Exclusive-BYD brought hundreds of Chinese workers to Brazil with irregular visas-Inspector Reuters

Authors Fabio Teixeira and Luciana Magalhaes

– Electric vehicle maker BYD ( SZ: ) brought in hundreds of Chinese workers with irregular visas to build a factory in Brazil, a key labor inspector told Reuters on Tuesday, adding that the company had pledged to comply with local labor laws for workers who remained into the country.

A total of 163 of those workers, hired by contractor BYD Jinjiang, were found to be working in “slavery-like conditions” last month.

The 163 workers rescued by labor services in December are leaving or have already left Brazil, said Liane Durao, who led the investigation announced in late December.

“It was all irregular,” Durao said, adding that BYD would be fined for any worker found in this situation, without specifying the total amount to be paid.

She said the company has agreed to adjust the conditions of the hundreds of workers who will remain in the country to comply with Brazilian labor laws. About 500 Chinese workers were brought to work at the Brazilian factory, she said.

BYD and Jinjiang did not immediately respond to a request for comment. BYD previously said it had severed ties with Jinjiang, which disputes the allegations by Brazilian authorities.

A person close to BYD told Reuters that the Chinese company believes the visas were issued properly and that all employees came to work in Brazil voluntarily.

The factory has become a symbol of China’s growing influence in Brazil and an example of the closer relationship between the two countries.

Labor authorities and representatives of BYD and its contractors working in Bahia met on Tuesday to negotiate how to protect the rights of all workers employed at the factory.

THE KEY TO BYD’S GLOBAL EXPANSION

BYD has been building the plant to produce 150,000 cars initially as part of plans to start production in Brazil, its biggest market outside China, early this year. It is unclear whether construction will be delayed due to an investigation into working conditions at the factory.

He invested 620 million dollars just to set up the Bahia factory complex. Almost one in five BYD cars sold outside China in the first 11 months of 2024 was in Brazil.

In December, the labor prosecution described the workers, who were hired by the Chinese construction company Jinjiang Group, as victims of human trafficking. The company denied passports to 107 workers, investigators said.

Slavery investigations can have strong consequences for employers in Brazil, including limiting their access to bank loans.

Because the workers were found in slavery-like conditions, the Brazilian government temporarily suspended the issuance of visas to BYD.

Reports of irregularities in Bahia could prove to be a major obstacle in bilateral relations.

Brazil has long sought more Chinese investment. But Beijing’s model of taking Chinese workers to countries where it invests poses a challenge to local job creation, a priority for President Luiz Inacio Lula da Silva.

The investigation has also drawn unwanted attention to BYD as it seeks to expand globally and build its dominance in China, the world’s largest auto market, where it accounts for more than a third of the EV and plug-in hybrid market.

Labor inspectors will continue to monitor BYD’s construction site, Durao said, to make sure workers who remain employed at the factory are not exposed to poor working conditions.