Forced labor, slavery, whatever you want to call it—it’s an abhorrent thing. So much so that the U.S. has sought to ban the products using such labor from its shores. The problem is that global supply chains are so densely interwoven that it’s easy for a company to throw up its hands and state that it is unaware of what goes into the products it sells. The problem has recently come home for a number of automakers, though, who have seen vehicles held by customs officials due to import restrictions on the products of forced labor.
As covered by the Financial Times, thousands of cars from Porsche, Audi, and Bentley have reportedly been impounded across a number of U.S. ports. The cause of the problem is allegedly down to an electronic component in the vehicles that was sourced from “Western China.” It’s believed that around 1,000 Porsches, several thousand Audis, and several hundred Bentleys have been held by authorities. If you’re drawing a connection there, it’s that all these brands belong to the Volkswagen Group.
The issue has frustrated many owners eagerly awaiting their new cars. Reports shared on the Rennlist forums have said that dealers are advising customers that cars may not be released until April 2024. Early speculation suggested the questionable component could have been sourced from Belarus, but it’s now believed to be a part of Chinese origin.
The Uyghur Forced Labor Prevention Act is at the center of the matter, which was signed into force in 2021. The goal of the legislation was to prevent the importation of products from China that may have been produced by forced labor, both in the western Xinjiang region and beyond. The Xinjiang area is notable for its Uyghur population, which has been subject to repression and forced labor by the Chinese government. Prior to the Act, the U.S. government had previously banned imports of several goods, including cotton and tomato products from the Xinjiang region. Despite many reports on the matter, the Chinese government denies any human rights abuses in the area.
A letter to customers waiting for vehicles noted the hold up was due to “a small electronic component that is part of a larger control unit, which will be replaced,” according to the Financial Times, without directly outlining what the component was. Sources speaking to the outlet noted that the automaker’s parent company, Volkswagen, was not aware of the source of the components. The parts are said to have been sourced by an indirect supplier to Volkswagen, some way down the supply chain. Sources also noted that Volkswagen notified the US government of the matter as soon as it became aware of the problem.
“As soon as we received information of allegations regarding one of our sub-suppliers, we have been investigating the matter. We will clarify the facts and then take appropriate steps,” noted Volkswagen in a statement to the outlet. “These may also include the termination of a supplier relationship if our investigations confirm serious violations.” The company also noted it “takes allegations of infringements of human rights very seriously, both within the company and in the supply chain.”
The issue is a complex one for Volkswagen, which currently maintains a partnership with Chinese firm SAIC. The company has recently stated it will be re-examining its own presence in the Xinjiang region due to further recent allegations. As reported by Reuters, the company has come under fire regarding the construction of a test track in Xinjiang, in which it’s alleged an engineering firm hired by Volkswagen and SAIC used Ugyhur forced labor.
Volkswagen has a number of plants across China, with much attention often focused on the Urumqi plant in Xinjiang, run in partnership with SAIC with a contract until 2029. The factory was the topic of an audit last year, with a December report stating no evidence of forced labor was found. However, the fresh attention has led Volkswagen to reconsider its position. It currently employs only approximately 197 employees, down from a high of 650, and car production no longer takes place at the facility. Instead, it is presently used as a distribution hub.
The issue can be a minefield for global companies to navigate. It’s easy enough to audit a Tier 1 supplier that delivers parts directly, but drilling down further can be difficult. A full audit involves looking into all the suppliers the Tier 1 manufacturer uses, and then going on from there to look at where raw materials are coming from.
Xinjiang’s status as an industrial powerhouse only makes the matter more difficult. One recent report from Human Rights Watch noted that 10% of the world’s aluminum comes out of the Xinjiang region. In fact, Xinjiang itself now produces more aluminum than any country besides China itself. The report notes that the products of forced labor from this area could readily end up in everything from car bodies to engines and batteries. The outlet has worked to find a link between the region’s aluminum output and automotive production, with the suspicion that Chinese partners of major automakers could be relying on these supplies. Volkswagen responded to queries from Human Rights Watch over the matter, but the answers aren’t as positive as you’d hope for.
Indeed, when asked what steps it takes to ensure SAIC-Volkswagen is not purchasing aluminum from a producer linked to Xinjiang, Volkswagen stated: “We have no transparency about the supplier relationships of the non-controlled shareholding SAIC-Volkswagen. We therefore ask for your understanding that we do not make any statements about this question.”
Until forced labor practices stop, issues like these will continue to dog automakers. Compliance with ever-stricter import laws will require rigorous supply chain surveillance or a hard cutting of ties with suppliers sourcing parts and materials of questionable origins. Companies that fail to do so would have to reasonably expect to face more import headaches in the future.
Image credits: Volkswagen, Bentley
They came clean this time around just in time once shit hit the fan because last time they tried a cover up it didn’t go so well, so at least they learned some new tricks. Meanwhile they got started in Nazi Germany so color me unsurprised.
Well I am not in te mood to write a long drawn out comment and get into a battle of words with the people here who accused me of making events that are mentioned here up. Nor am I going to argue prisons are fun places to live. They shouldn’t be. But if you offered every prisoner in the USA the option of serving out their time in a Chinese prison and offered Chinese prisoners the option to serve their time in a USA prison I would bet over 99% of all of them would elect to serve time in the USA.
I hope they get Shein next.
and Temu
This. And also Amazon’s complicity at pipelining the Chinese copycat supply chain into their warehouses and then brazenly offering these shitty copies as legitimate alternatives to legitimate brands.
A story about forced, slave labor and VW?
I am shocked.
Practicing since 1936 – expert level attained in 2024
Even when you run a company and perform supply chain audits, that doesn’t fix anything. Because when you are talking a tier 3 supplier, its very easy for them to change THEIR supplier to an unethical one. What are the chances you will even hear about it? Even if there is some language somewhere in a contract that says they must tell you, its likely not happening. So you have redo those audits with some level of frequency. While I tend to make negative assumptions about big businesses, here there is definitely reasonable space for “we didn’t realize”, even if they are actively trying to find the bad actors.
And kudos to VW for voluntarily stopping import of the vehicles instead of waiting for regulators to catch wind. Even if it was done just to avoid a fine, they’re doing more than the bare minimum.
The irony is anyone who can afford a brand new Porsche, Audi, or Bentley can absolutely afford to pay someone a living wage to make whatever components are in question.
They didn’t get rich by paying living wages. Leeches.
It’s not like new car buyers choose where the parts/raw materials come from.
I had some sympathy for VW because supply chain due diligence is really tough. And then I got to this part: “We have no transparency about the supplier relationships of the non-controlled shareholding SAIC-Volkswagen.”
Step 1: Create a partnership in which you have zero transparency into what your partner is doing
Step 2: Claim ignorance if anything goes wrong.
Step 3: Profit.
It’s a feature, not a bug.
Yeah that stuck in my craw, too.
“Upon diligently sticking our fingers in our ears and our heads in the sand, we have found that we were in fact unwilling to look into the matter whatsoever.”
I’m sure if the supplier relationships of the non-controlled shareholding SAIC-Volkswagen were failing to meet quality or volume targets and thus impacted shipments, sales, and profits, there’d be a lot of transparency, fast.
Let’s just say that if VW did say anything about their Chinese partner companies, all their Chinese operations would be shut down immediately.
Interesting that there’s no concern about the forced labor in U.S. prisons(or at least what functionally amounts to it, when you consider the cost inmates are charged for calling family, or even attorneys, and how little they are paid, for jobs that USED to employ Americans at living wages).
Why the double standard?
Because the law at issue here creates a magical lever for the US government to pull when it wants to slow or stop the import of a massive amount of Chinese-origin goods at any time, thus creating leverage in our increasingly hostile relationship with a very important trade partner! Duh!
Insert the Homer Simpson “But when I do it, it’s cute” image.
We love these double standards here. We can incarcerate more people than Russia and talk about how many people they throw in the gulags. We can use prison labor and ban products made with foreign forced labor. We interfere in foreign elections, support foreign wars, and denounce other countries that do the same. Because we’re America, we do what we want and the world (including our citizens) end up paying the price.
Because the phones are usually contracted out to to independently owned companies.
And those bastards can charge whatever they want to.
Because those prisoners are mostly used as slaves in private prisons, which are basically slave-owners who “rent out” the prisoners to third party companies; both the prison owners and the third-party company owners are very generous political donors, with their own pet-congresscritters.
Then you have various state-owned prisons and sheriffs, who are untouchable and make their own rules.
Charges to the inmates is a non starter. The pay to say stamp a license plate may be of some concern, though cost to Feed, Bathe and House the inmates should be part of that equation. If the person does not like the situation, don’t come back.
Hypocrisy will always exist – the difference here is you don’t get imprisoned for reporting it. So unfortunately US hypocrisy is *better* than the totalitarian kind. For whatever that’s worth, a hope and a song
Julian Assange
Uff. Forgot that one, but maybe Snowden fits letter, not being a creep and all.
justifiable incarceration vs unjustifiable incarceration. Not that I agree 100% with how people are “justifiably” incarcerated in the US, but if you did something wrong it does begin to make back the cost of housing and feeding you.
According to China’s legal system, their prisoners are “justifiably” incarcerated, which is the same thing… it’s just the laws may differ.
And the cost to house this prisoners is MOSTLY profit margin paid to the prison industry. It’s a travesty that the taxpayers are footing the bill for that, because a lot of money could be saved if the taxpayers didn’t have to pay for profit margin. For the amount being charged to house those prisoners, the prison should be a luxury resort where they are fed steak and lobster… or alternatively, the taxpayer should be charged a LOT less.
“The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.” ― Anatole France
The Autopian should stop publishing reviews of Chinese cars.
What would that accomplish? Not all Chinese automakers are complicit in this and not all non-Chinese automakers are free and clear. A better approach would be the nuanced one where discoveries like this are acknowledged and reported on along side your regularly scheduled content.
Ah yes, only cover the “ethical” Chinese automakers. Got it.
I think the real takeaway from this article is ethical sourcing is a problem all automakers face. A blanket blackout on Chinese cars would 1). rob the readers of important and interesting news and 2). whitewash the issue so we just blame those darn Chinese OEMs while non-Chinese OEMs proceed unaccountable.
That’s a very thoughtful response. However, the treatment of the Uyghurs by the Chinese is horrific and grounds to right off coverage of Chinese products. Non Chinese OEMs may have issues and definitely deserve coverage on them, but the countries they manufacture in don’t have concentration camps like China does.
Everyone should read about the plight of the Uyghurs.
Ok, then what about vehicles made in China by non-Chinese OEMs or vehicles made outside China by Chinese OEMs?
I’m out on Chinese cars no matter where they’re made.
Non-Chinese OEMs manufacturing in China are dancing with the devil in pursuit of the almighty dollar. That’s a terrible look and really bad karma.
Right off?
“You don’t even know what a write-off is!” -Kramer
I think they deserve credit for covering the dark side of it
Agreed.
China’s unsustainable bubble is about to pop. Already, China is #2 in the US after Mexico. Before long, they’ll be out of the top ten.
And that’s not even taking the demographic collapse into account.
Poor China. A victim of it’s own hubris.
wishful thinking
Did you find any errors in my comment? Please share them.
China is #2 specifically in goods to the USA but still the industrial manufacturing powerhouse of the world. Their “demographic collapse” will still leave them with 800 million people. A lot of western nations are undergoing a similar population decline – so if you want a total Chinese economic collapse you’re going to have to wait a few centuries at least.
Ok, but…
China’s demographic collapse is worse than even Italy or Japan’s. The one-child policy has come home to roost- as predicted in the ’70’s.
The real estate bubble actually burst during the pandemic, but the PRC has effectively hidden it since then, and there’s only so far they can prop up this mess.
China’s historical cycle has them moving into an isolationist period, as 800 million people have to live in a country built for double that number. Ask Detroit how that ratio works out.
Russia’s GDP is less than Italy, Brazil, and Canada. Getting completely cut off from the world’s financial systems, a massive land war, becoming a pariah state, losing a crazy chunk of population and their economy is still humming along.
You think China is going to collapse? Not in our lifetime. Only fringe Youtubers think that’s going to happen. Come join the real world.
You think Russia’s economy is “humming along?”
https://www.express.co.uk/news/world/1866920/vladimir-putin-china-russia-economy-ukraine-invasion
https://www.cnbc.com/2024/02/12/russias-economy-in-for-very-tough-times-despite-improved-outlook-imf.html
https://www.businessinsider.com/russia-economy-ukraine-war-inflation-growth-worker-shortage-putin-moscow-2024-2
https://www.bbc.com/news/business-68249043
I’m wondering if that “Youtube” insult was pure projection.
I mean, your second article literally proves my point.
“In late January, the International Monetary Fund more than doubled its forecast for the pace of Russia’s economic growth this year, raising it from 1.1% in October to 2.6%.”
You’re willfully missing my point – China absolutely eclipses the RU economy in every way at a magnitude of scale, thinking it’s going to drop out of the top 10 is just pure cope. Russia still has growing economy despite supposedly imploding.
Agreed so long as they force 800,000 million people to bend to their will at the threat of killing them and can devalue their currency they can survive as long as enough people put cheap prices above the lives of other people. We live at a time where Oligarchy and dictatorships of China and Russia can be forced to enter in a modern world where everyone is equal but so many people are willing for people to die and suffer to get them the newest cars and bigger houses. Sometimes I am not sure who is worst the dictator or the Joneses
Gee. Who didn’t see this coming?
Good! Do temu next.
I’ve never bought anything from them and I never intentionally will, but there’s something even creepier about “$39.99 boots? $1.97!” than just offering a free credit on your first order or something. Like this is how cheap people as labor really are, and your profits are infinite when your labor is, ahem, “free.”
This is all super depressing so I’d like to say I just saw a big zero-turn mower go by and it had tweels, which I always always love and didn’t realize they had made it down to commercial lawn equipment!
Yeah, they’ve been around for years for zero-turns but have always stayed expensive but going down…I’ve never used them but have seen them in commercial use
Who can blame them, we’re all nostalgic for the past. Hollywood remaking classics, disco coming back, Russia trying to take back Ukraine. VW using a oppressed minority for forced labor. the good old days.
VW has made progress. They have outsourced and as far as we know, there are no gas showers for the unproductive.
Too soon.
Wait… did you say DISCO? Just hold your horses there cowboy.
Yeah, always makes me think of this
George Costanza: “You don’t know who BOZO is?! He’s Bozo THE clown, bar none!”
“BOZO?! You’re hung up on some clown from the 60’s, man! You’re livin in the past!”
Hey China, want America off your backs? Just copy and paste our 13th amendment into your own law, then join America’s “war on drugs” against whomever you like.
Those Uyghurs are terrorists. Mother China is just helping them straighten out their lives and become productive citizens. /sarc
Just like reefer smokers over here are dangerous criminals that need to be locked up.
They clearly need reeducation and a job. Maybe a Scared Straight program that could replace those pesky union autoworkers… also /sarc
Those licence plates ain’t gonna make themselves!
I mean, the US did designate East Turkestan Islamic Movement as a terrorist group.