SAIC Volkswagen agrees to sell controversial Xinjiang, China, auto plant

Nov. 27 (UPI) -- Germany's Volkswagen Group and its Chinese partner have sold a factory in the Xinjiang region of China, where accusations of forced labor dogged the facility for many years.

Volkswagen and SAIC Motor agreed to sell the factory that is located in Urumqi in China's Xinjiang region to the Shanghai Motor Vehicle Inspection Center but did not disclose the sale's terms in an announcement made Wednesday.

"Volkswagen and SAIC are pioneers of individual mobility in China," said Ralf Brandstatter, a board of management member of Volkswagen AG for China. "We established one of the first international joint ventures in the region 40 years ago."

SAIC Volkswagen has "earned the trust of more than 28 million customers" in China and extended the joint venture agreement between Volkswagen and SAIC until 2040 to create "early planning security beyond 2030 in a very dynamic development phase of the Chinese automotive market," Brandstatter said.

He said SAIC Volkswagen is focusing on producing electric vehicles for the Chinese market with a new generation of EVs planned for 2026.

"Electrification and the transformation of the car into an intelligent vehicle are the defining trends in the automotive industry," SAIC Motor chairman Wang Xiaoqui said. "The focus for SAIC Volkswagen is on the development of new, intelligent electric vehicles in order to maintain an industry-leading position in the field of smart technologies."

The Volkswagen announcement said the sale of the Xinxiang plant is an economic decision without mentioning the alleged controversial use of forced labor at the factory, which opened in 2013.

SAIC Volkswagen officials said the sale will reduce operating costs while enabling it to focus on producing EVs for the Chinese market.

About 45% of the Chinese auto market is comprised of EV sales this year and expected to rise, the International Energy Agency and CNN reported.

Since the plant opened, it has received strong criticism from human rights activists and investors for alleged use of forced labor performed by Uyghur Muslims in China's Xinjiang territory.

Critics have said SAIC Volkswagen has not properly investigated potential use of forced labor in the factory and its supply chain.

The U.N. Human Rights Office in 2022 accused the Chinese Communist Party of "serious human rights violations" that include the mass detention of Uyghur Muslims and "torture or ill-treatment, including forced medical treatment and adverse conditions of detention."

A report produced by the Human Rights Office said the accusations of human rights violations are "credible" but said evidence is insufficient to confirm the alleged abuses.

Chinese officials have denied any wrongdoing in Xinjiang and said any efforts there are to counter terrorism and extremist acts within the region.