Is Volkswagen losing its grip on the market and on its moral compass?
Volkswagen’s (VW) operations in China’s Uyghur region are under increasing scrutiny as human rights groups raise concerns over forced labor involving Uyghur workers. The company’s assembly plant in the region, established in 2013, was initially a source of pride, symbolizing German industrial expansion. However, in recent years, the situation has changed as mountains of evidence of Uyghur forced labor have surfaced, and their position on top of the automaker market is plummeting fast.
VW’s ethics and market concerns
VW’s troubles in China go beyond human rights concerns. The Chinese auto market has shifted rapidly towards electric vehicles (EVs), and are being increasingly outpaced by local manufacturers. For years, VW led the Chinese market, but a 10.2% drop in sales in 2023 pushed the automaker out of the top position.
Michael Dunne, a China auto industry consultant, commented on the shift in an article by The New York Times, stating, “Chinese consumers see VW as the king of yesteryear. They prefer fresher, more compelling offerings from home-team brands.”
As VW struggles to maintain its competitive edge, the U.S. and European markets are also imposing restrictions on imports from the Uyghur region due to forced labor concerns.
The New York Times reports,
As many as a million ethnic Uyghurs, Kazakhs and other minorities were sent to indoctrination camps, detention centers and prisons. Associated forced-labor programs to send rural Uyghurs to factories and other urban jobs also drew heavy criticism from human rights groups and have prompted the United States and some European countries to restrict imports from Xinjiang since 2021.
Earlier this year, VW was forced to halt the import of certain luxury models to the United States after discovering that a supplier was using components sourced from the Uyghur region.