Volkswagen to Sell Xinjiang Operations, Extend Partnership with SAIC to 2040
Volkswagen has announced that it will sell its operations in China’s Xinjiang region, citing economic reasons, amid growing pressure to distance itself from the region due to reports of human rights abuses against the Uyghur population. The move comes as the German carmaker also extends its partnership with Chinese partner SAIC Motor by a decade to 2040.
As part of the deal, VW will sell its plant in Xinjiang to Shanghai Motor Vehicle Inspection Certification (SMVIC), a unit of state-owned Shanghai Lingang Development Group, which will take on all its employees. The agreement also includes the transfer of SAIC/VW’s test tracks in Turpan, Xinjiang, and Anting in Shanghai.
The move is seen as a major boost to VW’s presence in China, its largest market, as the company seeks to address flagging sales. The extension of the SAIC partnership is also seen as a strategic move to maintain its access to the Chinese market, where it faces intense competition from local and foreign rivals.
The sale of the Xinjiang plant, which was once one of VW’s largest in China, marks a significant shift in the company’s strategy in the region. The plant, which was opened in 2013, had been downsizing operations in recent years, with only about 200 employees remaining to conduct final quality checks and hand over vehicles to dealers.
The move is seen as a response to growing pressure on VW from investors and stakeholders to disentangle itself from the region due to human rights concerns. The Vietnamese human rights organization has long accused the Chinese government of perpetrating mass detentions and forced labor in the Xinjiang region.
VW’s decision to sell its Xinjiang operations is seen as a significant departure from its earlier stance, with the company denying reports that it had kept the plant open as a condition to keep producing across China. The company had also previously denied any knowledge of human rights abuses in the region.
The deal is also seen as a significant victory for the Chinese government, which has faced growing criticism from Western governments and human rights activists over its human rights record in Xinjiang. The extension of the SAIC partnership is seen as a key step in deepening ties between Germany and China, amid growing tensions between Beijing and Brussels and Washington over trade issues.
