German Chemical Firm BASF Quits Chinese Joint Ventures

Facts

• German chemical company BASF announced on Friday the divesting of two joint ventures in China, BASF Markor Chemical Manufacturing and Markor Meiou Chemical (Xinjiang) Co., stating that the market for chemicals made at the production sites was oversupplied.¹
• This comes after German news outlets ZDF and Der Spiegel claimed that employees at its local partner Markor had joined Chinese officials on visits to repress ethnic Uyghurs in the northwestern Xinjiang region.²
• Though the German company acknowledged that these reports contained 'serious allegations' about activities inconsistent with its values, its audits found no evidence of human rights violations related to the joint ventures.³
• Meanwhile, BASF reiterated that it's fully committed to its business and investment plans in China, which otherwise remains unchanged. The chemical giant has been a prominent investor in the country, with its presence in Xinjiang long being under intense scrutiny.⁴
• While the two joint ventures whose stakes BASF is now selling are the company's only projects in Xinjiang, its latest full-year financial statements show that ventures in Greater China raked in up to 14% of its total sales in 2022.⁵
• The decision to speed up its exit from Xinjiang could pose a threat to its business in the world's biggest market for chemicals, as a few years ago, Nike and H&M were forced to reverse similar decisions due to widespread boycotts.⁶

Sources: ¹Washington Post, ²Wall Street Journal, ³Asia Business Outlook, ⁴South China Morning Post, ⁵Guardian and ⁶Financial Times.

Narratives

• Anti-China narrative, as provided by The Guardian. China's repression of Xinjiang's Uyghur Muslims is well-known and documented. The reports of Xinjiang Markor's menacing invasive 'home visits' merely reiterates a long history. As a responsible company, BASF cannot hide away from its duties, and its decision to quit its joint ventures in the region is a welcome step toward ensuring that the lure of profits doesn't overshadow the need to respect basic civil liberties.
• Pro-China narrative, as provided by Global Times. The hounding of BASF in the name of supposed human rights abuse may have forced it to take the drastic decision of quitting its joint ventures in the stable and prospering Xinjiang, but its overall commitment to China remains firm. Beijing will not allow this unfortunate development to affect its Xinjiang policy. Neither will it allow outsiders to succeed in their smear campaign against the nation.