A German newspaper report that it found close ties between China’s state-sponsored Uyghur labor transfer program and a regional partner of chemical giant BASF has prompted criticism that the company is ignoring the possibility of forced labor at the plant.
Xinjiang Markor Chemical Industry Co., Ltd., has operated a plant in Korla – the second-largest city in China’s Xinjiang Uyghur Autonomous Region – with German-based multinational BASF since 2016.
German business newspaper Handelsblatt reported on Nov. 5 that some of the ownership rights to Xinjiang Markor Chemical Industry are held by the Xinjiang Zhongtai Group and its subsidiary, Zhongtai Chemical Company.
In September, the United States banned goods made by the Xinjiang Zhongtai Group from imports due to the company's "participation in business practices that target members of persecuted groups, including Uyghur minorities."
Xinjiang Zhongtai is now one of 27 companies explicitly blacklisted under the 2021 Uyghur Forced Labor Prevention Act, or UFPLA, which also includes a general ban on the import of any goods made even in part by the forced labor of Uyghurs, a Muslim minority subjected to persecution and put in internment camps in China.
A statement from BASF said it routinely conducts background checks of its suppliers in Korla.
Investigations done at the Xinjiang Zhongtai plant in 2019, 2020 and earlier this year have found no instances of forced labor or any other human rights violations, BASF said.
Also, the inclusion of Zhongtai Group in the United States’ UFLPA Entity List doesn’t have any legal implications on the products made through BASF’s joint ventures in Korla, the company said.
“Regardless of the legal implications, we regularly conduct transparency measures, to the extent legally possible, in response to the situation in Xinjiang, which also involves the joint venture partner and its shareholders,” BASF said in the statement.
Allegations are ‘no surprise’
The German Bundestag, the U.S. Congress and several other Western legislative bodies have declared that the abuses in the region amount to genocide or crimes against humanity.
But BASF, the largest chemical producer in the world, continues to invest heavily throughout China.
The German-language Handelsblatt's report said that the Korla factory – "probably the most controversial plant" that BASF operates in the world – produces chemical precursors used in sportswear.
“In the past, we highlighted the risks that the BASF joint venture plant in Korla implies,” Tilman Massa of the Germany-based Association of Ethical Shareholders said. “So for us, it is no surprise that there are new allegations.”
The company has an obligation to comply with German supply chain laws, to investigate its suppliers and release its latest investigation to the public, he said.
However, BASF’s latest external audit may not be an effective measure for investigating any supplier in the Xinjiang Uyghur Autonomous Region, Massa said.
“It is not a sufficient measure,” he told RFA. “Responsible withdrawal from the region should be what companies should do given the context there.”
It’s also not really possible to trust any audit conducted in a region that remains under strict control of watchful Chinese authorities, said Hanno Schedler, a genocide prevention consultant who is based in Germany.
“There will be no external audit because they know that independent audits aren’t possible in that region,” he said.
“These companies need to realize that when you deal with a system comprised of internment camps, long prison sentences, family separations as well as forced labor, you cannot escape the system,” he said. “The only way to really escape that system is to get out of the region.”
Edited by Matt Reed and Malcolm Foster.