Jerry Jackson After 12 years, Volkswagen has sold its factory in Xinjiang, China. The plant, surrounded by controversy, never turned a profit but drew significant criticism.
The Controversy Behind Xinjiang
Xinjiang, labeled an “autonomous region” of China, has seen little true autonomy. Since 1949, the Communist Party integrated the area, historically home to the Muslim Uighur population, into its control. Han Chinese settlers gradually outnumbered Uighurs, turning them into a minority.
China’s leadership viewed Uighur traditions and religion as outdated, pushing economic growth as a solution. In 2014, these policies escalated to the creation of “re-education camps.” Hundreds of thousands of Uighurs endured forced indoctrination, with reports of torture, forced sterilizations, and labor surfacing over time. The Chinese government denied these allegations initially but later described the camps as “training centers,” focusing on Xinjiang’s rapid economic growth as justification.
Massive infrastructure investments, such as expanding the Karakoram Highway connecting China to Pakistan, were part of a strategy to stabilize the region. After a 2010 uprising, China promoted development to maintain control and strongly encouraged foreign companies, including Volkswagen, to invest.
Volkswagen’s Factory: A Financial and Ethical Misstep
In 2012, Volkswagen established a semi-knockdown factory in Xinjiang. The plant relied on parts shipped over 2,000 kilometers from eastern China. Only 197 workers assembled the vehicles, and the factory’s capacity of 50,000 vehicles per year was never met.
Behind the scenes, Volkswagen likely lobbied for years to exit its unprofitable joint venture with Chinese partner SAIC. This became possible under a restructured agreement, allowing Volkswagen to leave Xinjiang while extending its partnership with SAIC until 2040. Initially set to end in 2030, the deal now includes plans for a major product launch in 2026.
Despite exiting the region, Volkswagen’s extended cooperation with China’s Communist Party suggests it has learned little from its controversial Xinjiang experience.