News / VW auto supply chain falters as US 'forced labour' law delays imports

Volkswagen is facing pressure to sever its links with China following claims of forced labour in its supply chains and trust in the eastern powerhouse among western firms deteriorating.

US Customs impounded several thousand VW vehicles that arrived at ports because a Chinese subcomponent within the Audis, Bentleys and Porsches was believed to be manufactured in breach of forced labour laws.

The UK Financial Times quotes two people close to the German carmaker who said further deliveries had been delayed as VW looked to source a replacement for the part that had originated in Xinjing.

The region has become synonymous with what experts claim is the Chinese government-directed genocide of its Muslim Uyghur population, including their use in forced labour camps, which drove the US enactment of the Uyghur Forced Labour Prevention Act in 2021.

It is understood that the VW issue was discovered in January – although there is scant detail on how long the cars have been impounded – and the delays may linger well into next month.

Volkswagen said: “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. These may also include the termination of a supplier relationship if our investigations confirm serious violations” (in relation to its partnership with Chinese joint-venture SAIC).

There has been increasing concern among western companies doing business in China about exposure to not only forced labour, but intellectual property theft and tit-for-tat tariffs.

Amid this collapsing faith, India is increasingly seen as the west’s new manufacturing hot spot, with Onepoll noting 61% of 500 executives now favoured the South Asian giant.

Last month’s poll also indicated that 59% of the US executives considered China “very risky”, or “somewhat risky”, a figure dropping to 39% for India. And Samir Kapadia, CEO of India Index, on whose behalf the poll was conducted, told CNBC companies saw India as a “long-term strategy, rather than a short-term pivot”.

Stories relating to the arrest of staff working for foreign companies in China on claims of espionage have also caught media attention; the most recent relating to the arrest of Emily Chen who had been involved in helping a US logistics firm open an office in the country.

Given the growing criticism of China among western firms, The Loadstar is investigating and is keen to hear from readers with experience, or concerns, relating to staff security in China.