Volkswagen has sold its controversial factory in northwest China’s Xinjiang province. The Wolfsburg team announced this on Wednesday. The buyer is the Chinese state-owned company SMVIC, which is active in the used car business.
The Urumqi location in northwest China has long been criticized for human rights violations against members of the Uighur minority. VW responded to the allegations with an investigation which found no evidence of forced labor by VW in Xinjiang.
Economic reasons are crucial
According to the company’s statement, the location was “sold for economic reasons” as part of a strategic realignment. Originally, production was supposed to start at the plant with a capacity of 50,000 vehicles. In the end, however, the employees no longer manufactured cars, but only prepared a few thousand a year for sale.
The future of the plant, which VW operated as a joint venture with the state-owned car manufacturer Saic, had been negotiated for months. The new owner is now a Chinese state-owned company from Shanghai. At the same time, the Wolfsburg-based company extended its general cooperation with Saic on Tuesday by ten years until 2040. The previous contract would have expired in 2030.
VW wants to start a new product offensive from 2026 and by the end of the decade with Saic 18 new models of the core brand Volkswagen and Audi bring to market. Of these, 15 are exclusive to the Chinese market. By 2030, the VW Group wants to sell four million cars a year and thus have a market share of 15 percent China to reach. VW said there was no connection between the withdrawal from Xinjiang, which was sealed a few days ago, and the contract extension.
The report found no evidence of forced labor
The plant opened in 2013 under pressure from the Chinese government. They wanted the company to locate production not only on the coast, but also inland. It was already known back then that the area was a political powder keg. The oppressed Uyghur minority protested there again and again, and dozens of people were killed. However, out of fear of alienating the leadership in one of their most important sales markets, the people of Wolfsburg gave in to the party’s urging.
In 2019, the location finally came under massive criticism after new news from the region became public. Numerous media outlets reported, citing leaked documents, that the Chinese government operated a surveillance state in the region and had many Uyghurs locked up in mass camps. Further reports followed in 2022 that put VW under pressure. This prompted CEO Oliver Blume (56) to subject the plant to an independent review and take a closer look at the human rights situation in production. In December, the auditors announced that they had been unable to find any evidence or evidence of forced labor among employees. However, critics complained The anonymity of the employees interviewed in the investigation was not adequately protected.
Volkswagen is currently in crisis, which has led the group to, among other things, close plants and massive job cuts. Read about the true dimensions of VW’s problems in this article.