Brazil accuses BYD construction site workers of human trafficking

China's BYD is facing criticism over human trafficking allegations at an electric vehicle (EV) factory in its biggest overseas market, after Brazilian labor authorities accused a contractor at the site of the crime. On Thursday, authorities said 163 Chinese workers at the factory, under construction in Bahia, were victims.

After discussions with BYD and contractor Jinjiang Group, Brazil's Labor Prosecutor's Office said Monday it had reached an agreement with the two to house the workers in hotels while negotiating contract resolutions. Prosecutors have not yet released particulars on how they concluded that this kind of trafficking took place.

BYD's spokesperson reposted a social media statement attributed to Jinjiang, which denied allegations the workers were under 'slavery like conditions' and said they were a result of translation issues. At first, BYD said it had cut ties with Jinjiang, but a senior BYD executive later blamed the allegations on 'foreign forces' and some Chinese media bent on muddying the image of BYD and China.

The foreign ministry in China, which did not immediately comment on the trafficking claims, said its embassy in Brazil is working with local authorities to address the situation.

Ongoing Investigations and Future Scrutiny

BYD and Jinjiang are due to return to Brazil on January 7 for talks with a resolution. A settlement would clear the companies of the administrative violations but would not eliminate criminal investigation. Federal prosecutors are requesting evidence sharing to examine possible legal action.

China is gaining more and more economic presence in Brazil as the factory will produce 150,000 vehicles a year on a $620 million investment. The site is key to BYD's plans for global expansion, with the car firm selling almost 20% of its cars outside China, in Brazil, during the first 11 months of 2024.

China's Overseas MODEL: Challenges

It casts new criticism over China's ways of doing investment business, and specifically this practice of sending Chinese workers overseas. The problem has already complicated Brazil’s growing rapport with China, a key country in President Luiz Inácio Lula da Silva’s push to invite foreign investment while creating jobs at home.

These allegations are now a real problem for the reputation of BYD as it attempts to expand globally — with factories in Mexico, Thailand and Hungary, at a key moment that raises questions about the company's ability to trade on the international stage.