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BYD’s Labor Practices in Brazil Under Investigation
Electric vehicle manufacturer BYD has come under scrutiny following allegations regarding the employment of hundreds of Chinese workers under irregular visa conditions at a factory being constructed in Brazil. A prominent labor inspector disclosed the situation to Reuters, emphasizing that the company has committed to adhering to local labor regulations for the workers still present in the country.
Labor authorities recently discovered that 163 workers, hired through BYD’s contractor Jinjiang, were employed in “slavery-like conditions.” These workers, rescued in December, are reported to be either departing from Brazil or have already left, according to Liane Durao, who is leading the investigation initiated late last year.
“All of this was irregular,” Durao noted, indicating that BYD would face fines for each affected worker, although she did not provide specific figures on the total penalties. The company has agreed to improve the conditions for the remaining workforce, which consists of approximately 500 Chinese employees.
Neither BYD nor Jinjiang has issued immediate responses regarding these allegations. Previously, BYD announced its decision to sever ties with Jinjiang, which has denied the charges made by Brazilian officials. A source familiar with BYD’s perspective conveyed to Reuters that the company believes the visas were issued correctly and that all employees willingly moved to Brazil for work.
The factory itself symbolizes the increasing influence of China in Brazil and represents a step towards enhanced bilateral relations between the two nations.
Negotiations for Workers’ Rights
On Tuesday, representatives from labor authorities, along with officials from BYD and its contractors in Bahia, convened to discuss measures aimed at safeguarding the rights of all personnel employed at the factory.
A Strategic Move for Global Expansion
BYD is establishing the factory to initially produce 150,000 vehicles, marking a significant move to kickstart production in Brazil, which is regarded as its largest market outside of China, anticipated to commence in early 2024. However, the ongoing investigation into labor conditions might affect the construction timeline.
The investment in the Bahia facility amounts to $620 million. Notably, nearly 20% of BYD’s vehicle sales outside of China in the first eleven months of 2024 were recorded in Brazil.
In December, the labor prosecutor’s office categorized the affected workers, recruited by Jinjiang Group, as victims of human trafficking, citing instances where the passports of 107 individuals were confiscated by the firm.
Implications of the Investigation
The ramifications of investigations related to slavery can be significant for employers in Brazil, potentially leading to restricted access to bank financing. Following the discovery of labor exploitation, the Brazilian government has also halted the issuance of temporary visas to BYD.
The allegations of irregular labor practices in Bahia underscore a critical issue in Brazil’s aspirations for enhanced Chinese investment. The practice of dispatching Chinese workers to foreign projects complicates local employment, which is a key concern for President Luiz Inacio Lula da Silva.
This investigation presents a challenge for BYD as the company seeks to reinforce its global presence and capitalize on its leadership status in China, where it commands over a third of the electric vehicles and plug-in hybrids market.
Continuing oversight by labor inspectors will ensure that remaining workers at the construction site are provided with fair treatment and are not subjected to exploitative working conditions, according to Durao.
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