Today, anyone who walks through the streets of Ürümqi or Turpan will discover only a few signs of the genocide of Muslim minorities by the Chinese government. Many checkpoints are abandoned and some of the notorious re-education camps are empty. The inmates have often been relocated to regular prisons, and many Uyghurs have also been sent to other provinces in China for suspected forced labor. After years of open repression, the Chinese government wants to restore a semblance of normality and transform the economically backward region into a tourism paradise. Villages and towns everywhere are being converted into Disneyland-like attractions.
Volkswagen would also like to cut its ties to the Uighur region. The group has now declared that it will sell its factory in Ürümqi and the test track in Turpan “for economic reasons” to the Shanghai Motor Vehicle Inspection Certification (SMVIC), a subsidiary of the state-owned Shanghai Lingang Development Group. Volkswagen is under pressure in China because of falling sales figures, but also because its involvement in Xinjiang had caused dissatisfaction among shareholders.
Volkswagen had operated the controversial plant with its Chinese partner SAIC from Shanghai for around ten years. However, the original hopes of economic success as part of the government’s campaign to develop the western provinces failed to materialize. Instead of assembling up to 50,000 cars a year as planned, the factory ended up only being responsible for commissioning vehicles built in other provinces for the local market. Of the approximately 650 employees at peak times, only 175 were left, a quarter of them from minorities. It is questionable whether there were ever forced laborers among them.
A controversial audit allayed concerns
Last year, Volkswagen tried to refute the allegations with an independent on-site report, which, according to experts, did not meet international standards. However, it was enough for the US rating agency MSCI to remove its “red flag” warning level for VW. The image as a sustainable, socially responsible company was thus restored, at least on the capital market.
Regardless, the mere fact that Volkswagen’s presence in the region gave the Chinese government a fig leaf to dismiss allegations of human rights violations caused criticism. The political pressure on Volkswagen never let up. However, in order not to offend the Chinese government, the group is now presenting the withdrawal, which has been negotiated since at least February, as part of a larger restructuring. The joint venture with SAIC is suffering from a severe decline in sales of combustion cars, and at the same time the electric offensive is only slowly gaining momentum.
The contract with SAIC actually ran until 2030 and was just extended early until 2040. In the course of these negotiations, it was also decided to sell the locations in the Uyghur region, says VW. Instead of SAIC, which is also present in Germany with brands such as MG, the state-owned company SMVIC is now to take over the properties in Xinjiang. Like SAIC, the company is based in Shanghai and has test centers across China, including a high-temperature test track in Turpan and a sub-zero test site in Heihe, near the border with Russia. In the future, cars will be processed at the plant in Ürümqi.
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