MNCs in China rethink their Xinjiang connect

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MNCs in China rethink their Xinjiang connect

Beijing: Volkswagen 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 Corp., 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.In a written reply to a question about Volkswagen and BASF, the Foreign Ministry on Sunday called allegations about forced labor in Xinjiang “a lie of the century concocted by anti-China forces to discredit China” and to cut off China’s economy from foreign markets. The ministry added, “We hope that the enterprises concerned will respect the facts and cherish the opportunity to invest and develop in Xinjiang.”VW and BASF, which have had extensive investments and sales in China for decades, are among the companies increasingly caught between Beijing on one side and Western governments, shareholders and human rights groups on the other.

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