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Volkswagen Faces Mounting Scrutiny Over Its Xinjiang Presence

The Volkswagen AG headquarters and auto plant in Wolfsburg, Germany, on Wednesday, March 9, 2022. VW's Chief Executive Officer Herbert Diess is warning that the fallout of a lengthy war between Ukraine and Russia risks being "very much worse" for Europe's economy than the impact caused by the Covid-19 pandemic. Photographer: Krisztian Bocsi/Bloomberg

Volkswagen AG faces mounting pressure to address allegations of human rights violations in the Chinese province of Xinjiang, where the German carmaker operates a car factory.

While there’s no evidence that anyone has been mistreated at the VW plant, the company should carefully examine the accusations, said supervisory board members Joerg Hofmann, a labor leader, and Stephan Weil, who represents VW’s anchor shareholder Lower Saxony.

“We have to concretely weigh the facts and on this basis answer the question if a termination of the activity there would be the right thing,” Hofmann told the Braunschweiger Zeitung in an interview, citing potential damage to VW’s reputation.

Volkswagen has fielded uncomfortable questions about its suppliers and operations in Xinjiang, where human rights groups and a panel of United Nations experts have raised concerns about coercive labor practices. China has repeatedly rejected criticisms of the work programs, calling allegations of forced labor lies and defending its policies as an effort to reduce poverty and unemployment.

READ: Secrecy, Abuse Claims Loom Over China’s Solar Plants in Xinjiang

Chief Executive Officer Herbert Diess has defended the company’s presence in the region, telling CBS’s 60 Minutes in April he’s “absolutely sure” there’s no forced labor at VW’s plant, and that locals “are much better off” if the company stays put. China is Volkswagen’s biggest market, accounting for roughly 40% of sales.

Volkswagen is “firmly opposed to forced labor,” Nicolai Laude, a company spokesman, said Friday. “In our worldwide business activities, we ensure that our values are lived and our standards are upheld. We expect the same from our local business partners.”

German Chancellor Olaf Scholz last month called out alleged abuse at detention for ethnic Uyghurs in Xinjiang and called on companies to do more to diversify their supply chains and export markets.

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