Firms With Deep Roots in China Reconsider Their Xinjiang Ties

Volkswagen Group is reviewing the future of its joint venture in the Xinjiang region of northwestern China and another German industrial giant is starting to sell its stakes there following new international scrutiny of forced labor by predominantly Muslim ethnic groups.

Volkswagen said last week that it was in discussions with one of its main joint venture partners in China, the state-owned Shanghai Automotive Industry Corporation, in the wake of allegations of human rights violations at their joint venture in Xinjiang.

The companies are examining “the future direction of the J.V.’s business activities in Xinjiang,” VW said, adding that “various scenarios are currently being examined intensively.”

BASF of Germany, the world’s largest chemical company, disclosed on Feb. 9 that it began moving late last year to divest its stakes in two manufacturing joint ventures in Xinjiang.

BASF said that while its audits had not found human rights violations at either operation, “recently published reports related to the joint venture partner contain serious allegations that indicate activities inconsistent with BASF’s values.”

The Chinese government has strongly opposed any move by multinational corporations to distance themselves from commercial activity in Xinjiang, a sparsely populated region four times the size of California.