German carmaker Volkswagen is withdrawing from its controversial involvement in a factory in China’s Xinjiang province, which has attracted criticism over alleged human-rights abuses of the Uighur minority.
Volkswagen sold the plant in the city of Urumqi, which was jointly operated with the Chinese state-owned company SAIC Motor Corporation as a partner, the Volkswagen Group announced on Wednesday.
The buyer is the Chinese state-owned company SMVIC, which is active in the used car business.
VW investigated the allegations of abuse, but the company cited economic reasons for the sale of the plant. The future of the plant had been negotiated for months.
VW has not built cars in Xinjiang since 2019. At its peak between 2015 and 2019, the plant employed around 650 people, according to VW.
In recent years, the plant has handled technical adjustments and tests on vehicles.
The plant opened in 2013, and the initial contract between VW and SAIC was due to run until 2029. According to VW, SAIC held the controlling stake at the site, where vehicles were once assembled for sales in western China.
However, the project failed in the weaker than expected market.
At the same time, the German carmaker announced that it had extended a cooperation agreement with SAIC on Tuesday for a further 10 years. The deal will now run until 2040.
However, Volkswagen said there is no connection between the withdrawal from the Xinjiang plant, which was sealed a few days ago, and the contract extension.
Abuse allegations
Serious allegations of human rights violations due to forced labour at the plant have been made in recent years. Many Uighurs – a Muslim minority in China – live in Xinjiang.
According to human rights activists, hundreds of thousands of Uighurs have experienced years of oppression, have been forced to work or have been sent to re-education camps.
China has cited a series of attacks by extremists to justify the crackdown on Muslim minorities, but denies allegations of rights abuses.
Following the allegations in the summer of 2023, VW commissioned a company to investigate the working conditions at the plant and look into the allegations.
In December, the auditors announced that they had found no evidence or proof of forced labour among the employees.
Critics complained that the anonymity of the employees questioned in the investigation had not been adequately protected.
New VW models for Chinese market
VW plans to launch a new product offensive in China from 2026 and bring 18 new models from the company’s Volkswagen and Audi brands onto the market in partnership with SAIC by the end of the decade.
Fifteen of the vehicle models will be exclusive to the Chinese market. By 2030, the VW Group aims to sell 4 million cars a year and achieve a market share of 15% in China.
According to VW, last year’s share was 14.5%.
