Volkswagen is under pressure to pull out of a joint venture in the Xinjiang region of China – the latest example of geopolitical tensions colliding with business priorities for Germany’s biggest manufacturers.
These issues are most acute for companies that operate in or have ties to Xinjiang, a region home to millions of Uyghur Muslims where the U.S. says China has conducted genocide and used forced labor. In1984, SAIC Volkswagen Corporation Ltd., Volkswagen Group's first joint venture in China, was founded in Shanghai, followed by FAW-Volkswagen Corporation Ltd.
in 1991. Then, in 2017, the Group launched Volkswagen (Anhui) Automotive Company Limited with a mission to manufacture NEVs in China for China.
Volkswagen Group China is the largest, earliest, and the most successful international partner in China's automotive industry. It started its connection with China as early as in 1978, and has been taking the leading position in the Chinese automotive market for more than 25 years.
The Basic ideal is to design electric cars at VW's industrial complex in Hefei, a city in central China. The new strategy, which Volkswagen calls “In China, for China,” is another sign of how China's commanding lead in electric vehicles has upended global auto making.
Thousands of luxury cars including Porches, Audis and Bentleys have been impounded at US ports amid allegations they contained parts made through forced labour in China.
The brands are all owned by German giant Volkswagen and contain “western China” electronic components suspected of breaching anti-slavery laws, according to the Financial Times.
It came as Volkswagen was hit by claims that it had benefitted from human rights abuses in China’s troubled Xinjiang region, which is also in the country’s west.The US blocks imports of products made with forced labour in Xinjiang under laws passed in 2021.Some 1,000 Porches, “several hundred” Bentleys and “several thousand” Audis were impounded, the Financial Times reported.VW did not comment on the report.
On Wednesday, the company said it was considering the future of its joint venture with SAIC Motors in Xinjiang after it was claimed a huge test track in the Turpan Basin was built using the forced labour of Uyghur Muslims.Turpan, where temperatures can soar higher than 80 degrees Celsius in the summer, is China’s hottest region, known by locals as “the oven”.
However,The well regard Company said it would accelerate plans to divestify itself of two joint ventures in Xinjiang, citing the market environment, the carbon footprint for the products produced there and news reports that alleged its joint-venture partner was involved in human-rights violations.
