Inside the Chinese Region That Has Become a No-Go for Western Companies

Projects are dead and surveillance is omnipresent in Xinjiang, which once lured Western companies such as Volkswagen

- Yoko Kubota

About a decade ago, some Western companies answered Beijing's calls to invest in Xinjiang, an underdeveloped region in the country's remote west. Some were drawn by the natural resources there. Others eyed the political points they could score with China.

Today, many of those projects are dead or have been sold off. A visit by a Wall Street Journal reporter earlier this year to Urumqi, Xinjiang's capital, found that the site of German carmaker Volkswagen—which was especially eager to invest in the region a little over a decade ago—sits lifeless. The factory, in Urumqi's Toutunhe economic development zone, was recently sold. The carmaker and its joint venture partner SAIC Motor's names have been scraped from the gate, leaving a blurry mark.

As the reporter approached the site and turned onto an empty side street, a white car trailed her movements—surveillance that continued throughout her trip in Urumqi.

The demise of what was the most prominent Western project there shows how toxic association with Xinjiang is for Western companies, and how those companies' ambitions in China can collide with political and geopolitical realities. The investments into relatively minor projects in a remote area ended up morphing into a yearslong international headache.

Over the years, Xinjiang, home to millions of Turkic-speaking Uyghurs and other predominantly Muslim ethnic minorities, has become synonymous to some in the West with Beijing's ruthless clampdown on ethnic minorities. The Chinese government has targeted the minorities in Xinjiang with mass-detention internment camps and omnipresent surveillance as part of a forcible assimilation campaign. China portrays the campaign as an effort to fight religious extremism and terrorists.