Brazil says staff at China’s BYD web site are victims of human trafficking

By Fabio Teixeira

RIO DE JANEIRO/SHANGHAI (Reuters) -Chinese language staff at a building web site in Brazil for a manufacturing unit owned by China’s electrical automobile producer BYD (SZ:002594) are victims of human trafficking, Brazilian labor authorities mentioned on Thursday in a rising controversy in BYD’s greatest abroad market.

BYD and contractor Jinjiang Group have agreed to help and home the 163 staff in inns till a deal to finish their contracts is reached, Brazil’s Labor Prosecutor’s Workplace mentioned in an announcement after assembly representatives from each corporations.

The temporary assertion didn’t present particulars on how prosecutors had reached their conclusion.

BYD and Jinjiang didn’t instantly reply to requests for touch upon Friday. Jinjiang rejected the Brazilian authorities’ evaluation on Monday that the employees on the web site within the jap state of Bahia had been working beneath “slavery-like circumstances”.

Jinjiang mentioned, in a social media submit reposted by a BYD spokesperson, that the portrayal of the employees as “enslaved” was inaccurate and that there have been translation misunderstandings.

BYD initially mentioned it had lower ties with Jinjiang, however a BYD government later accused “overseas forces” and a few Chinese language media of “intentionally smearing Chinese language manufacturers and the nation and undermining the connection between China and Brazil”.

China’s overseas ministry mentioned on Friday it has maintained communication with the Brazilian aspect to confirm the state of affairs, including that China protects staff’ rights and requires Chinese language firms to function in compliance with the regulation.

The Brazil prosecutors mentioned they’d meet once more with the businesses on Jan. 7 and suggest a deal.

CHINA’S GROWING INFLUENCE IN BRAZIL

A deal may clear BYD and Jinjiang from an investigation by labor prosecutors, however they may nonetheless face scrutiny from labor inspectors and from federal prosecutors, who’ve requested the sharing of proof in order that “measures may be adopted within the felony sphere”, the assertion mentioned.

BYD has been constructing the manufacturing unit to provide 150,000 vehicles initially as a part of plans to start out manufacturing in Brazil early subsequent yr. Practically one in 5 vehicles BYD bought outdoors China within the first 11 months of 2024 was in Brazil.

The manufacturing unit has change into an emblem of China’s rising affect in Brazil and an instance of a better relationship between each international locations. BYD has invested $620 million to arrange the Bahia manufacturing unit advanced alone. 

The stories of irregularities in Bahia may show to be a serious sticking level in bilateral relations.

Brazil has lengthy sought extra Chinese language funding. However China’s mannequin of taking Chinese language staff to the international locations the place it invests presents a problem to native job creation, a precedence for President Luiz Inacio Lula da Silva.

The investigation additionally brings unwelcome consideration to BYD when it’s in search of to increase globally after having gained dominance in China, the world’s largest auto market, the place it now takes up greater than a 3rd of the market of EVs and plug-in hybrids.

BYD, poised to outsell Ford (NYSE:F) and Honda (NYSE:HMC) globally this yr, has been on a rare enlargement at house and overseas, rising capability and endeavor a large hiring spree. The corporate had practically 1 million workers as of September.

Whereas it nonetheless makes greater than 90% of its gross sales in China, BYD has been constructing passenger automobile factories in Hungary, Mexico, Thailand, Uzbekistan and Brazil to serve its main abroad markets and rising investments in advertising and marketing overseas.

Jinjiang additionally does building for BYD in China, in response to data on the Chinese language firms info database Tianyancha.

RARE CHINESE BACKLASH AGAINST BYD

The case has triggered a uncommon backlash on Chinese language social media towards BYD, opening a dialogue over employee rights, with a number of web customers saying residing circumstances for the employees in Brazil had been typical of these discovered on building websites in China.

Brazilian prosecutors launched movies of the employees’ residing quarters that confirmed bunk beds with out mattresses. They mentioned the employees labored for excessively lengthy hours, generally seven days every week, in circumstances the authorities known as degrading.

In Brazil, “slavery-like circumstances” embrace compelled labor but additionally degrading work circumstances, lengthy hours that pose a threat to staff’ well being, debt bondage and any work that violates human dignity.

Distinguished Chinese language commentator Hu Xijin, a former editor of the Communist Social gathering tabloid International Instances，echoed Jinjiang in saying there could possibly be misunderstandings however mentioned Chinese language building firms ought to enhance the residing circumstances of their workers.

For BYD, the case reveals how it’s prone to encounter extra controversies in future because it emerges as China’s strongest EV model, Hu mentioned.

“The one factor BYD can do is to lift its personal necessities and match its rising affect in all instructions. This isn’t straightforward, however BYD ought to be capable of do it.”