163 Chinese workers subjected to abusive contracts; automaker faces credit restrictions and reputational damage in its largest overseas market.
According to a Reuters report dated April 6, Brazil’s Labor Ministry has added Chinese automaker BYD to its registry of employers who subjected workers to “slavery-like” conditions.
This decision follows a 2024 scandal in which 163 Chinese workers were identified as victims of human trafficking and abusive contracts while building BYD’s manufacturing facilities.
The listing carries significant reputational risk for BYD in Brazil, which has become its most critical market outside of China for electric vehicle expansion.
Reuters Details: Housing Conditions and Contract Abuses
Labor contracts reviewed by Reuters revealed that workers hired by contractor Jinjiang Group were forced to surrender their passports upon arrival in Brazil.
The Reuters report noted that the majority of the workers’ wages were sent directly to China, and individuals were required to pay an approximately $900 deposit to secure their roles.
A raid by labor inspectors found workers living in cramped lodgings without mattresses. In one instance, 31 workers shared a single house with only one bathroom.
Inspectors told Reuters that food was found piled on the ground alongside personal belongings, characterizing the environment as “degrading conditions” that violated basic human rights.
Legal Consequences and Operational Impact
According to Reuters, the addition to this “dirty list” bars BYD from obtaining certain types of loans from Brazilian state and private banks.
However, Reuters clarified that the listing will not affect the daily operations of BYD’s existing auto plant in Bahia, which has already produced over 25,000 vehicles.
BYD previously told Reuters it had no knowledge of these violations until media reports surfaced in late 2024, placing the blame on the third-party contractor.
Brazilian officials, however, maintained that BYD is ultimately responsible for the conditions of workers at its sites and should have supervised its contractors more effectively.
Legal Status and Next Steps
Companies are only added to this registry after all administrative appeals are exhausted. Reuters confirmed that BYD failed to reach a deal with labor inspectors to avoid the list.
Once listed, a firm typically remains on the registry for two years. During this period, their ESG (Environmental, Social, and Governance) ratings are expected to face intense scrutiny.
The contractor, Jinjiang Group, has denied the claims of abuse. BYD did not immediately respond to the latest request for comment from Reuters regarding the official listing.
This case serves as a landmark warning for global manufacturers regarding supply chain compliance and labor standards under Brazil’s strict regulatory framework.
