Volkswagen (VOWG_p.DE) is contractually committed to its plant in Xinjiang until 2030, it said on Tuesday, after its China chief made the first visit by senior management to the plant in mid-February and said he saw no signs of forced labour.
Ralf Brandstaetter, who has headed the carmaker's China operations since the middle of last year, spent 1-1/2 days on Feb. 16-17 touring the facility with Volkswagen's compliance and external relations chief in China.
He spoke at length to seven workers individually - including Han Chinese, Uyghurs and Kazakhs - some through a translator of Volkswagen's choice and some in English, and held shorter discussions with other workers on his tour, which he said occurred without government supervision.
"I can talk to people and draw my conclusions. I can try and verify the facts [from joint venture partner SAIC], and that's what I did. I didn't find any contradictions," Brandstaetter said, adding it was his first visit but not his last.
Volkswagen has come under fire from human rights groups, politicians and German union IG Metall among others for co-owning a plant in the region, where rights groups have documented human rights abuses including mass forced labour in detention camps which the U.N. said could constitute crimes against humanity. China has strenuously denied any abuses in Xinjiang.
But the German carmaker is bound by contract with its joint venture partner SAIC (600104.SS) to keep the plant until 2030 and has no intention of pulling out, Volkswagen chief lobbyist Thomas Steg said on a call following Brandstaetter's visit.
The company, which said in 2012 it was approached by Beijing to build the plant, says it has never found evidence of forced labour among its workforce and that its presence is positive for the local population.
It denied that maintaining the plant was a condition imposed by Beijing to keep producing across China: "I have no knowledge of an ultimatum of any form," Steg said.
Still, Steg said the atmosphere in Xinjiang had shifted since talks on the plant began, noting a "significantly more repressive approach" after an anti-terrorism law was implemented in the region in 2015 following numerous deadly attacks which the government has blamed on militants from Xinjiang.
But with Volkswagen seeking new contractual partners worldwide, partly to diversify its business from the Chinese market, breaking the contract with SAIC was out of the question, he said.
Nonetheless, output has dropped as semiconductor shortages and coronavirus
lockdowns shuttered industry in China. Staff numbers have fallen 65% since before the pandemic to around 240 workers, of which 17% are Uyghur.
The plant, which previously assembled the Santana, now only handles the final installation and quality check of vehicles built at other plants and prepares them for handover to dealers who sell them in the region, Brandstaetter said.
Planned output for this year was 10,000, a fraction of the 50,000 targeted when it first opened.
Around 190 workers had also undertaken retraining and qualification programmes at other SAIC plants across China.