German carmaker Volkswagen and its Chinese partner SAIC have agreed to sell a controversial factory in China’s Xinjiang province. Reuters reported today, citing sources familiar with the situation. The factory has been the target of criticism over reports of human rights abuses against the Uighur minority in the region.
SMVIC to buy factory from Volkswagen and SAIC
According to the sources, the factory is being bought by Shanghai Motor Vehicle Inspection Certification (SMVIC), a division of state-owned Shanghai Lingang Development Group. It is not yet clear what the value of the deal is, Reuters reports.
Sources also said that SMVIC will also take over test tracks in two Chinese cities from VW and SAIC as part of the deal. After the deal is completed, Volkswagen will have no operations in Xinjiang province, according to the sources. According to Western countries and a number of human rights groups, China is deliberately oppressing Muslim Uighurs in Xinjiang, including through forced labour. Beijing denies these allegations.
Volkswagen extends partnership with SAIC
Volkswagen said at the end of last year that an audit of its factory in Xinjiang province found no signs of forced labour. However, the auditing company pointed to difficulties in collecting data in China. The agreement to sell the plant comes at a time when Volkswagen is struggling with falling sales in the Chinese market, where it faces stiff competition and weak demand.
The carmaker is now working with Chinese partners to develop new models to better meet the demands of Chinese customers. Volkswagen will extend its partnership with SAIC for ten years until 2040, according to sources. Their joint venture plans to launch 18 new models by 2030.
Source: ČTK
