BASF to Withdraw from Xinjiang Following Implication in ‘Gross Abuses’
BASF is exiting China’s Xinjiang Uyghur Autonomous Region after all.
The German chemical giant revealed Friday that it will be divesting its shares in the two joint ventures it operates with Xinjiang Markor Chemical Industry Co. in the Korla Economic Technology Development Zone: BASF Markor Chemical Manufacturing and Markor Meiou Chemical, both of which produce key ingredients used in the creation of stretch textiles favored by sportswear brands.
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The announcement comes on the heels of an investigation by German media outlets Der Spiegel and ZDF, which linked Markor, a subsidiary of the Uyghur Forced Labor Prevention Act-blacklisted Xinjiang Zhongtai Group, with state-sponsored activities that human rights groups say are designed to surveil and politically indoctrinate Uyghurs and other Turkic Muslim minorities as part Beijing’s cultural and religious crackdown.
On Monday, the Inter-Parliamentary Alliance on China, an international cross-party group of politicians better known as IPAC, wrote a letter to BASF CEO Martin Brudermüller urging the company to leave Xinjiang in light of the “shocking degree” to which it “appears to be implicated in gross abuses” through its association with Markor.
“As advocates for corporate responsibility, human rights due diligence and respect for basic rights, we urge BASF to withdraw from Xinjiang,” the letter said. “The credibility and integrity of your company are at stake, and we believe it is crucial for you to take swift and decisive action in addressing this matter.”
The IPAC’s plea was echoed by the Congressional-Executive Commission on China, an agency of the U.S. government, on Thursday. “Shareholders and the press must challenge the use of internal ‘audits’ as a defense by XUAR-based companies, as they are used to cover-up instead of expose,” it wrote on X, formerly known as Twitter.
In a statement on its website, BASF said that it had already begun the process of unloading its stakes in the fourth quarter of 2023, though it appeared to attribute this to market pressures and a desire to rein in its carbon footprint from the sites’ extensive coal use. While the forced labor allegations have sped up its timeline, BASF maintains that regular due diligence measures, including internal and external audits, have not uncovered any evidence of human rights violations in the two facilities.
“Nonetheless, recently published reports related to the joint venture partner contain serious allegations that indicate activities inconsistent with BASF’s values,” the firm said. “Consequently, BASF will accelerate the ongoing process to divest its shares in the two joint ventures in Korla, subject to negotiations and required approvals of the relevant authorities.”
On Friday, Brudermüller met with IPAC members and Adrian Zenz, the German anthropologist and forced labor expert who alerted Der Spiegel and ZDF about incriminating posts on Markor’s website. Writing on X the same day, IPAC said that Brudermüller has committed to expediting BASF’s exit from Xinjiang “within months” because a “red line” had been crossed regarding its partner’s “complicity in the treatment of Uyghurs.”
“This decision was overdue, especially in light of BASF’s own history,” Zenz told Sourcing Journal, referring to BASF predecessor IG Farben‘s involvement in the production of Zyklon B, a lethal gas used to murder Jews at Auschwitz and other death camps during the Holocaust. “Now that BASF has taken the right step, Volkswagen’s continued presence in the region is even more problematic.”
The German automaker has come under similar fire for its joint ownership of a plant in Xinjiang, though it says that a recent audit has found no signs of forced labor. Human rights and social audit experts say, however, that conventional inspections of labor conditions in the region are not possible due to the restrictions imposed on third-party investigators.
BASF said that its presence in China remains “otherwise unchanged” and that it is “fully committed” to its business activities and planned investments in the country, where half of global chemical production takes place.
“Global growth in chemical production until 2030 will be driven by Greater China, which will account for around 80 percent of the total growth during the period from 2022 to 2030,” it added.
