Volkswagen faces union and shareholder calls to examine China human rights allegations

Volkswagen’s anchor shareholder, the state of Lower Saxony, has joined Germany’s most powerful union boss in calling on the company to address allegations of human rights abuses in Xinjiang, the Chinese province where the manufacturer has had a car plant since 2013.

The unusual interventions by IG Metall’s Jörg Hofmann and Lower Saxony’s minister president Stephan Weil — both of whom sit on VW’s supervisory board — come as the company faces increased scrutiny from activists, the media and politicians over its activities in China, its largest and most lucrative market.

They are in sharp contrast to those once made by VW chief executive Herbert Diess, who told the BBC in 2019 that he was “not aware” of detention camps in Xinjiang.

Diess has also repeatedly defended VW’s exposure to China, telling the Financial Times earlier this year that the company was “there to stay”.

Hofmann told newspapers in Lower Saxony that VW should ask whether it “was proper to end its activities [in Xinjiang]”, and warned against VW becoming a “fig leaf” for China’s human rights violations. Weil, meanwhile, said in a statement that the group should “closely examine” the accusations.

“The pictures and reports of severe human rights violations against the Uyghur minority in the Chinese region of Xinjiang are upsetting,” Weil wrote, referring to the mostly Muslim ethnic group against whom China is accused by the US and others of committing genocide.

Weil reiterated VW’s claim that no human rights or labour rights violations had been identified at the carmaker’s Urumqi plant, but added that “this does not relieve the group of its duty to deal intensively with the issue and to closely examine the allegations”.

Lower Saxony, in which VW’s Wolfsburg headquarters is located, owns nearly 12 per cent of the company. An informal alliance with workers’ representatives in effect gives the state control over major decisions taken by the supervisory board.

VW, which runs the Xinjiang plant in conjunction with its joint-venture partner SAIC, said “all important topics relevant to our business are addressed” in its discussions with the Chinese government.

“In our worldwide business activities, we ensure that our values are lived and our standards are upheld,” it added. “We expect the same from our local business partners.”

After decades of largely cordial relations, tensions between Beijing and Berlin have intensified under Germany’s current coalition government, with China singled out for criticism by Green foreign minister Annalena Baerbock and economy minister Robert Habeck.

Last month, Germany’s economics ministry rejected four applications by corporations for investment guarantees in China, citing human rights concerns.

While VW was not named by the ministry, people close to the company confirmed that the carmaker was among those that had been rejected.

Recent media reports, including the leaked “Xinjiang Police Files”, which were published in the German press, have provided further evidence of the oppression of Uyghurs, and forced companies including VW and chemicals group BASF to defend their operations in Xinjiang.

German companies also face a looming legal challenge, with the country’s new supply chain act set to go into effect from next year. The law would make corporations responsible for human rights violations, even if they occur at facilities belonging to suppliers or subcontractors. Fines of up to 2 per cent of a company’s annual turnover can be imposed.