Volkswagen has sold its factory in Xinjiang, China, ending 12 years of controversy and criticism. The plant, which never turned a profit, was a source of significant reputational challenges.
Controversy Surrounding Xinjiang
Xinjiang, officially labeled an “autonomous region,” has long been tightly controlled by the Chinese government. After 1949, the Communist Party integrated the region, historically home to the Muslim Uighur population, into its broader state framework. Over time, Han Chinese settlers displaced the Uighurs, reducing them to a minority in their own homeland.
China’s government sought to assimilate Uighurs by undermining their traditions and religion, promoting economic development as a solution. These policies escalated in 2014 with the establishment of “re-education camps,” where Uighurs faced forced indoctrination. Reports of torture, forced sterilizations, and mass labor camps emerged. Initially denied, the government later described these facilities as “training centers” and pointed to Xinjiang’s rapid economic growth as a defense.
To further this development, China heavily invested in infrastructure projects like the Karakoram Highway, linking China to Pakistan. It also encouraged foreign companies, including Volkswagen, to set up operations in the region.
Volkswagen’s Factory: A Strained Operation
Volkswagen opened its semi-knockdown factory in Xinjiang in 2012. Parts were shipped over 2,000 kilometers from eastern China and assembled by just 197 workers. The facility, with an annual capacity of 50,000 vehicles, never reached its targets and was largely seen as unprofitable.
Amid mounting criticism over human rights concerns, Volkswagen likely sought to leave the region for years. A recent renegotiation with its Chinese partner SAIC finally allowed the company to exit Xinjiang. However, the agreement also extended its partnership with SAIC until 2040, beyond the original 2030 deadline. The new deal includes plans for a significant product launch in 2026.
While Volkswagen has distanced itself from Xinjiang, its deepened collaboration with China’s government suggests limited reflection on its controversial past involvement in the region.
