Volkswagen AG is reviewing its activities in Xinjiang following allegations that new evidence had emerged of human-rights abuses at a project in the western Chinese region.
The German carmaker said it’s now holding talks with joint-venture partner SAIC Motor Corp. after Handelsblatt reported that forced labor may have been used during the construction of a test track in Turpan, located in a region where the government has been accused of forcing Uyghurs and other Muslim minorities to work.
“Various scenarios are currently being intensively examined,” the company said Wednesday in a statement.
The report, published late Tuesday, cited research by Adrian Zenz, director of China studies at the non-profit Victims of Communism.
Zenz pointed to information, including photos of Uyghur workers wearing Chinese military uniforms at the site, on the website of the firm that built the test track for Volkswagen and SAIC, according to Handelsblatt. The construction of the track, which was completed in 2019, coincided with a period during which Uyghurs were forced to work as part of what the government called poverty-alleviation efforts.
Volkswagen also has a small factory with majority-owner SAIC in the Xinjiang town of Urumqi, where it is currently contractually obligated to remain part of site operations until 2029. An early release from that contract would be a possible way to end its activities there.
The Urumqi facility doesn’t manufacture any vehicles. Its 197 workers – 24% of whom are minorities including Uyghurs – make final quality checks of already assembled vehicles that are then sent on to dealerships in the region.
Allegations of human rights issues at the Urumqi site prompted U.S. rating agency MSCI to give Volkswagen a “red flag” in 2022 and led Deka Investment to remove VW shares from its sustainable products. Wednesday’s report of further allegations at the VW-SAIC site led Union Investment to do the same.
“Today’s accusations have a new dimension,” said Janne Werning, who heads ESG fund management at Union. “This means that Volkswagen is now no longer investible for our sustainable mutual funds.”
Volkswagen already commissioned an external audit of the Urumqi plant, though a review of the test track wasn’t possible because of the ownership structure with other firms, Volkswagen said.
Volkswagen’s premium brand Audi is finalizing an agreement with state-owned SAIC to jointly develop electric vehicles, working on model underpinnings to accelerate Audi’s electrification and protect market share.
Copy the Story LinkComments are not available on this story.
Send questions/comments to the editors.
