s review of its business in Xinjiang. “An audit of the test track in Turpan as part of the previous ESG audit at the Urumqi site was not possible.” The two facilities belonged to different operating companies. A separate inspection of the test site in Turpan would have had to be coordinated and approved with the Chinese joint venture partner Saic and the responsible authorities in China. “Initially, an audit of the joint venture plant in Urumqi was a priority,” VW said. We are also in contact with Saic about the approach to the test site.
BASF announces withdrawal from Xinjiang – demands from politicians
The chemical company BASF announced on Friday that it would sell shares in its two joint ventures in Korla, China, in the center of the Xinjiang region, citing recent reports of possible human rights violations. Several politicians then asked Volkswagen to do the same.
“Volkswagen likes to talk about integrity and role model function regardless of economic or social pressure,” said FDP deputy parliamentary group leader Gyde Jensen to the “Handelsblatt” on Wednesday. “Anyone who really feels committed to this principle should say goodbye to Xinjiang.”
The human rights policy spokesman for the CDU/CSU parliamentary group, Michael Brand, called for the closure of the VW plant in Xinjiang in the “Tagesspiegel”: “Actually, the scandal at VW is even bigger than at BASF because the state of Lower Saxony is complicit as a shareholder might.” Lower Saxony, led by a red-green coalition, holds 20 percent of the voting rights in the Volkswagen Group.
“The reporting on the conditions under which the test track in Turpan was built is worrying,” said Lower Saxony’s Prime Minister Stephan Weil (SPD), who sits on the VW supervisory board. The state government in Hanover takes the indications of possible forced labor very seriously. “In all business activities of Volkswagen and its partners, basic and human rights must be observed.”
Fewer than 200 employees at the VW factory
According to previous VW information, the Urumqi location only has around 197 employees who only prepare vehicles for delivery. Car production has now stopped at the site and the number of employees has been significantly reduced from 650.
Uighurs, members of other minorities and human rights organizations have been reporting for years that hundreds of thousands of people in Xinjiang are being put into re-education camps against their will, in some cases tortured and forced into forced labor. The Chinese government denies these allegations.
Investors criticize VW’s involvement in China
Business in the Chinese province is also sensitive for VW because large fund companies require certain criteria for investments in their sustainability-oriented ESG funds (ESG: Environment, Social, Governance). On Wednesday, the Volks- und Raiffeisenbanken fund subsidiary Union Investment announced consequences in response to the new allegations. “This means that Volkswagen is no longer investable for our sustainable public funds,” wrote Janne Werning, the manager responsible for organizing ESG funds.
Source: Stern
