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Volkswagen’s China Troubles Worsen Amid New Forced Labour Claim

VW has said it is reviewing “the future direction of business” in Xinjiang, where a test track was constructed for the German carmaker, allegedly using forced labour

Employees work on assembling vehicles at a plant of SAIC Volkswagen in Urumqi, Xinjiang
Employees work on assembling vehicles at a plant of SAIC Volkswagen in Urumqi, Xinjiang Uighur Autonomous Region, China. Photo: Reuters


Volkswagen’s presence in Xinjiang — through a joint venture with Chinese state-backed SAIC Motor — is causing fresh trouble for the German carmaker, affecting its business in the US and its investibility at home.

On Wednesday, German business newspaper Handelsblatt reported it had uncovered evidence of the use of forced labour in the construction of a test track for the carmaker in Turpan, Xinjiang, in 2019.

Responding to the report, Volkswagen said it was in “talks” with SAIC about “the future direction of business activities” in the province, where rights groups have documented abuses including forced labour in detention camps.


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“Different scenarios are being considered intensively,” a spokesperson said when asked about the report.

Even so, pressure is quickly building on Volkswagen to rethink ties with China, specifically in the Xinjiang region.

Stephan Weil, the premier of the German state of Lower Saxony – Volkswagen’s second-biggest shareholder – called Handelsblatt’s report “concerning”, adding his government supported reviewing different scenarios for the business.

German fund manager Union Investment said the latest news meant Volkswagen no longer qualified for investment from its sustainable funds.

“Today’s allegations have a new dimension. With that, Volkswagen is no longer investible for our sustainable funds,” Union Investment’s Janne Werning said in a written statement.


Car deliveries delayed in US

The report came at a time when VW was battling a separate crisis in the US.

The Financial Times reported on Wednesday that about 1,000 Porsche sports cars and SUVs, several hundred Bentleys and several thousand Audi vehicles were impounded by customs officials at US ports because a Chinese subcomponent breached anti-forced labour laws.

Volkswagen said it expected to resolve the issue by the end of March. The issue was related to a small electronic component that is being replaced as parts arrive, the auto giant said in an emailed statement.

VW said it takes allegations of human rights violations very seriously. Its investigations could result in the end of a supplier relationship if a serious violation was confirmed, the carmaker added.


‘Evidence of complicity’

Handelsblatt said evidence of the alleged forced labour was collected by Adrian Zenz, a known researcher on the Xinjiang region, and Director and Senior Fellow in China Studies at Washington-based Victims of Communism.

The newspaper said Zenz based his research on documents he found and tips from VW employees.

In an email to Reuters, Zenz said he had found photos and statements online, including on the website of an engineering company hired by Volkswagen and SAIC in Xinjiang, which indicated that Uyghurs were employed to construct the test track under poverty alleviation programmes that UN experts have said often involve forced labour.

He also said he had found photos of workers at the engineering company, China Railway Engineering Corporation, wearing military drill uniforms and a red flower which he described in a post on X as a “typical feature of the most coercive labor transfers”.

Sharing the Handelsblatt report on X (formerly known as Twitter), former executive director of Human Rights Watch, Kenneth Roth said the findings were “more evidence of complicity in Uyghur forced labor.”



Volkswagen needs to ‘get out’

While Beijing has repeatedly denied any abuses in Xinjiang, Germany’s biggest corporations have been under increasing pressure to review their presence in the region.

Less than a week earlier, German chemicals giant BASF disclosed it would sell its stakes in two joint ventures in the Xinjiang region, also citing reports containing serious allegations regarding human rights violations.

In a statement, Volkswagen said that it was not previously aware of any indications of human rights abuses at the test track, which was built in conjunction with the carmakers’ jointly owned site in Urumqi.

When asked why the test site was not audited together with the Urumqi site last year, Volkswagen said that would not have been possible because the two sites were owned by different operating companies. It did not name the companies.

Meanwhile, Zenz said Volkswagen’s move to review options for the site was inadequate in light of the most recent revelations, given criticism of the carmaker’s Xinjiang engagement was not new.

“In my opinion Volkswagen has to publicly announce that they’re going to get out as soon as they can,” he said.


  • Reuters, with additional inputs and editing by Vishakha Saxena


Also read:


Senior Auditors Wary on Review of VW Plant in China’s Xinjiang


$640m of SE Asian Exports Held up at US Ports Over Xinjiang Rules


China Sanctions US Firm Over Xinjiang-Related Investigations


US Puts More Chinese Officials, Firms on Xinjiang Sanctions List


Volkswagen Buys $700 Million Xpeng Stake to Lift China EV Share


Volkswagen Says ‘Don’t Want to Give Up’ China EV Market


VW to Sell Chinese-Built Electric Cars in Europe – Carscoops


Germany Denies VW China Guarantees on Rights Concerns – Spiegel



Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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