Volkswagen has come under intense scrutiny in the last few years as consumers and advocates become increasingly aware of the atrocities being committed in the Uyghur Region. In 2019, the company’s then CEO, Herbert Deiss, claimed that he was unaware of the re-education camps in the Uyghur Region. Since then, the company has denied the use of forced labor at its Ürümchi factory, but questions remain about what steps Volkswagen has taken to address rights violations in the region or to identify the use of forced labor among its suppliers.
With a CNY 2 billion investment, the SAIC Volkswagen (Xinjiang) Automotive Co., Ltd. (also known as the Ürümchi Plant of Volkswagen China) was the first car manufacturing project introduced in the Uyghur region, with an expected annual production capacity of 50,000 vehicles. According to China Association of Automobile Manufacturer's data, despite its high production capacity, the average annual production of the plant was 18,960 vehicles between 2015-2019. Nonetheless, SAIC VW was by far the most significant auto manufacturer in the region; in 2015, SAIC VW accounted for 98% of total car production in the Uyghur Region. With an increase in automotive manufacturing in the region, SAIC VW had dropped to a still significant 79% of all cars manufactured in the region in 2019.
However, in the last two years, production at the plant seems to have slowed to a near standstill. SAIC VW annual production dropped to 3,244 vehicles in 2020 (37% of total automobile production in the Uyghur Region), which could be accounted for by COVID. However, by 2021, when Chinese manufacturing had returned to normal levels, the factory only produced 5,355 vehicles.
The plant appears to have failed economically, as it never reached even half of its expected annual production capacity at the peak of its annual production. Compared with the other two plants of Volkswagen – located in Zhengyi and Ningbo and founded around the same time as the Ürümchi plant – the scale of production in the Ürümchi plant is relatively small. According to Social Security Information of workers in Ürümchi, Zhengyi, and Ningbo plants, there were 678 employees in the Ürümchi plant in 2018, whereas the Zhengyi plant had 3,135 and the Ningbo plant had 4,003. While there has been no concomitant dramatic decrease in the number of workers in Zhengyi and Ningbo plants over the last three years, the number of workers in the Ürümchi plant decreased to 318 in 2021, leaving it with a tenth the employment of its sister plants.
Volkswagen, for its part, has refused to shutter the plant under pressure, and the former CEO Herbert Deiss has claimed that the VW presence has a “positive impact” on the region. There has been no indication from VW executives as to why the plant has indeed been slowly winding down production, though there have been reports that the plant is running at “reduced levels.”
In June 2018, one worker from the Volkswagen Ürümchi plant wrote in a post published on an online platform that “the plant is dealing with leftover parts the previous year… some see it as a preparation for a shutdown of the autobody and paint division… the Xinjiang plant will not likely be closed in the short run…It has political significance, after all.” A more recent statement from Volkswagen Group seems to lend credence to the claim that the continued existence of the Ürümchi plant is more political than economic. Stephan Wölllenstein, Volkswagen China’s outgoing CEO, said that “the executives at the Chinese auto-manufacturers told Volkswagen that if the company closes its Xinjiang plant for political reasons, it will do more harm than good.” Indeed, European Parliament member Viola von Cramon-Taubadel spoke with Volkwagen executives who reportedly “tried to convince [her] that if VW decides unilaterally to close [its Xinjiang plant] they could not produce a single car in China anymore."
The employee from the Volkswagen plant in Ürümchi worried about the effect the downsizing was having on workers. He noted that the downsizing at the plant had left many people laid off, others being paid less than they had expected. He lamented that there didn’t seem to be any new materials coming in to ensure the plant would continue production.
In September 2022, Volkwagen asked Diess to step down and appointed Oliver Blume the new CEO. According to Chinese state media, in his first days in office, Blume stated that the company would maintain its presence in the XUAR, as the company offers “secure well-paid jobs” to people there. And even if this were the case, much of those benefits would be unlikely to accrue to Uyghur people due to discriminatory hiring practices. In at least one of VW’s Xinjiang factory’s job advertisements from 2018, a CNY 100,000 a year test engineer job was advertised indicating explicitly that only “male of Han nationality” need apply.
Volkswagen has exposure to Uyghur labor transfers in its supply chains as well.