German auto manufacturer Volkswagen (VW) has courted controversy for maintaining a business presence in Xinjiang, despite documentation from the U.N. and other organizations of the CCP’s possible crimes against humanity, genocide, and Uyghur forced labor in the region. Under pressure from rights groups who criticized VW for operating a factory near Urumqi, a joint-venture with Chinese state-owned SAIC, VW commissioned an audit last year to investigate allegations of forced labor at the facility. The one-page summary of the audit released by VW appeared to absolve the company of any human rights violations, but all 20 staff members of Löning, the consultancy hired to conduct the audit, publicly distanced themselves and claimed only two executives were involved. Now, a leaked copy of the full audit, reported on by Adrian Zenz for the Jamestown Foundation, shows that VW actually failed to meet international standards:
A recently leaked copy of the audit of Volkswagen’s much-criticized joint-venture factory in Xinjiang indicates that claims made by Volkswagen inside the report are misleading or false. These include suggestions that the audit applied the SA8000 social accountability standard, followed International Labor Organization standards, and was conducted by a firm with experience carrying out social audits.
The audit shows that the factory organizes staff activities promoting “harmony” of all ethnic groups. Such activities are associated with forced assimilation, which raises severe ethical concerns over Volkswagen’s continued presence in the region.
Liangma Law, a Shenzhen firm with ties to the Chinese Communist Party contracted for the audit, possesses no discernable experience in conducting social audits and does not advertise related services. Clive Greenwood, who joined Liangma shortly before the audit to participate in it, has publicly stated that SA8000 audits are worthless in the People’s Republic of China. [Source]
Judy Gearhart, a professor with the Accountability Research Center at American University’s School of International Service who helped develop the SA8000 rules, said that VW’s audit “departs” from the SA8000 standard and does not substantiate VW’s previous claims to the contrary. One shortcoming is how interviews with company employees were conducted. Only managers were asked questions about forced labor, and staff were asked only yes-or-no questions that did not address forced labor. Patricia Nilsson and Edward White from The Financial Times provided more detail:
Notably, the interviews, carried out at the plant in the regional capital Urumqi, were live streamed to the law firm’s headquarters in Shenzhen.
The live broadcast placed workers in a situation that was “intimidating [and] did not guarantee confidentiality”, Gearhart said. “The interviews have no value [and] cannot be used as confirmation of the situation in the factory.”
[…] “All interviewees were very relaxed and with smiling faces,” the audit report further noted.
Under China’s legal system, factory workers risk committing an administrative violation or criminal offence, including breaching national security laws, if they publicly comment about forced labour practices, “even if the statements are true”, according to a Beijing-based legal expert, who required anonymity for safety reasons. [Source]
Following these news reports, 50 members of 23 parliaments from around the world called on VW to withdraw from Xinjiang. Rushan Abbas from the Campaign for Uyghurs called VW’s audit “nothing more than a shameless charade designed to cover up the reality of #ForcedLabor in the #UyghurRegion,” and “not just a matter of oversight; it’s a calculated and cold-blooded betrayal of fundamental human dignity.” In May, Human Rights Watch had previously reported on VW’s growing presence in Xinjiang and its supply-chain risks of forced labor. Researchers at Sheffield Hallam University’s Helena Kennedy Centre for International Justice produced a report in 2022 detailing how Uyghur forced labor in Xinjiang infects the supply chains of many other companies in the global automobile industry, beyond just VW:
In a six-month investigation undertaken by Laura T. Murphy, Kendyl Salcito, Yalkun Uluyol, Mia Rabkin, and a team of anonymous researchers, analysis of publicly available documents revealed massive and expanding links between western car brands and Uyghur abuses, in everything from the hood decals and car frames to engine casings, interiors and electronics.
Consumers do not want cars made through exploitation. But a combination of weak enforcement of forced labour laws and the government’s blind eye to environmental standards in China, paired with convoluted supply chains has left the automotive industry reliant on abusive suppliers. Every major car brand – including Volkswagen, BMW, Honda, Ford, GM, Mercedes-Benz, Toyota, Stellantis brands (like Fiat, Chrysler, Dodge and Jeep), Tesla and NIO – is at high risk of sourcing from companies linked to abuses in the Uyghur region. Some are sourcing electronics from firms that are employing trafficked Uyghurs in factories in other parts of China. Some are unwittingly sourcing metals from the Uyghur region, because metal trading companies own equity in Xinjiang smelters. Some of the greatest exposure comes from the steel and aluminum used to make car frames, axels, bodies, engine casings, wheels and brakes. The world’s largest steel and aluminum producers have shifted into the Uyghur Region under Chinese government subsidies and incentives. But tires, interiors, windshields, batteries and practically every other major part are also implicated.
The auto industry cannot wait another day to trace their supply chains back to the raw materials. To do anything short of full tracing would be an enormous legal, ethical, and reputational risk. [Source]
Regulatory pressure regarding these issues is building in the U.S. On Thursday, Congressional Republicans introduced a bill, the “No Funds for Forced Labor Act,” that would require the U.S. Treasury Secretary to instruct American heads of international financial institutions to oppose loans to projects that pose forced labor risks or involve a state-owned entity, and require the institutions to explain how they mitigate forced-labor risks. Other measures appear to specifically target the automobile industry’s ties to Xinjiang forced labor. Among the updates to the import requirements in the Uyghur Forced Labor Prevention Act (UFLPA) this year, U.S. Customs and Border Protection has begun detaining shipments containing “automotive and aerospace” products for the first time. In August, the Forced Labor Enforcement Task Force added to the UFLPA Entity List five new companies involved in Xinjiang’s production of critical minerals used in certain automobile products.
