the ‘step back’ of Volkswagen and Uniqlo

New supply chain regulations implemented by the United States and the European Union are forcing many companies to take a stand on the issue of Uyghur exploitation. The vehicle manufacturing company sold the controversial Urumqi plant “for economic reasons”, but gave new impetus to its business plans in China. Japanese clothing brand Uniqlo stated that it does not use cotton from Xinjiang.

Milan ( / Agencies) – After BASF, Volkswagen also decided to leave Xinjiang following accusations of the use of forced labor by Uyghurs in the construction of a test track for automobiles. The German vehicle manufacturer’s announcement was made known yesterday and officially declares “economic reasons” related to the restructuring of its presence in China. But in reality it represents an important victory for the associations that fight to defend the rights of the Muslim minority, which in the westernmost province of the People’s Republic has been the object of harsh repressive policies by the Beijing government for more than ten years. years.

As is known, China is a fundamental market for Volkswagen: it currently sells there 4 out of every 10 cars it produces in its factories globally. But it is a presence that today is directly affected by the confrontation between Beijing and the European Union in relation to taxes on imports of electric cars, as well as by the more general Volkswagen crisis. As for Xinjiang, the car manufacturer would now also have to adapt to the Forced Labor Regulation, adopted by Brussels on November 19, which – although it is much less strict than the Uyghur Forced Labor Prevention Act in force in the United States since 2021 – would have put the Urumqi plant in difficulties. Added to that – as we said a few weeks ago – the report commissioned by Volkswagen, which was to demonstrate the non-participation of the local subsidiary in forced labor practices, turned out to have been written in a very dubious manner in a place where it is impossible to investigate freely.

In the end, Volkswagen decided to sell the plant that it had opened at Beijing’s request in Xinjiang in 2012 and the corresponding track, which will pass into the hands of Shanghai’s SMVIC, a company that deals with the testing of cars produced in China. Meanwhile, the extension until 2040 of the joint-venture with Saic Motor, the Chinese partner of the German factory, has also arrived. The agreement establishes that 18 new Volkswagen and Audi car models will hit the market before the end of the decade, 15 of which are exclusive for the local market. The objective is to recover positions and sell four million cars a year in China again by 2030, which means a market share of 15%. Therefore, it leaves Xinjiang, but certainly not the rest of the People’s Republic.

However, the sale of the German manufacturer’s plant does not resolve the broader issue of suspicions about the use of Uyghur slave labor in products flooding markets around the world. According to the complaints of the Coalition to End Forced Labor in the Uyghur Region, another of the sectors strongly involved in the phenomenon is the textile sector, since it is estimated that 23% of world cotton production is concentrated in Xinjiang, but also production of solar panels and the cultivation of tomatoes.

Just today the Japanese clothing brand Uniqlo has declared for the first time that it does not use cotton from the Uighur region in its products. A step dictated precisely by new regulations, which are forcing many groups present in international markets to abandon ambiguity: US law, in effect, requires companies themselves to prove that their supply chains are not involved. And a few days ago the Biden administration included 29 other groups that have not done so on the list of companies whose imports are blocked in the United States. In total, more than 100 companies have already been excluded from the US market due to suspicions that they use Uyghur forced labor, and they belong to sectors ranging from agriculture to the extractive industry, including steel and digital technologies.

Uniqlo’s statement is significant because until now its founder and president, Tadashi Yanai, had always refused to respond, claiming that he wanted to remain “neutral” in the trade war between the United States and China. Although the strong presence of the Japanese company in the Chinese market also influences: Uniqlo has more stores in China than in Japan itself. That is why there was fear that adopting a position on the Xinjiang issue could result in a nationalist boycott, as has already happened to other major brands in the sector.

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